Entrepreneurs Experiment With Ways to Profit From Web Site, Desktop Gizmos
The standard Internet advertisement is so familiar that most people tune it out: a billboard stripped across the top of a Web site, waiting for consumers to surf by and maybe click on it.
Now a young generation of online-ad creators are pushing a newer idea: putting a brand on a mini-site so fun or useful -- a video game or a spruced-up calculator or a live sports update -- that people download it, paste it on their personal blogs or social networking sites, use it again and again and share it with friends.
It's called a widget, an old word for a 21st-century product. And it's what they make at an expanding roster of companies that locally includes Freewebs of Silver Spring and Clearspring Technologies of Arlington -- start-ups founded in the past two years.
"Advertisers are no longer wanting people to click on a link to buy something," said Haroon Mokhtarzada, Freewebs' 27-year-old founder and chief executive. "Now they're wanting people to engage in a neat product while they build brand equity."
Though widget technology is too new to be turning a profit, some high-profile investors apparently see the potential. Last month, Clearspring pulled in funding from AOL icons Ted Leonsis, Steve Case and Miles Gilburne along with Bethesda-based Novak Biddle Venture Partners, bringing the company's total financing to $7.5 million. Mark Jung of Fox Interactive Media, which owns a dozen Internet properties including MySpace.com, became chairman of the board. And in one of last year's largest local venture-capital deals, Freewebs got $11 million from Novak Biddle Venture Partners and Core Capital Partners.
"The new role of companies is not to produce content and spoon-feed it to users," said Hooman Radfar, 25, the founder of Clearspring. "Their new role is to create tools people want and push them out so people can use them however they choose."
On the screen, most widgets resemble a tiny window on the user's desktop or Web page, similar to picture-in-picture television sets. What they do, and how they promote their clients, varies.
Purina has created a tiny box that alerts pet owners about good dog-walking weather. Last month, Hewlett-Packard offered a downloadable March Madness scoreboard that continuously pulled down college basketball tournament results. Twentieth Century Fox is promoting "Live Free or Die Hard" with an iTunes player that also blurts out quotes from the movie.
Such promotions offer advertisers a couple of distinct advantages: Once dragged onto personal Web pages, widgets tend to live on longer than traditional ads -- not necessarily because users care about the brand, but because they like the interactive feature they downloaded it for. And friends who see the widget on someone else's blog or MySpace profile are a self-selecting group of consumers. Much of Clearspring's business is tracking the widgets as they spread across the Internet -- providing its clients with information about a potential customer base.
At Freewebs, the original business was helping people build their own Web sites. But the founders soon realized they could leverage their 18 million visitors as a launching pad to spread widgets. Now Freewebs has pumped out a Reebok widget that lets you design your own sneaker and a zombie-killing video game to promote the movie "Ghost Rider."
"This is more about consumption rather than just about publishing on a Web page," said Jonathan Strauss, Yahoo's product manager for widgets. "Advertisers see this as a unique opportunity to have a persistent presence on valuable real estate."
Yahoo first invested in widgets in 2003 when it worked with the photo-sharing site Flickr to create personalized slide shows that remain on users' desktops or Web sites. In 2005, Yahoo bought Pixoria, a start-up that created the widget maker Konfabulator. Now Yahoo has more than 4,300 widgets in its gallery, including one from Target that counts down the days until Christmas and others that show live webcam views of Hong Kong traffic, Australian beaches and New York City's Greenwich Village.
Meanwhile, a slew of other widget companies have cropped up, though not everybody uses that word. Blog publisher TypePad now offers "blidgets"; home-page creator PageFlakes lets people incorporate "snippets" into their personalized pages; Netvibes, Snipperoo and YourMinis host widget galleries.
Apple and Microsoft have desktop tools in the form of constantly updating stock tickers, news feeds and airline schedules. Google says its fastest-growing products are "gadgets" for its personalized start pages, or Web sites that allow users to customize the displayed information.
Some of the most popular widgets on the Web are made by amateur developers or have user-generated content -- YouTube video screens on Web pages, for example, or Backwards Bush, whose widget counts down the days, hours, minutes and seconds left in the current presidency.
Chris Seline, founder of District-based Searchles, a social bookmarking site that organizes links, videos and articles for its users, is creating widgets that let people access certain online content without having to visit the actual Web site that provides it. By offering convenience, he said, he keeps his company's name on people's screens.
"It's contagious," he said. Widgets "are the glue between people and the content they want."
There are problems, though. Snazzy interactive widgets can guzzle computer resources, which will slow down page loads. Some skeptics say Web sites could become so cluttered with widgets that they cease to be effective.
Advertisers are leery of paying top dollar for widgets because their influence on consumers is unknown. And the longer a popular widget lives online, the less incentive there is for an advertiser to pay for a new one.
"Brands need to be where their consumers are," said Eric Weaver, a Seattle branding consultant with the firm Sound Principles. But he said that not all marketers will buy into the widget idea. "It's just one more way to have your brand out there, but it's not going to convert anyone. If I have a pizza-related widget on my desktop, am I going to want to buy everything from Papa John's? Probably not."
To introduce more advertisers to the idea, Freewebs throws a free widget into every online campaign it designs, so clients can "test the waters," said Christian Cunningham, the company's vice president of advertising.
A snag in the business model is that no one has quite figured out how to make much money off widgets. Cunningham said he expects a pricing strategy will emerge within the next year as advertisers become more comfortable with the idea.
"The economy is still being shaped," said Clearspring's Radfar. As in any other online venture, "we have to get volume first, then we'll figure out how to make money."
The companies may also have to clarify what qualifies as a widget before Internet traffic analyzers, such as Nielsen NetRatings and ComScore, monitor their penetration into online communities. Media companies, online retailers and big advertisers often use such measurements to target their audiences. Widget pioneers, however, say the new mode of advertising will make counting page views and unique visitors obsolete, since widgets connect users to content without opening additional browser windows.
Gregory Dale, chief technology officer at ComScore, said the firm is not yet tracking widgets, "but once anything gets critical mass, it will be measured."
In the meantime, these widgets -- or gizmos, snippets, doodads or gadgets -- are not replacing the traditional Web sites of the companies promoting them, said Maurice Boissiere, vice president of client services for Clearspring.
"The point is to see that there's value in the widget itself," he said. "It's the new cash register."