image Companies have been building ways to establish authority and credibility online since the beginning of the web.  Yahoo started life as ‘Jerry’s guide to the world wide web’, a site where Yahoo founders David Filo and Jerry Yang lent their authority to what they viewed as the best sites.  Google’s link based algorithm did the same thing, but scaled better because it was automated.  Turning from search to commerce, one of ebay’s great innovations was the supplier ratings system which put enough trust into the system for people to buy from other people they didn’t know.

More recently a lot of the innovation seems to be around looking for ways to lend authority to entities rather than content – entities can be people or businesses (often small businesses).

On the small business side reviews and recommendations are the most obvious way to extend the ebay concept to entities like restaurants, clubs, bars and other local businesses, and for the last couple of years a number of companies have been doing that with varying degrees of success – e.g. Yelp and Qype.

Where things are starting to get exciting now is a focus on people.  A couple of weeks back Fred Wilson wrote about a UK company called Peer Index which is getting started in this space with an algorithm which establishes authority by analysing social media activity to determine the extent to which people are listened to (Azeem Azhar founder of Peer Index is a friend of mine).

The underlying activity which is being measured here is sharing of links and I’m writing this post this morning after reading on Techcrunch that sharing widget company ShareThis have started measuring social reach by tracking the number of times a link is shared AND the number of times it is clicked.  Incorporating data on clicks is a good step as to my mind a link that is shared and clicked has a lot more significance than a link that is merely shared.  (ShareThis is a DFJ Mercury company.)

Facebook’s Like button is also all about establishing authority – in this case via crowd sourced data.

So where is all this headed?

It seems to me there are parallels with the online advertising world.  There is an increasing amount of authority related data swilling around and companies that have the traffic to help create more data will be in a good place (e.g. Facebook and ShareThis), but perhaps the most value will accrue to those that build services off the back of algorithms that crunch the data to tell us something useful (e.g. Facebook and startups like PeerIndex).  I also think that this data could be profitably incorporated into ad targeting services.

To close I’m going to pull out a couple of interesting facts that ShareThis found.  Firstly more links are now shared through Facebook than over email (45% of the total compared with 34%, Twitter is in third place with 12%), but secondly email links are much more likely to be clicked on than Facebook links (91% chance of click through on email compared with 80% on Facebook).  This suggests a difference between the way people view content shared between the two services which is relevant for authority calculations.  This data is from the Techcrunch post I also linked to above and is un-corroborated.  The click through rates seem a little high to me.

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