The company has conducted an initial test of native advertising in its new feed feature, and achieved what it deemed to be "great" results. At the same time, Klout is reportedly being sold to Lithium Technologies.
Klout recently released a product update that automatically surfaces content for users to share – and it paves the way for native advertising. In fact, Klout has already conducted an alpha test of native ads with a few undisclosed brands with what it deemed "great" results. The move comes hot on the heels of reports from today that the online social influence start-up is being sold to social customer service company Lithium Technologies for $100 million or more.
The deal is "signed but not closed," according to Re/code, and will be in the "low nine figures" when stock and cash is factored in. Lithium sells social customer experience management software to businesses. The reported acquisition would allow the company to adopt Klout's 200,000 customers.
On February 6, Klout released into general distribution its new platform that focuses less on the Klout score and more on how to improve it. The new Klout provides a news feed that's algorithmically generated to match a user's areas of influence or expertise. Users can annotate the links if they wish and then immediately share the content or schedule it to be shared at a later time.
Klout began testing the new version in November, and at the same time, it worked with seven brands to allow them to insert their own links into users' Klout feeds in a style similar to Twitter's Promoted Tweets. Link URLs are generated by Klout to enable tracking and analytics.
"We would put [sponsored] content intermixed with the organic content we're showing in the feed," says Klout chief executive (CEO) Joe Fernandez.
He won't name the alpha advertisers, but says they were top-tier brands in consumer electronics, fashion, travel, and consumer products.
"We're presenting content to consumers and letting consumers share it in their own words," Fernandez says. "If consumers don't share it, fine, your content needs to be better."
Fernandez says that the new interface moves beyond checking your score to enabling content syndication.
"Now, it's about creating content," he says. "At this point, you can tweet in your own words. In the next iteration of the platform, we will inspire you to create original content."
Details about how Klout will do this are still to be determined, but Fernandez suggests that, for example, if someone started to create a tweet, Klout might suggest a hashtag or highlight conversations on the topic. The system might also prompt creation by offering a question related to trending topics that the user could answer in a post.
Regarding the native advertising product, the company is still debating the product name. It expects brands to be willing to pay a subscription to have access to an enhanced content creation platform that would include deeper analytics and deeper targeting. In addition, the company is contemplating charging for CPMs: If a consumer shares sponsored content that reaches 1,000 others, Klout would get an additional payment.
Five-year-old Klout already makes revenue from Klout Perks, a program that connects marketers with top influencers in its network. Klout's revenue increased almost 300 percent in 2013, according to Fernandez. He thinks the company is on track to generate more than $10 million in revenue this year, thanks in part to the new native advertising product, although the launch date hasn't been decided.
It will be interesting to see whether it will be Klout (as an independent company) or Lithium Technologies who will benefit from these projected revenues. At the time of publishing, Fernandez was unable to comment on the rumored acquisition.
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