Klout, the tech pioneer that measured people's social media star power, is shutting down after losing influence in an industry over which it once claimed to be the arbiter of influence.
The company invented the "Klout Score," which professed to measure a person's online influence based on their social media habits. The score was invented 10 years ago and became a contentious marker of social media standing and sometimes punchline. Many technophiles saw it as a badge of honor and made it a goal to win Klout's highest rating by growing their social media accounts and staying active online.
For others, Klout bestowed an undeserved sense of superiority on people for illusory achievements online. At one point, Klout scores were being used in weighing job applicants at some companies. Britney Spears once went to the company's headquarters in San Francisco demanding to know why her score was lower than Lady Gaga's.
However, in recent years as the industry built around social influence evolved, Klout became less and less relevant.
"Klout was supposed to be the barometer of influence and purveyor of real world value for any given consumer on social," says Ryan Detert, CEO of Influential. "At one time, hotels would give upgrades based on people's scores since they were quantified as important."
Brands got smarter about what data points were most important, Detert says.
"Klout was largely based on who was most active on social versus who had an engaged audience that fit a brand's consumer base," Detert says. "And influencers saw that someone who simply tweeted more often than them could have a higher Klout score, so they didn't put much stake in it."
Klout is shutting down on May 25, which also is the day new privacy regulations, known as General Data Protection Regulations, take effect in Europe. The new data regime in Europe undoubtedly will have an impact on how businesses like Klout and its parent company Lithium Technologies can conduct business.
The new GDPR rules govern how companies can collect data and how they can use it, and requires them to obtain consent from consumers.
"The Klout acquisition provided Lithium with valuable artificial intelligence and machine learning capabilities but Klout as a standalone service is not aligned with our long-term strategy," said Pete Hess, CEO of Lithium Technologies, in a note on the company's website. "Our goal with these AI and machine learning investments is to improve our customer care capabilities across the board, whether that's self-service, peer-to-peer, or direct-to-brand."
"Given that strategic focus, Klout no longer made sense as a standalone service. The upcoming deadline for GDPR implementation simply expedited our plans to sunset Klout," a Lithium spokesman said in an e-mail statement attributed to Hess.
Lithium is a global marketing technology firm that helps brands manage customer relationships through software and social media. The new GDPR rules in Europe are expected to hit these types of third-party companies hardest, because they have to operate on behalf of brands without having the direct relationships with consumers. Those direct relationships are important for getting consumers' approval to use their information.
"It is going to be really challenging for organizations where data is their business," says Christina Allyn, partner at Moye White, a law firm that is helping clients navigate GDPR. "Consumers have to say, 'go ahead use my information,' which in many cases might be innocuous but it's one more thing to do. For these ad tracking companies it's going to be a challenge."
Klout has relied on people handing over their social media accounts on Facebook, Twitter and other platforms so it can track their activities.
Even more challenging for a company like Klout, however, could be Facebook's recent crackdown on third parties accessing user data. Facebook has been under a microscope since it inappropriately allowed Cambridge Analytica, a data provider, access to almost 90 million user profiles. CEO Mark Zuckerberg had to testify to Congress about its policies that allowed such data companies to suck up so much personal information on its customers.
Facebook has since made it more difficult for influence-measuring tracking companies to plug into the social network and Instagram, which it also owns. A number of marketing technology companies have been built on providing data to brands about popular social media stars and their followers.
However, Facebook recently shut down their access to its application programming interface that gave them a way to plug into Instagram and take snapshots of activity to report back to their web celebrity clients and brands.
That loss of access to Facebook data could have been the straw that broke the camel's back for Klout, according Gil Eyal, CEO or Hypr Brands, a social influencer marketing and technology company.
However, Klout was simply losing its own clout, and never really justified the $200 million price Lithium paid for the company.
"The platform was flawed and advertisers couldn't really rely on the score to evaluate if someone was significantly influential," Eyal said. "While it paved the way for platforms like ours, it never really stood a chance and has not been a major factor for quite a while."