The panellists generally agreed that total revenue in the influence sector, including the companies represented on the panel (Rapleaf, Buzzlogic, Klout) is around US$100 million. The primary business model is providing insights to companies on who the influencers are in their customer base.

One example given is a hotel that asks guests checking in for their Twitter name, swiftly ascertaining how influential in social media they are, and treating them accordingly. If someone who has real reach is their guest, the hotel might upgrade them or otherwise treat them in a way that they are likely to rave about.

Another example is a clothing company that assesses how influential a customer is by seeing how many people in their personal network buy similar items of clothing to them. If they determine they are indeed influential in actually impacting others’ buying decisions, they may give them gifts or other rewards which will flow on to further sales.

The second of the Five key trends in how influence is transforming society is “influence can be measured”. This is a very recent phenomenon, driven by a wholesale shift of most influential communicators onto online channels, and the richness of information available on many social media platforms.

What this means is that companies can start differentiating at a high level of granularity how they treat their customers. Instead of simply taking into account wealth or spending power in treating people differently, influence is rapidly becoming an important factor.

As Auren Hoffman noted in the panel discussion, companies are moving beyond ‘total customer value’ to consider the additional customers that may be referred by someone, sometimes called the ‘customer network value’.

This suggests a world where those that receive the most preferential treatment are not the wealthiest, but the most influential. Capital wanes in its power relative to influence. Most critically, influence becomes a currency that buys things with real value: free goods, discounts, special treatment, and more.

We could call this Influencism: a world in which influence holds sway, sometimes even beyond capital.

There was heated debate at Future of Influence Summit as to whether differential treatment based on how influential you are is a good thing or not. More on that discussion later. However like it or not, we are swiftly entering that world.

Jeremiah is quoted in the New York Times:

Mr. Owyang said that his story holds lessons for other companies. “I think this is an interesting trend that many companies are going through — personal brands are here to stay, alongside corporate ones, and the key to success is to make sure they help each other,” he said. “But now the power is shifting to the workers, because they can take their network and a lot of what they know with them, with these social media tools.”

The third trend in my recent Five key trends in how influence is transforming society is:

Reputation shifts from the corporation to the individual

I strongly believe in Jeremiah’s point that individuals and corporations need to support each others’ brands. In fact one of the important reasons I have pointed to as to why companies should support use of social networks is that it helps their employees to build their own brands, to the benefit of both individual and company.

Now, as personal brands grow in relative strength, corporations need to consider how they can best reflect and tap the influence of the individuals working for them. As Jeremiah notes, social media means that personal brands are immensely portable, as are personal networks.

This is about power to the worker, absolutely, but those companies that understand this and tap this shift can do extremely well. They can attract those with strong personal brands and create immense value from their influence, simply by focusing on building the brands of their key staff as much as they do their corporate brand.

I don’t think Seth will mind if I put the full post here, as it doesn’t really bear excerpting (as long as I include a solid plug for his awesome blog!)

Clout

The web knows something, but it’s not telling us, at least not yet.

The web knows how many followers you have on Twitter, how many friends you have on Facebook, how many people read your blog.

It also knows how often those people retweet, amplify and spread your ideas.

It also knows how many followers your followers have…

So, what if, Google-style, someone took all this data and figured out who has clout. Which of your readers is the one capable of making an idea break through the noise and spread? Bloggers don’t have impact because they have a lot of readers, they have a lot of impact because of who their readers are (my readers, of course, are the most sophisticated and cloutful on the entire web).

If you knew which of your followers had clout, you could invest more time and energy in personal attention. If we knew where big ideas were starting, that would be neat, and even more useful would be understanding who the key people were in bringing those new ideas to the rest of the world.

Back in the old days, we had no idea, so we defaulted to big newspapers, or magazines or the TV networks. But now we know. We just need to surface the data in a way that is useful.

I’ll be writing a lot more on this topic and how this can best be done in coming weeks and months.

