I’m not sure what it is about Klout that keeps me coming back. I tell myself that as a digital marketer/analyst that I need to monitor the newest trends in the market, blah blah blah. But every time I interact with Klout, they find a new way to abuse me, leaving me feeling dirty for having looked to see what value they assign to me based on the data that I willingly provide.
Klout Perks - Send a lot of Tweets, get free sh-!
In a previous post on Klout, I wrote that “Klout Perks” don’t seem like the most effective way for a business to market. Especially given that fact that these advertisement ‘perks’ are often locked when a user clicks on them (and in some cases, weren’t ever available…). Showing a customer an offer then saying “just kidding” is nothing more than a low stakes bait-and-switch, and a way to sully brand reputation.
That said, trying to get “influential” people using your goods is a tried-and-true advertising technique, and one that companies pay handsomely for. You see it in car commercials, luxury goods like watches and clothing, and even home goods retail. So again, I can’t fault large companies that are testing into new markets, as top-line growth can often be hard to find (and expensive!)
But once you start moving into investment offers, venture capital, and startups, now you’re moving into a whole other world of due diligence…
I qualify for “Wahooly”…what’s that?
After signing into Klout this most recent time, I see that I now qualify for a perk from Wahooly, which from the banner ad seems to be some sort of influence-peddling for equity shares in startups. WTF? Equity to people who’ve never met the founders, just that their Klout score is above 35!
Rather than flex my MBA muscles on the value of equity in unknown companies, I decided to just Google ‘Wahooly’ and see what comes up. One of the results that popped up was from Ad Age, an industry publication I generally trust. Imagine my surprise when I see the lede:
Set to Launch in January, Wahooly Walks a Grey Area In Securities Law
Hmmm, nice partnership you’ve got going here Klout…interesting that you think I might be interested, or at the very least be able to help.
Wanting to know more, I dug farther into the article to find these two gems:
…But according to Linda Goldstein, chair of the advertising, marketing and media division at the law firm Manatt, Phelps & Phillips, the fact that the [equity] stakes have a potential future value constitutes a material connection that would make them subject to the regulations.
“If you’re an equity stakeholder in a company, I can guarantee that the FTC is going to think that’s a relationship that needs to be disclosed,” she said…
…Wahooly is looking to structure itself like a venture capital fund, in which it would be the sole shareholder and represent the interests of its users, and thereby avoid registering itself and the startups it represents with the Securities and Exchange Commission as public companies…
However, the SEC has a history of cracking down on so-called “free stock” offerings that seek to be exempted from registration on that basis.
After reading the Ad Age article, I looked to see what disclosures were presented on the Klout website, similar to something like this:
“Your newest Klout perk may require your pursuit of legal representation. Please consult a financial adviser, lawyer, and anyone else that may be relevant before accepting this offer”
Why am I not surprised there aren’t any?
Key to investing success: Stick with what you know
I’m sure that it goes without saying that I’ll be passing on this newest “Perk”. As much as I like money and enjoy arguing the merits of different legal interpretations, I need to talk with the Federal Trade Commission and the Securities and Exchange Commission like I need a kick in the groin.
And yet after all this abuse, I don’t delete my Klout account. Maybe I DO need a kick in the groin…