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WELCOME TO THE REPUTATION ECONOMY

January/February 2012


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WELCOME TO THE REPUTATION ECONOMY

In a world where a tweet or a website posting can torpedo a brand, kibosh a deal or bury a career, the race is on to find a common currency for trust writes Colin Brown

By Colin Brown

An early target of criticism has been Klout, whose scores have been used since 2009 by corporate brands and their marketers to pinpoint 'influencers' worthy of being showered with invites and other freebies - a virtual velvet rope for the twitterati set. This autumn it was Klout's own social reputation that suffered a double whammy, a victim perhaps of tall poppy syndrome. First, a sudden change in algorithms caused a near-riot among those users who suffered dramatic drops in their Klout scores without any detailed explanations about the revised methodology. Then, following a New York Times article in November, Klout had to apologise for unwittingly creating profiles of minors. Klout, which relies on data from Twitter, Facebook, Google+, LinkedIn, Klout's founder and CEO, Joe Fernandez Foursquare, YouTube, Instagram, Tumblr, Flickr and Last.fm, as well as blog activity, promised to work with those platforms in introducing safeguards to protect against such intrusions.

"I get why Klout can rub people the wrong way. We are putting scores next to people and that can be initially off-putting," responded Klout's founding CEO, Joe Fernandez, in a blog designed to put out the firestorm. "We are not elitist jerks but just a bunch of data nerds passionate about understanding the impact of every person online. We believe that every person who creates content online has influence on some topic, to some group of people." In Fernandez's San Francisco worldview, Klout is a "great equaliser", a way for marketers to recognise and reward people based on the power of their social media voices, rather than just the size of their wallets. He claims that more than 250,000 Klout Perks have been delivered so far.

Nonetheless, rivals have sensed a market opportunity. PeopleBrowsr, a social analytics company that measures trends and customer sentiments for marketers, has just created its own social scoring system known as Kred to measure influence in online communities connected by interest. The emphasis here is on full accountability: users are told exactly how their scores are calculated, even to the point of drilling down to every 'retweet' to see how many points it was worth.

"The best way to fight misinformation is a policy of transparency. It's tremendously important that everyone can understand what their score means, which is why we let everyone see all the actions that go into calculating their Kred," says Jodee Rich, the Australian digital anthropologist and tech entrepreneur who founded PeopleBrowsr in 2007.

"Kred uses social data to simulate the foundations of strong real-world relationships: trust and generosity within small, close networks of friends and subject-matter experts.

We use indicators like who a person interacts with and whether their content generates action to determine a person's influence," explains Rich. And, like so many others in the field, he believes this is just the beginning. "Genetics started with Gregor Mendel experimenting with peas in his garden, and today influence measurement is at a Mendel stage where our understanding evolves every day."

That recruiters, and not just marketers, are using the likes of Klout to benchmark potential job candidates - or even turn them down, apparently - shows just how quickly social scores are also entering the business domain. It's a shift that another San Francisco outfit, Identified, is directly targeting with the recent launch of what it calls "the world's first professional stock market". By tracking and analysing what thousands of companies are searching for online, Identified provides users with a dynamic measure of how companies rate their professional background. Such real-time feedback is delivered in the guise of the Identified Score. But that's just the beginning. There is no reason why future data analytics couldn't go on to provide an automated answer to those high-school polls that ask classmates to vote on who's 'most likely to succeed'.

Identified's scoring algorithms, says co-CEO Brendan Wallace, "still really only scratch the surface of what is possible. We quantify a professional's desirability along one dimension: recruiting. But the possibilities of how far one could take online personalisation are endless. With enough data, could algorithms predict who's likely to start a company, who's likely to be the most creative, who may have the leadership qualities to be the company's next CEO? Obviously one has to be careful about how much we can rely on data to measure people professionally; being too dependent on data can limit the risk-taking, creativity and synergies that can lead to great organisations. On the other hand, predictive data can be very empowering: in a world of unlimited data, tools like Identified can help companies distill a signal from amidst all the noise that is created by products like LinkedIn, resume databases, and job boards."

Of course, not everyone makes the right noises - not even the greatest authorities among us. Azeem Azhar, the former Reuters innovation chief who founded PeerIndex, dubs this the "Clay Shirky problem", referring to the influential internet theorist who, ironically, has a terrible social score. "Every two years Clay writes a phenomenal book - but he does not tweet. He is manifestly an outlier," says Azhar. "Conversely there are those who get others to tweet for them, essentially creating a special purpose vehicle to enhance their ratings. But then this happens with every index. Look at CDOs (collateralised debt obligations): what seemed so fruity and fresh when rated was really just toxic sludge."

PeerIndex's own scoring system tries to account for such anomalies by trying to build a composite picture of an individual and their varying attributes. As with Klout, there's the iconic overall score, but alongside are also individual measures for activity, audience and authority. Then there are 'topic resonance' scores that measure a list of discernible interests related to that individual. In Azhar's own case that would be: peer influence (score of 50), entrepreneurship (41), customer relationship management (15), start-ups (15) and economics (41). The intended result is an 'authority fingerprint' on a topic-by-topic level. PeerIndex's data sources, beyond the customary social media platforms, include Quora, a question-and-answer website and mobile application that uses its own PeopleRank system for prioritising responses and tracking the best contributors.


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Economy, Cover Story

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Related Stories:
  1. CHEAP AND CHEERFUL

    By taking thriftiness to extremes, China's Spring Airlines makes millions

    Go to Article »

  2. THE FOCUS GROUP

    A Berlin eyewear company dedicated to innovation and tradition has become the darling of the über-cool

    Go to Article »

  3. PAINT AND CLICK

    By treating art as a short-term commodity play, a new generation of dealers is shaking up a staid profession

    Go to Article »

  4. GRADE EXPECTATIONS

    A Beijing ratings agency poses a challenge to its powerful Western rivals

    Go to Article »




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