How Klout Can Win The Sports Industry

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My personal Klout score lives between 52-58. I am listed as being an influencer in Sports, Hockey and Media. My most recent Perks from Klout were a subscription to ESPN The Magazine and Red Bull’s extreme sports magazine Red Bulletin.

Klout, a product that sells social media analytic rankings and influence, is working effectively in this instance. Since I accepted a job with the Texas Stars and began writing more about sports, my Klout Perks changed from spice racks to sports publications.

This is a quick and simple explanation of how Klout works: ESPN wants to expand its product or market; Klout measures interests of users as well as their influences; ESPN pays Klout to promote a Perk (free gift) to influencers that will be excited about the product; Klout notifies me, the user, that I can accept a free Perk from ESPN if I talk about the product to my followers, who ideally would be following me because they are interested in what I have to say about sports stuff.

Klout makes its profit by connecting sellers and buyers, with a little wrinkle. The “buyer” doesn’t necessarily buy anything, but rather promises to use their influence on others to buy the product. The “buyer” then has a choice to buy the product after the Perk expires, or just enjoy the free stuff while it lasted. Based upon this process, Klout’s influence measures are just as important to its success as its ability to sell Perks. If the “seller” doesn’t have confidence in Klout’s ability to measure and find the best influencers, then why should the “seller” purchase a Perk to give away?

Klout works, in certain contexts. In the personal example I listed above, Klout’s services were money well spent for ESPN. I am in fact a sports fan and was excited about the product. I liked the free trial of magazines enough, and ESPN INsider for that matter, that I purchased the product (and maybe convinced someone else to buy it too).

What Klout cannot do is direct major influencers to other major influencers. Connecting a major influencer (such as Nike) to another major influencer (such as a sports team) is the name of the game when it comes to sports. Sponsorship and advertising make up large amounts of revenue for sports teams (and athletes for that matter), and Klout is missing a golden opportunity to capture some of that profit.

Why Sports Is Different

The sports industry has its own unique rules in the digital world. A team is a brand, but most brands on social media attract followers who either are passionate about the products, or are seeking incentives from the brand such as coupons. A sports brand is different from this because they are acting as a quasi-news outlet.

This is significant in the world of sportsbiz because the high, unwavering demand from a team’s digital presence can generate revenue. This digital revenue doesn’t have to come from ticket sales or merchandise in the form of links to a team store. Instead, a team’s digital platform can be sponsored, or individual pieces of content can be sponsored – generating a guaranteed revenue throughout the season.

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There are only a select few digital accounts that can mandate revenue from sponsors. If @darrenrovell wanted to stray away from journalism, his influence in the sports industry would be enough to charge for digital sponsorship, or paid advertisement. In fact, the majority of sports journalists could generate some sort of revenue from sponsored content.

But they can’t. It’s not ethical for a journalist to accept payment or retribution for “paid” content. This would be a conflict of interest, and would have them run out of the industry.

Now, this is why teams have a monopoly of sorts on digital revenue from sponsorship or ads. They are still followed for news and team updates, and the followers are influenced heavily by team content (how many times a day do you check in on your favorite team?). But, a sports team is a business – not a journalist. Sound familiar? It should.

Back in the day, back before you and I, newspapers made revenue from ads. Why? Because they had a devoted following. Still today, the New York Times can report readership of their paper to potential advertisers so that they may buy a full page spread. Fast forward to today. A team’s digital channel also has a reported membership with detailed demographic information. If a company like Nike wants to promote a new shoe, why would they advertise in the paper when they could advertise through a team? Nike is big enough that they’d probably do both, but that’s not the point. Nike can target its ad campaign through @Yankees and hit 1,000,000 people. Those 1,000,000 have already voluntarily admitted they are interested in sports by following the Yankees on Twitter, so it’s a great targeted campaign for Nike, as opposed to a New York Times ad where 1 in 10 people are interested in sports.

