Why Widgets Don't Work

Marketers are mistaken if they think these easy-to-forward applications will help them make deep inroads to the MySpace generation

Editor's Note: This is one of two perspectives on the marketing usefulness of widgets. Check out the counterpoint: "Widgets: The Future of Online Ads."

We knew widgets had gotten overhyped when we learned of the launch of a Widget Marketing Assn. When a marketing tool leaps from obscurity to cottage industry with its own trade group in just a few months, a bubble is surely brewing. Deep in your heart, dear marketer, you know this is true.

It didn't take long for the fad to take flight. Widgets are small, easy-to-forward bundles of software that let users play with graphics and information online. Apple (AAPL) included a version of widgets in a 2005 operating system update, and suddenly Mac computer users could easily check weather forecasts or stock quotes from little flashy icons. The marketing world really began to take notice in May, 2007, when Facebook announced any software coder could easily build widgets for its vast online social network.

Ah, the dream! Marketers suddenly had a new way to reach the millions of computer users, especially desirable young consumers, who spend more time inside Facebook and other social networks than traditional, stodgy Web sites. The idea was simple: Create a cool widget, add your advertising message, and hope users pass them virally to all their friends.

Receive, Hunt, Do

But marketers are making a big mistake if they think widgets will help them build deep inroads with this demographic. To understand why, consider the mindset of the people spending time spiffing up their profiles and socializing online.

They are doing, not hunting, and you'll have a hard time reaching them when they're in this mode. There are three modes, or mindsets, people take on when they use interactive communications: receiving, hunting, and doing. You receive a phone call. You hunt for a book at the library. You take an action—say, writing an article such as this.

The history of the Web is a transition between these phases. Back in the mid-1990s, most people were happy to "receive" information on the Web. Content (meaning Web sites) was king, and so AOL, EarthLink (ELNK), and marketers responded by trying to create "sticky" Web portals where people would spend long stretches, returning often.

By 2000, the Web expanded, and millions of Web sites meant we all got lost. So consumers entered "hunt" mode, and Google (GOOG) arose as a powerful search engine helping us rapidly find stock quotes or sneakers for sale.

But "do" is where the Web is headed in 2008. Millions of people—mostly the under-35 demographic—have signed up for Facebook, MySpace (NWS), and Twitter. They are leaving single Web sites behind and becoming immersed in social media. Now Internet users can create, contribute, network, edit, share, even steal online, and pass it to hundreds of friends or colleagues. Google Docs helps you edit spreadsheets; Mint.com watches your bank and credit-card balances; Twitter lets you track the thoughts of friends.

Diversion vs. "Core Conversation"

The entire mindset of a person engaged on MySpace or LinkedIn is different from that of a hunter on a search engine. A Google user is walking into a store. A Facebook user is walking into a bar.

A clever widget is nothing more than a jukebox in the back of the social throng, a nice diversion, but really not part of the core conversation. Sure, some widgets give users something to do—"here, play with our virtual sheep-throwing game and pass it to your friends!" But there's a difference between giving consumers a Frisbee and getting them to listen to your pitch or remember your name.

This is a crucial distinction. If consumers don't remember you, they won't buy your product. Here's a test. If you use Gmail or another Web e-mail service, it usually inserts little text ads on the side of your computer screen as you type away to friends. Close your eyes and try to think of just three ad messages you've seen while e-mailing during the past year. Can't do it? That's because the ad reached you while you were doing, not hunting.

Widget Allure

The allure of widgets is powerful for marketers because they hint at the holy grail of marketing: that they'll go "viral"—imagine your message passed around among millions of people without having to pay for all those impressions. Author Seth Godin calls this an ideavirus; journalist Malcolm Gladwell calls it a tipping point. The idea sells lots of business books; few have figured out how to do it.

Widgets can be a useful extension of your brand, but only if included in a broader portfolio of Internet outreach. The days of having a single Web site are gone, because people are spending much of their time in "doing" mode. Widgets, blogs, online video, public relations, and microsites are all ways to extend your reach online. But you can't rely on a single application, especially since there are now more than 14,000 competing widgets on Facebook alone.

Widget Worthiness

We suggest four simple tests to see whether widgets are right for you:

Will your widget reach hunters and not doers? Hunters still exist online; that's why Google pay-per-click campaigns continue to work well. The trick is finding the audience when they are in that mindset.

Will your viral application reach the right target? A recent "viral video" by the British skin products company Elave showed nude people walking around talking about eczema medication. Provocative? Yes. Viral? Of course. But we're certain the ad reached the wrong demographic: Young men looking at risqué models, not women shopping for skin ointments.

Does your product lend itself to engaging consumers? For example, if you sell mortgage refinancing, it may make sense to launch widgets that give users a chance to sort through rates with an interactive tool. The key here is getting people to engage with your core message, not just the clever widget.

Can you launch a widget even if it doesn't go viral? If you can afford to spend thousands of dollars on a widget application and have it go nowhere, fine. But when it comes to turning ad dollars into new customers, the widget may be no more effective than any other form of advertising.

A few weeks ago, we spoke with a sales representative at an Internet advertising network and asked how his clients were using widgets. He said click-through rates were down, so some clients were now placing Internet banner ads to drive traffic to the widget applications. Hmm, we thought. If you need to run ads to get people to your ads, maybe you have a problem.

Before it's here, it's on the Bloomberg Terminal.