An extensive study titled The Influentials: New Approaches for Analyzing Influence on Twitter, created measures for relative influence, tracking in detail 12 popular users. Commentary on this further down in this post, and a nice visual showing response density to these users below.

Rapleaf, whose CEO Auren Hoffman spoke at Future of Influence Summit, released a quite different report showing the change in the structure of the Twitter ecosystem in the period late-March to mid-June of this year, during which time Twitter usage grew 60%. Rapleaf, in the course of doing a study to identify influencers in one of their clients’ customer community, came up with some interesting statistic in the dynamics of the most prominent Twitter users.

The published elements of this study focused only on numbers of Twitter followers, which are only a moderate proxy of influence, though showed some interesting insights. One of the most prominent was that the “popularity gap” between the most prominent Twitter users and the rest is growing. This is not at all surprising, and we can expect this to continue to grow, while maintaining the power law distribution that typifies scalable networks.

Techcrunch has also written about this study.

Going back to The Influentials study, they have proposed a definition:

We define influence on Twitter as the potential of an action of a user to initiate a further action by another user.

Unfortunately they only include replies, retweets, mentions and attributions as actions, and they do not seem to include click-throughs of links, which is one of the prominent actions taken in response to Twitter activity, and for publishers, by far the most meaningful one.

While there is currently no way to directly measure this, clearly activity taken outside of Twitter (e.g. buy a record, go to a movie, vote) is a far more important outcome of influence than online activities.

It is important to note that the study has directly compared the influence of tech commentators, news outlets, celebrities and others. This is close to meaningless. Influence is context-specific, and the Twitter-based influence of @BarackObama, @Scobleizer, @CNN, and @aplusk cannot be compared directly based on figures such as follower counts and responses.

There are now quite a few studies analyzing Twitter statistics to derive measures of influence, some of them more sophisticated than others. The state of the art is advancing rapidly due to the attention being paid to this space. However these studies will become far more useful and relevant once they start to bring in data from other sources.

Influence and reputation are now key issues on the agenda for any organization. At the Summit, we began to tease out the many issues that will be critical moving forward. I will spend some time digesting what was discussed and pull together some structured thoughts in the next little while.

We will also post videos of a couple of the sessions soon.

For now, it’s worth reviewing what attendees at the event captured on social media during the event – together these provide a great overview of the Summit.

Twitter stream for #foi09

Blog posts: (In no particular order – more coming soon I believe):

Mick Liubinskas: Live from Future of Influence Summit

Daniel Young: My highlights from today’s Future of Influence Summit

Erin Byrne: Future of Influence Summit

Brad Howarth:
Live from the Future of Influence Summit 09 #foi09
More from the Future of Influence 2009 #foi09
Cross-continental panel discussion #foi09
Final cross-continental panel #foi09

Ross Dawson:
Tara Hunt on You can’t eat Whuffie, but it’s harder to eat without it
Panel discussion: Business models for influence and reputation

Xavier Vespa: Future of Influence Summit

Brandsplat: Regular Joes and Janes are changing the way we advertise

The Letter Two: Separating The Difference Between Influencers & Evangelists

[UPDATE: Additional media/ social media coverage]

NineMSN: Newspaper companies face backlash over charges for online news content

Crikey.com.au (Stilgherrian)(Note: full article will be available from 18 September): The Future of Influence: welcome to the confetti economy

Tara Hunt: Enthusiast vs Influencer Marketing

Pollenizer: Live from the Future of Influence Summit (detailed live coverage from Sydney side)

Below are my notes on what panellists and audience members were saying – hope they’re correct but may not be 100% accurate.

Todd: the market pushed them towards the advertiser space. In 2004 companies were not ready for it, but now Buzzlogic is 100% focused on the advertising space related to influencers. Still a few years before seeing $100 million revenue level.