And classified ads? You know how newspapers began to struggle in the late 90s because of Craigslist? Teams can benefit from those too. Sports teams, especially in the minor leagues, rely heavily on trade. This allows the team to “pay” for goods or services without actually writing a check. For example, if there is a town Christmas Festival a team may offer to promote the event through their digital channels in order to wave vendor fees. It’s a win-win-lose. Win: The town gets free advertising; Win: The team gets free exposure without vendor fees; Lose: The newspaper gets no ad revenue because the town didn’t need to advertise the festival.

Klout and Sports

Why did I just tell you all of that and not mention Klout once?

Klout measures influence through follower metrics (number of “alive” followers), amplification (how many followers you reach once RTed) and popularity (list memberships and unique @mentions). Naturally, all major league sports teams have Klout scores hovering between 90-100. But there is no real difference between teams, when in reality there are massive market efficiencies and deficiencies (Sponsors, don’t go near the Astros).

It is correct to assess that Klout is correct in the findings that these teams are influential. But, what is underscored is the fact that these digital accounts can sell, rather than just create content. And some teams can do it better than others.

But Klout can’t show this.

Klout is good at connecting big brands, such as a sports team or sporting goods companies, to small influencers – like me, who talk a lot about their products. Klout is bad at directing big brands to connect with other big brands. For instance, Klout would not be able to differentiate the difference between the @Yankees and @RaysBaseball (First and last in net worth in the MLB). The difference in Klout between the team would not distinguish a large enough deficiency between accounts, even though one exists – and Nike would just be throwing money down a dark hallway, hoping it sticks.

Klout has at its disposal metrics of interactions, followers and engagement. If a company like Nike were to show up at Klout’s doors, they would be unable to effectively direct Nike to which teams are best to promote content through using their current algorithm.

Give Them Their Money’s Worth

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This is a professional hockey player, not me.

Do you think it would be easy to tell Nike, “We recommend promoting content through the Yankees digital platform.”

Have you considered the inflation value on the @Yankees account? Did you take into effect that their follower numbers are so high because of their market size, and that their relatively low engagement levels may in fact point to a larger problem – that the brand’s base is not as passionate when it comes to engagement?

Why does engagement matter?

Because, when the @Yankees tell you to go buy Nike’s new shoe you should want to do it.

So if the @Reds fan base has 4x the engagement with 1/4 of the following, but will sell sponsored content at a much lower cost than the Yankees – is that a sounder investment for Nike? Lower cost with similar projected engagement – that’s a good deal.

And what if the sponsor is local to the Midwest, or just Ohio? Would a more national brand like the Yankees make sense? And how should the sponsor choose between the Cleveland Indians or Cincinnati Reds?

A whole different aspect of the sports industry to consider is individual athlete sponsorships. Major brands purchase athlete endorsements in the form of Wheaties boxes and television ads, so why not their Twitter and Facebook accounts too? Each individual athlete has attracted digital fan bases that are potential gold mines for endorsements – thousands of engaged followers listening to every word the athlete  says  types.

This is what Klout needs to focus on when it comes to large brands such as sports teams. There is plentiful space for advertisement on team’s digital media, and Klout has the infrastructure (metrics, access to data and clients) to build their product into a massive digital worth assessment (a stock exchange for digital media worth, if you will).

The final step is a commitment to understanding the industry, and capitalizing on which potential clients would  want to advertise with teams. Money can be made from negotiations and analytic services, both from the team and sponsor. All Klout needs to do is make the next step.

The Next Step

Klout needs to adjust their algorithm to differentiate between 50 and 100 Klout. My 53 is not exactly half of the Yankees’ 96. In fact, my 53 should be about .0001% of the Yankees’ influence.

It makes sense 0-50, but 50-100 is a guessing game when it comes to actual digital influence on Klout. Buying power, and actual influence that can be sold should be evaluated into their formula.

Klout could even create an entirely different service for negotiations that involve buying influence, rather than connecting influencers. If the current algorithm works for connecting digital influencers to major brands, by all means keep it! But there needs to be an honest assessment of how much an account’s influence is worth to facilitate digital advertising and sponsorship.

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