By Catherine Holahan, Spencer Ante, and Heather Green
Dan Strauss is at the forefront of the Web's next revolution. A vice-president at Fox Interactive Media , Strauss is on the team that develops MySpace widgets, those small applications that enable users to bring content from all over the Web to their own personal social-network page or blog site. For Strauss, widgets promise to encourage users to spend more time on their MySpace pages and give marketers yet another way, and reason, to work with News Corp.'s (NWS ) leading social network. Silicon Valley has gone wild over widgets, convinced that they are changing the basic architecture of the Web by allowing media companies, software developers, and retailers to cut up their content and distribute it widely around the Web.
WIDGETCON GENERATES MARKETING ALLIANCE
The problem for Strauss is that many businesses still don't understand what a widget is—let alone how or why they should pay for them. And the widget makers don't understand why MySpace , which gets the idea of widgets, won't let more of them put advertising and e-commerce widgets on its site. "It's a frustrating conversation both internally and externally," says Strauss.
This week, Strauss and other widget creators gathered in New York's Tribeca Cinemas to discuss how to educate business about the benefits of widgets and build a market around them. The July 11 WidgetCon conference is the brainchild of Freewebs , a service that enables users to create their own free Web pages and fill them with widgets. One of the first announcements to come out of the conference was the formation of a widget marketing association. The members include widget makers Clearspring Technologies , RockYou.com , and Gizmoz , and measurement company comScore (SCOR ), among others.
A chief job of the new association will be to get non-techies to understand what a widget is and why it's important. At its simplest, a widget is a piece of software that can be pasted into a blog or MySpace page. Ever see a movie trailer in someone's blog? That clip is a widget (see BusinessWeek.com, 7/23/07, "The Next Small Thing"). Widgets are not entirely new. The content on Google's (GOOG ) YouTube and Yahoo!'s (YHOO ) Flickr, after all, were widgets before techies began using the term. These two pioneering services took off because they let people splash photos and videos of a trip to Paris or a dog riding a skateboard on their personal sites.
A RADICAL NEW DISTRIBUTION MODEL
Widgets are important because they fundamentally change the way content is disseminated on the Web. Instead of going to a Web site to see a video or buying something from an online store, users can do those things from the comfort of their own personal Web page. "Web 2.0 isn't just about user-created content," says Dave Morgan, CEO of advertising company Tacoda . "It's about user-distributed content. Widgets let you take the content you created, or someone you don't know created, or The New York Times created, and distribute it."
Just as blogs helped create new influencers who now put their mark on society's basic debates about politics, technology, or science, widgets are beginning to pinpoint new power brokers. The NBA stumbled across this phenomenon with its widgets. The NBA site was a key place where users could pick up their scoreboard and player widgets to post on their own site. But other sites, such as the fan community site Celticsblog, turned out to be hubs for users to grab the NBA's widget as well. These viral hubs can be so powerful that they can boost the number of a times a widget is viewed by 50%, says Hooman Radfar, co-founder of Clearspring, a startup that creates widgets for marketers and advertisers including the NBA, Sony (SNE ), and NBC Universal .
The new widget distribution model means companies must worry about more than just their Web page. They have to get their content on other people's Web pages. Andrew Stachler, director of interactive marketing at Warner Bros. Pictures , says he is more worried about widgets than a movie's destination site. "We are really looking at the Web as a platform as a whole," says Stachler, who spoke on a panel at WidgetCon. "Our site is less and less important."
Widgets are changing the distribution model for e-commerce companies as well. Instead of driving buyers to your site, you can bring your store to them. Want to buy a movie ticket? Do it from your Facebook site. Interested in buying a new book? Shop Amazon (AMZN ) from your blog. Max Mancini, the head of disruptive innovation at eBay (EBAY ), has been talking seriously about widget distribution for the past 14 months. EBay now has a host of widgets, created by both eBay's own people and by third-party developers, that enable users to shop for items on eBay from their own personal Web page. "Now is the time to deliver eBay off of eBay," says Mancini. "What we want to do is engage buyers when they happen to be at some other Web site."
WHAT'S A WIDGET WORTH, ANYWAY?
A second job of the widget marketing association will be to define the standards around which a widget market can be created. That requires answering some key questions: How should marketers pay widget makers for their creations? And how can they judge when a widget is successful? Some suggestions offered at the conference include factoring in where the widgets appear, how many people post it on their sites, and how often the widget drove sales.
Judging success will require new measurements. Today, companies like Clearspring can tell marketers how many times a widget has been viewed and where the widgets are being published. Advertisers, though, are already clamoring for more metrics, such as what type of ad works best compared to others and how widget audiences can be consolidated with other types of traffic. The Internet Advertising Bureau has set up a working group to establish standards for marketing on social networks. "The standards of how to measure widgets are going to evolve," says Freewebs Chief Operating Officer Liddy Manson.
After deciding how to pay the widget makers, the association will also have to decide who else should be compensated. For a widget to take off, social networks and blog-hosting companies must allow it on their sites. And there are reasons for sites not to want them. While widgets give users of social networks reasons to spend more time on a site, they also can distract from the network's own advertisements and user experience. "It certainly presents an interesting dilemma for the likes of MySpace and Facebook," says Steve Grimes, vice-president of NBA Interactive , which this winter created hundreds of widgets that provided stats and updates on individual teams and players. "When you open up a platform for folks to express themselves and marketers do so, do you get a piece of it?" (see BusinessWeek.com, 5/22/07, "Sharing the Widget Wealth"). Some widget makers are already discussing revenue deals with social networks.
Then there's the question of whether to compensate the widget users. Some e-commerce widgets that turn a user's site into a host for a storefront do pay users a share of the sales they help generate. Most of the time, however, the widget itself is considered the reward. After all, in a widgetized world, the audience is willingly choosing what content they want and where.