Wave of Widgets Spreads on the Web
Monday, April 9, 2007
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.