Wiley Widgets Popular, But What About Profits?

Nearly everywhere you look online lately there's a widget. Just go to Facebook or MySpace or any type of social site and you're bound to come across one. Indeed, according to Internet market researcher comScore, in November 2007 nearly 148 million U.S. Internet users had viewed a widget.

But just because widgets are popular and cool, does that mean you need to jump on the widget bandwagon? And do branded widgets (which often function as ads or are ads) increase traffic and sales for online businesses? Ecommerce-Guide.com did some research and spoke with a senior analyst at comScore to find out.

For those who have yet to use the mini-applications, you may be wondering: what, exactly, is a widget? It depends, depending on whom you ask. That's because the term "widget" is pretty generic. ComScore, which developed a service called Widget Metrix last year, to track widget usage across the Web, originally defined a widget as an embedded Flash (.swf) object, but recently expanded the definition to include JavaScript files and Facebook applications and has plans to measure Google Gadgets in the future.

Most of the widgets out in cyberspace right now — at least the most popular ones according to Widgetbox, which bills itself as "an open Web widget marketplace and syndication platform" — were developed as a way to add a little fun to and personalize social networking sites, blogs and personal pages.

They allow visitors to play games (Widgetbox ranks Super Mario and Tetris as two of the most subscribed to widgets), do silly things (like throwing sheep) and/or share favorites (photos as well as music, book and film recommendations — which comScore rated as the most viewed types of widgets). More and more, however, social and e-commerce sites, as well as developers, marketers and advertisers, are looking to widgets to help grow traffic and sales. The question is, can they?

Extend Your Brand, Maybe Even Increase Sales
ComScore Senior Analyst Andrew Lipsman and others believe that widgets have value but do not see them as huge moneymakers — yet.

"The purpose of a widget is it allows you to distribute content, not just on your own site but on other sites," explained Lipsman. "So if you have content that is interesting to people, you can get your brand, your name, out there beyond your own site, which could indirectly or directly lead to sales." For example, Forbes.com has a branded "stocks to watch" widget, which people can download for free, that it is hoping will bring additional traffic, and ultimately advertising, to the site.

Similarly, hundreds of online businesses (or businesses with an online presence) have turned to developers like KickApps to create "viral widgets," basically branded widgets with links back to the Web site that encourage viewers to "steal" the widget, thereby spreading and increasing brand awareness and links.

And some widgets, like Southwest.com's DING!, which provides users with live updates on airfares and deals for up to 10 cities/airports, are not only spreading brand awareness but generating revenue for the parent site. According to a study conducted by comScore, Yahoo! and Southwest (to be published this month), people who downloaded DING! actually spent more money on Southwest.com.

In addition to widgets like DING! Lipsman sees promise in third-party applications/widgets like RadicalBuy, an online classified service, which he described as a cross between Craigslist and eBay, that allows users to buy and sell items directly on Facebook, which has more than 60 million active users, and earn a commission.

Proceed With Caution: Widgets Ahead
While widgets are typically free for individuals to download, creating one from scratch can cost money, with the amount depending on what exactly you want to create. And having your own widget may not be right or necessary for your brand or your site, cautioned Lipsman. While younger, more Internet-savvy users are more likely to view and download widgets, older or less bell-and-whistle-seeking users could be turned off. Additionally, by monetizing widgets too quickly you could "drive away or limit potential users who see them as too commercial," he said.

That may be why at $20 million, widget ad revenue was only a tiny fraction of Internet advertising revenue as a whole in 2007, and why Lipsman cautions e-commerce sites not to abandon other forms of online advertising, like Google AdSense, just yet. Rather, he said, e-commerce sites should see widgets as "another channel that can be used for advertising and branding purposes."

Jennifer Lonoff Schiff specializes in writing content for small businesses and is a frequent contributor to ECommerce-Guide.com.

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