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It wasn't too long ago that we were told widgets were the marketer's recession survival tool and that Facebook's application platform, which allows developers to build widgets for the social network's users, heralded the ushering in of another "new economy."

My how quickly times change.

Users have shown widget fatigue, advertisers haven't embraced widget marketing with huge budgets and the economy has reminded everyone that cash trumps hype.

In a wonderful piece entitled "Widget makers get a makeover," News.com's Stefanie Olsen details the woes of the widget market, starting off with a blunt observation of reality:

"For makers of widgets--modest little pieces of software that let people do things like play games, annotate photos, or send 'pokes' to each other on Facebook or MySpace--it seems the buzz has turned to a worrisome hush."

She notes that, despite the large funding rounds pulled in by widget makers Slide and RockYou earlier in the year, widgets have fallen out favor with once-enthralled VCs.

Bill Tai of Charles River Ventures states:

"We are witnessing a shift back toward balance versus the heat everyone had felt a year ago around the Facebook ecosystem that felt like it could be...the 'next new thing' with unbounded upside."

This upside certainly wasn't unbounded, as I argued the minute the hype began. It was quite clear that the potential widgets offered entrepreneurs, advertisers and investors was actually quite limited.

Olsen observes that "the word 'widget' just doesn't cut it when you're trying to sell advertising to a big-name marketer or agency" and that "it's also hard to convince venture capitalists hung over from the hype of widgets to invest."

So what are widget makers doing to cope with the fact that building widget-based businesses is proving harder than anticipated?

At a young age, they're already giving themselves a "makeover."

Tom McGovern, CEO of Snap.com, a VC-backed startup that produces widgets, now refers to his company as a provider of "personal media applications."

He told Olsen that "for the non-Web-savvy, a widget company invokes negative images of a commodity product" and that describing his company differently "doesn't sound from an investor perspective that you're investing in something that's shallow, and not indicative of the amount of time put into the technology."

Of course, relatively-speaking, most widgets are shallow and simple to create - they are commodities.

Let's be clear - BS is BS no matter how you package it and the fact that some widget makers are already feeling the need to rebrand themselves as producers of "personal media applications" and "social applications" tells you all you need to know about the state of this market.

It's also quite revealing that widget makers are apparently spending a considerable amount of time "educating" advertisers.

While this is to be expected with any new marketing "model," I find it interesting that Slide and RockYou raised large amounts of money on exorbitant valuations at a stage of their development where (apparently) they still hadn't proven to advertisers that they have something viable to offer.

Finally, I couldn't help but chuckle at the comments made by Charlene Li of Forrester Research, who pinned a lot of the widget makers' woes on confused advertisers:

"This market is extremely confusing to marketers, some who even don't understand what Facebook is. The VCs are taking a step back, but what's the reality behind this, is that it takes a long time for marketers to understand where their customers are at."

Li, of course, has been hyping widgets with her colleagues since they appeared on the scene so this is not a surprising perspective.

Note to Li and those looking for Madison Avenue money - marketers are not as dumb as you apparently think they are. While many are prone to wasting money, most aren't completely inane.

As I see it, it's not that advertisers are confused about widgets, Facebook and social media. This after all isn't rocket science

Advertisers know about these things to varying degrees and even though they may not be experts on them (but in reality, who is?), they understand the general concepts.

The problem, quite simply, is that they're confused about the value proposition.

As I've mentioned before, while advertisers can be a conservative bunch, they're not unwilling to take risks on promising new offerings.

The problem for widget makers, however, is that advertisers naturally have questions because returns are MIA and a $279 treasure map isn't going to help advertisers find them.

At the end of the day, my advice to widget makers is this - how you "brand" yourselves is important but a "makeover" isn't going to attract more business if the product isn't "made over" too.

Drama 2.0

Published 4 September, 2008 by Drama 2.0

237 more posts from this author

Comments (2)

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Damon

At www.zebtab.com we felt a long time ago that the consumer/customer would tire quickly of lots of different walled garden widgets/gadgets cluttering up their screens with different operating characteristics to learn. Most of them as you observed have no monetisation potential to attract the advertising community or deliver rich media levels that would reflect their brands well. It was clear there was room for an aggregated gadget play at a higher level that removed risk and blended advertising with content from the major media players.

almost 8 years ago

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Lucy Cooper, Chief Marketing Officer at The foundry

We are working with a number of specialist publishers (primarily B2B and STM) who see widgets, toolbars and search boxes as viral distribution tools for their brands, allowing "search" access across sub-sets of their content. This involves search capabilities across sub-sets of unstructured Web content and structured proprietary content, like jobs, databases, product catalogues etc.

A widget is just a piece of code, the value (as always) is in content - and serving the workflow needs of a niche professional audience. Advertisers may also appreciate the clean, focused affluent demographics offered by these professional niche audiences.

almost 8 years ago

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