Auren: Companies think about total customer value, so will treat you differently if they think you’ll spend more in the future. Now they understand that your value includes the customers they will refer to you. Sometimes called the ‘customer network value’. The total market now is probably $100 million, but spread across several companies.

Louis: Brands look at who is interacting with them, and who has influence within communities. The influencer’s dilemma is working out which niche you can have influence within. Traffic is not a good measure of a blogger’s influence – engagement and participation goes beyond the numbers.

Joe: The social graph is a key component, but you are not limited by it.

Auren: If someone buys a pair of jeans, you can assess how many of their friends buy the same pair of jeans in the next few months, and work out whether they have influenced people, and will influence in the future.

Tara: But anyone can become a very powerful influencer.

Todd: We are still talking about a traditional advertising model. There is a convergence of earned and paid media. Traditional marketing spend is shifting.

Auren: One of our clients is a cosmetics company which has fanatic fans – they get exceptional treatment from the company. You have to know who they are first.

Louis: When I write a ‘Top 10 suggestions’ blog post for say LinkedIn or Google Reader, it enters the conversation and frequently gets a swift response.

Tom Schigel of ShareThis: Now that influence is democratized and we can service everyone better, shouldn’t we take care of everyone, the 80% who matter?

Scott: We each have to make our own decisions about how much we should focus on influencers to the exclusion of others.

Shannon: If we look only at numbers we can lose sight of the fact of how influential some people can be in a particular area.

Joe: We have a metric called ‘True Reach’ – we can work out how influential. Customer service doesn’t have to start when people are unhappy. If you reach out to influential customers as soon as they engage with you, they have a channel to speak to you.

John Wolpert: How do countries and cultures differ in their attitudes to public and private reputation? Being able to talk negatively about people differs across countries.

In the days of barter, we would exchange things for mutual value.

Advantages of money: it is fungible, trust is not necessary, and it’s independent of need. Money evolved to fiat money (in 1971 the US discontinued gold-backing of money).

Money is only a small part of what we value. There are many things we value that are not monetary: among many other things relationships and influence.

Alistair Croll took my book The Whuffie Factor and Chris Anderson’s Free to create some new ideas and the following diagram:

Source: The Three Economies of Online currencies

Whuffie, Attention, and Money are linked.

We can ‘cash in’ on Whuffie with jobs and clients.

We can convert attention to Whuffie.

There are 4,500 articles in Google News with “Rebuilding Trust” in the title in 2009.

Zappos is a great example of spending to do better things for their clients.

We need to balance people with profits.

I had the privilege of attending my second Gnomedex two weeks ago and there was a regularly used joke: everyone claims to be a “social media expert” just because they’ve used Twitter.

The line may seem glib, but it has serious roots. The label social media expert is being used by all and sundry just because they have used Twitter, or started a blog, or at the extreme, have a Facebook account. It’s not a title I’ve ever applied to myself, although it has been applied to me on occasion. I’m probably qualified to use it given my experience, but I have no particular interest in being a “social media expert.” I’d rather use my skills to build something quantifiable that doesn’t involve me telling others at every opportunity that I have some idea about what I’m doing.

The proliferation of social media has given rise to a proliferation of conferences and speaking gigs, and it’s a space that has been readily filled by those who profess to be experts in the field. Some genuinely do feature those worthy of the title, and I have the opportunity of sitting on a panel at the Future of Influence Summit Tuesday (Monday US time), a conference that is being held simultaneously (and at times connected by video) in both Sydney and Silicon Valley. But many don’t.

The proliferation of “social media experts” goes unchallenged for now, at the behest of a general populous who perhaps doesn’t have the knowledge yet to spot someone well qualified, vs. someone who can bluff their way through. This won’t always be the case, and eventually the social media space faces a trust crisis as the speaking/ guru market becomes even more flooded by those not really worthy of the title.

