Widgets: From Hype to Hits

Last year, Newsweek predicted that 2007 would be "the year of the widget." This July, developers gathered in New York for Widgetcon, a conference devoted exclusively to widgets. Whether or not Widgetcon fulfilled Newsweek's prediction, it signaled that widgets were more than a passing fad on the Web.

Widgets first appeared as mini-applications for computer desktops. The Web versions, which are derived from HTML, JavaScript, or Flash code, can be copied and placed onto Web pages, blogs, and social-networking profiles. Alternately called gadgets or "blog bling," they offer an easy method for producing viral content.

Facebook accelerated the widget craze by introducing its own platform for developers to create applications, modules similar to widgets except that they operate solely within the social network. As widgets have grown in popularity, galleries as well as development tools have emerged to aid in finding and creating them. Slide and RockYou are among the leading developers for widgets. Companies such as Widgetbox, Clearspring, Gigya, and Musestorm offer services for marketers and developers. Others, including Widgetbox and Google (NASDAQ:GOOG), host directories of widgets for site, blog, and profile owners.

Slide and RockYou quickly gained a large presence by developing multiple apps, many not related to their core multimedia slideshow-building services. Other companies' applications for Facebook, most notably those of Flixster and iLike (for film and music recommendations, respectively), helped their main sites skyrocket in membership and activity. Two weeks after its launch, iLike's Facebook application registered three million users, helping to spur average growth of 300,000 new users per day on iLike's central site.

If the quick growth of Web upstarts hasn't heralded the official arrival of the widget as a credible marketing strategy, the reaction of established corporations certainly has. Universal Studios stepped from viral trailers up to multimedia widget packages, including video, audio, biographies, and plot synopses, for films like American Gangster. Adidas, which had already featured viral video in its "Impossible is Nothing" campaign, launched a Flash-powered Website and widget soliciting testimonials from users to accompany those of athletes such as Reggie Bush.

Even more conservative companies have gotten in on widgets. "When we first started, it was the biggest risk-takers: movie studios, entertainment, apparel," says Chris Cunningham, VP of Advertising and Global Sales at Webs.com, a leading Web page hosting site that also develops widgets for clients. "With companies like Procter & Gamble (NYSE:PG) and Ford (NYSE:F), we thought, 'There's no way they'll do a widget.' But now they are, and Procter & Gamble and Ford are probably the most traditional companies out there."

Widgets are not only changing the way large corporations strategize their advertising campaigns, they're also changing the metrics guiding online advertisng revision of the metrics

guiding online advertising at large. For years, online advertisers have focused on advancing click-through rates, which offer a concrete measurement of how often a particular ad actually entices someone to visit a site.

Widgets, on the other hand, provide interactivity and viral branding impressions, whereas users may never visit the campaigns site. And it may not matter if they don't.

The still-developing metrics of widget marketing include views, placements (copies of the widget code onto a page), and distribution (by domain and geographical location), but the most significant of all may be engagement. Data such as the percentage of users who click on a particular feature within a widget or the average amount of time spent on a particular widget offer valuable insight into a widget's popularity.

Even if a user never visits the widget's sponsor site, he or she implicitly interacts with the brand by interacting with the widget. Users are also more likely to copy widgets with popular features onto their own pages, thereby becoming instant marketers for the widget's sponsor brand.

In addition to their long reach across the Internet, widgets and applications also hold potential for monetization opportunities. Widgetbox's devShare offers developers 50 percent of advertising revenue from their Facebook applications. Many widget companies, including Slide and RockYou, feature networks that enable widget publishers to place advertising within their widgets. In December, Clearspring announced its in-widget ad network, making it the first full-service widget management company to do so.

Peanut Labs, a company that integrates market research surveys into online communities, approaches monetization from a different angle. It offers developers and publishers 50 percent of revenue generated from hosting surveys on applications. The surveys are integrated into the applications by allowing users to earn virtual currency, redeemable through the application, for each survey they take.

Along with allowing their publishers to monetize content, widgets also enable them to tailor this content for specific audiences. "They're a pull mechanism rather than a push. Consumers take it themselves," explains Cunningham. "With banner ads, you say, 'I want to get people back to my site,' but that's not the behavior users want to do unless it's for something specific."

In this sense, widgets exist as a strategy not only for marketing but also distribution. According to Lawrence Coburn, who founded evaluation site RateItAll.com and authors the blog Sexy Widget, widgets form part of a "hub and spoke" model for companies' online presence. "The holy grail here is a distribution service," Coburn says. Flixster's Facebook application, for instance, syncs with the main site, offering users different platforms of access to its services.

Widgets also serve as a key method of distribution for other sites. Social music sites iLike, Last.fm, and imeem allow members to embed modules for searching for music, sharing playlists, and playing songs onto their pages. Spleak Media Network's CelebSpleak allows teens to create, share, and rate short briefs (between 50-250 words) on celebrities through widgets and instant messages, which sync with each other.

Rather than visiting individual sites for different types of information or entertainment, users are increasingly designing their own online destinations -- whether blogs, profiles, or other personal pages -- and adding content from multiple sources. Startpage aggregators such as NetVibes capitalize on this trend, and widget embeds are one of their top functions. In some ways, this trend resembles a personalized, more interactive version of the Web portal, which was popular during the heyday of AOL.

The click-through is far from extinct, however. "The radicals in Silicon Valley are saying that destination sites are dead, but that's risky," says Coburn. "Facebook could be dead tomorrow. For branding, monetization, and insurance, you still need a central site."

Rather than replacing the banner ad, widgets are slowly influencing the older Web advertising strategy. "I anticipate, based on the things I've been working on with partners, that soon there will be a big move in advertising toward focusing displays on interactive advertisements," says Hooman Radfar, CEO of widget company Clearspring Technologies. Clearspring, in partnership with rich media advertising company PointRoll, enables widget publishers to make widgets appear as ads.

EyeWonder, another leading rich media ad company, also allows widgets to appear on Web pages as banner ads through its SocialWonder service in partnership with Gigya. According to Mike Griffin, EyeWonder's EVP of corporate development, widgets enhance the interactivity already present in rich media ads by "rewarding" viewers of advertisements.

"There are three phases of advertising," says Griffin. "There's the initial engagement, where you're grabbing attention, then interactivity. The ability to download the widget is the reward part. [Viewers are] taking a piece of the brand that they can revisit as often as they want."

July's Widgetcon offered preliminary evidence of widgets' impact on marketing. At the conference, Cunningham introduced the Widget Marketing Association, whose goal is to define standards and key metrics for widgets in order to serve customers as well as online research firms such as comScore. In addition to Webs.com, the association's members include Widgetbox, RockYou, yourminis, Gigya, Google, and Slide. Eventually, says Cunningham, he hopes to see the creation of a universal ecosystem online for widgets.

Such an ecosystem may be well on its way. In response to Facebook's application platform, Google announced its OpenSocial platform, which allows developers to create widgets for all its member sites using a single API, greatly simplifying the task of programming for multiple sites. OpenSocial members include RockYou and Slide as well as social networks such as Ning, Google-owned Orkut, and the biggest of them all, News Corp.'s (NYSE:NWS) MySpace. Google's success in enlisting these members, particularly MySpace, fueled speculation that OpenSocial would overtake Facebook as the preferred widget ecosystem. OpenSocial does not yet, however, allow for sharing widgets across multiple sites, limiting its distribution potential.

For now, OpenSocial and Facebook will most likely serve as complementary platforms for developers and advertisers. Nonetheless, the competition between the two demonstrates that over a year after the first pronouncements of the "widget craze," the appeal of widgets not only remains intact but also continues to grow.

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