The Way of the Widget in the Age of the Social Web

As the Internet's newest way to connect brands with consumers, widgets have officially arrived. These portable applets appear on blogs, websites, and social networking sites like MySpace and Facebook. Offered by third-party developers as embedded Flash (.swf) objects, the self-contained badges allow page owners to personalize their sites with photo slide shows, music playlists, games, and other content. Widgets also allow companies to engage their audience with compelling content while also branding a company and/or product. Recent news of photo-sharing widget pioneer Slide's $500 million valuation gives us more than a clue to the huge potential of these little attention grabbers.

Because widgets are easy to install, the barrier to adoption by page owners is low. At the same time, social network users tend to engage favorably with widgets because of the more personalized nature and entertainment caliber of the content they contain.

How broad is the audience for widgets? According to eMarketer, 69 million adults and15 million teens will use social networks in 2008, representing nearly half of all adults online and more than three-quarters of Net-using teens. Virtually all social network users come across widgets in their online social travels, because widgets are everywhere. More than 15,000 third-party applications have been developed for Facebook alone since the network began allowing them in May 2007. Overall, some 100,000 developers are working on widgets and applications worldwide. For these and many other reasons, widgets are spreading like wildfire.

Yet today, only a faction of widget traffic – perhaps as little as .5% – is being monetized in any way. eMarketer estimates spending on widgets and third-party applications will represent just 2.5% of total U.S. online social network ad spending in 2008. The gap between widget opportunity and reality may very well lie in the reimagining of branding in the age of the social web.

Where once brands spent hundreds of thousands, even millions of dollars, enticing consumers to come meet them on their own websites, widgets offer a completely different path for connecting with Internet users on their terms and also enabling them to share the experience. With people spending more time on social networking sites like MySpace, Facebook, Friendster, and BEBO, the widget path could become the best online path for intersecting brands and consumers.

The behind-the-scenes third-party developers providing widgets and integrated applications for Facebook users are literally re-creating the web. Personalization of profiles with widgets and micro-applications has become standard procedure on social sites. Opportunities to engage with users through these distributed mechanisms – and even to monetize these interactions through new advertising and e-commerce models – are only now emerging. It remains to be seen whether or not distributed widgets can work as a long-term business play.

The Wow Factor of Widgets

What is the value of these non-traditional applets in terms of brand building? Most significantly, widgets and other integrated applications offer a platform for wider brand visibility, customer interaction, and consumer engagement. Unlike traditional applications and websites, which offer a single point of contact with customers or users, widgets distribute customer touchpoints across the web, increasing your brand’s visibility.

Widgets break the broadcast model, and that is their Wow factor. Customers are no longer forced to interact with brands on brands’ terms – on corporate websites, or through annoying banner and pop-up advertisements. Through distributed widgets and applications, brands can become part of the users’ already-in-progress online experience. Forget push or pull marketing – widgets offer a way to market ubiquitously, as part of the online discovery process that appeals to users of the social web.

How Scattered Will We Get – The Death of the Corporate Website?

As the use of micro-applications and widgets continues to spread, their value and return-on-investment becomes more clear. Certainly there are cost savings to be gained by distributing marketing programs on social networks rather than launching and maintaining promotional sites hosted by the organization. For smaller organizations especially, social networks offer the opportunity to reach numbers of potential customers that would be cost-prohibitive to attempt using traditional marketing techniques.

This begs the question: Will brands even need their own websites in the future? Some have said that the time will come when reaching customers on the social web is the default. The cry to “down the walls” and embrace the distributed web is compelling. While it may make sense for some companies to move their marketing efforts to a completely distributed model that interacts with customers as they traverse the web, for others, the use of widgets and micro-applications will serve as a welcome addition to a broader marketing strategy.

The Challenges of Going Social

Before a company decides to spend its entire marketing budget on widgets, it is worth considering what may be lost when the brand experience is distributed to social sites across the web. Although the cost and reach benefits of widgets and micro applications are clear, brands do give up significant control by parsing out their customer-interaction points to social networks.

Not only do companies pass incredible traffic flow to primary destinations like Facebook and MySpace, but they also pass along to these sites the opportunity to capture valuable customer data that they may never have access to. New strategies and tools are needed to harness the data and intelligence that is ripe for the picking.

While widgets offer an inexpensive way to create a presence with customers, techniques for monetizing micro-applications have a long way to go. The CPM rates on larger social sites are not proving to be promising. The “noise” and activity levels have become so high, and the competition for creating a compelling user experience so fierce, that the brand experience risks being diluted. By spreading micro-applications across distributed sites, already-low CPMs are often reduced even further.

Opportunities for Monetization

Over the last year, many have called this new opportunity for marketing, revenue generation and branding “the widget economy.” Not only is it an opportunity for empowering brand ambassadors, it represents a new level of online engagement and referrals. Monetizing widgets and their hosts is the natural, but not only, next step. Captivating and cultivating an audience can also be priceless.

Trends and Caveats

In assessing whether or not to embrace widgets and micro-applications as part of your larger brand strategy, consider the following trends:

• User-based targeting is coming: CPM and monetization opportunities will likely increase as companies are able to make media buys based on the specific users viewing the content or interacting with the widget rather than based on the property it sits on.
• Brand affinity is changing: As the understanding of brand affinity on the social web grows, organizations will realize that the proximity of brand to customer no longer depends on destination – users of the web are Everywhere at Once.
• Expectations are setting themselves: In the future, young people who cut their teeth on these social sites will be more in tune with the unique micro-brands they associate themselves with, rather than associating with a big brand.
• Uber-customization makes it personal: As the social web continues to transform advertising, it will no longer be about customers going to a website and seeing an ad. It will be about customers going to a website and seeing specifically what is related to them.

It’s Anyone’s Guess

Without a crystal ball, it’s anyone’s guess on how the social web will play out. No one would have predicted MySpace’s rise over Friendster. And no one would have predicted Facebook’s rise over MySpace.

In the world of widgets there is but one absolute: First Mover Advantage Rules. If you decide to launch a widget as part of your brand-building strategy, the only must-do is to launch early. Your results will be remarkably better if you’re one of the first 50 companies to launch a cool game inside of Bebo, rather than one of the first 100,000 to launch that same cool game in MySpace.

For brand-based companies looking to improve their brand experience, the social web holds tremendous promise. Brands can leverage emerging technology like widgets and micro-applications to engage and dialog with users. Distributed widgets and applications offer brands a web-wide presence, and an opportunity to meet and interact with customers in ways that build brand visibility and affinity.