The trust crisis from the bottom and the top

The easy presumption here is to presume that the trust crisis will be led by those at the bottom. Anyone can put their hand up and say “I’m a social media expert” in the same way every personal network has someone who can install Windows and run a virus scan calls themselves a “computer expert.” That’s only part of the picture though, because the trust crisis will also be driven by those at the top of the chain.

Take for example Australia’s first “Twitter conference” being held this coming November. The one thing that struck me about the makeup of the conference is that it consists nearly entirely of journalists. Each participant is eminently qualified in terms of their skills as journalists, but apparently this now means they’re Twitter experts, or in a broader sense social media experts. It’s a classic case of Johnny come lately; the Australian media was late to the Twitter party, and although some have embraced it, that doesn’t mean that they’re now all Twitter experts by any stretch, let alone social media experts.

To be fair though, I may have singled out the “Australian Twitter conference” but they are far from alone. The gurus of old media are desperately trying to reinvent themselves across the globe, and jumping on the social media bandwagon is an attempt to reinvent themselves as something in and interesting. Their only qualification is one of power, not expertise in their newly chosen speaking field.

Those that do, and those that don’t

The other proliferation in the “social media expert” space is those who can talk the talk, but have never walked the walked. Across the anglosphere there is a full time speaking circuit for those game and willing…and by extension that precludes much of the time those who are actually working in the space, as opposed to being available to talk about it week in, week out.

There are some greatly knowledgeable speakers in the space who haven’t really built anything of note, and I can think of a couple of great speakers in Australia and the United States who I’d happily recommend to others (and who I enjoy listening to myself.) But for every one who is truly proficient, there are those who’s influence arch extends only as far as their ability to bullshit their way through a talk to a crowd of people who are 10x more clueless then they are.

The problem here is that in many cases the implied trust is flawed: the audience expects to hear true experts, but that trust only extends as far as the audience’s knowledge level; once you get more knowledgeable audiences, those not really qualified to talk will be caught out. As a fundamental, that has to undermine trust, and once that stretches out across many, the whole sector suffers a trust crisis that even those qualified may be caught up by.

Conclusion

In noting the forthcoming crisis in trust, I profess to have no solution to it. The market has demand, and ultimately supply comes forward to fill that demand. Those that do by nature have little time to talk about what they are doing, and those that don’t have all the time in the world. For the short term, the market remains dumb to the fundamentals, and those not worthy of the title can and will make hay while the sun shines. Beyond that, who knows?

The market is not infinite, and yet the interest in the space has strong growth ahead of it. Eventually though the trust crisis will come, and the growth curve will head south; the market will naturally clean itself up, and maybe, just maybe the cream will be left standing at the end.

This is not supposed to be about the audience coming to hear wisdom from those on the platform. The person sitting next to you should often have as much to offer as the invited speakers.

As such, we always include “audience roundtables” and other approaches that help participants to have conversations, building their own insights from the ideas proposed by the speakers and panellists. At Future of Influence Summit, we will step up a few notches the video interaction between the audiences at the San Francisco and Sydney events to again create something unique in terms of participation.

As importantly, we have a quite extraordinary audience line-up in both locations. Without checking with everyone we can’t generate a list of star audience members, but be assured it matches the calibre of the invited speakers. At a highly participatory event like this, the quality of the audience is what makes it exceptional. Based on who we have coming, we can expect it to be spectacular.

I hope you can be part of the Future of Influence Summit experience!

Once Future of Influence Summit finishes in San Francisco on August 31 at 6pm, we will go to the nearby 111 Minna bar for drinks and the After Party. The conversation on where influence is going will continue with a little lubrication

See here for location and full info on 111 Minna

If you’re in San Francisco you really should go to the Future of Influence Summit itself – that’s where the REAL fun will be had – but if for some reason you cannot make it in the day, be sure to come to the After Party!

There will be some other things on at 111 Minna – say you’re there for Future of Influence when you arrive and look for the Future of Influence Summit logo as above.