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Widgets, March 2008

Web widgets and applications are getting far more attention than ad dollars. eMarketer projects that US companies will spend $40 million in 2008 to create, promote and distribute widgets and applications, up from $15 million in 2007. (Web widgets are the small modules of content or advertising that a Web user can add to a social network profile, blog or personal start page. Applications are widgets designed for a specific platform, such as Facebook.)

Indeed, since Facebook opened up its doors to third-party applications in May 2007, nearly 15,000 have been developed. Overall, some 100,000 developers are working on widgets and applications worldwide.

Several Internet trends influence the continued consumer adoption of widgets and applications. First, consumers want to be in control of their Web experience. Second, the number of people using social networks is increasing, and, third, they are spending more time there. Finally, media companies are breaking up their content and distributing it in multiple locations, rather than at a single destination site.

However, there are already several concerns about widgets and applications. These include so-called application burnout, measurement difficulties, distribution challenges and deceptive techniques used by some developers to increase their installation rate. The widget and application business has a lot of growing up to do before it can achieve its potential.

Based on interviews with executives from application-development companies, widget-distribution companies and ad agencies, eMarketer estimates that marketers and media companies spent $15 million in 2007 on widget and application advertising in the United States. This figure includes spending on widget and application creative development (not including fees paid to ad agencies), sponsorship of an existing widget or application and distribution. It does not include desktop widgets (which are downloaded and used by a single user).

Widget spending will represent just 2.5% of total US online social network ad spending in 2008, up from 1.6% in 2007. Technically speaking, widget spending is not a subset of social network spending, because some of the modules can appear on personal start pages or blogs. However, the majority of spending will go toward things that appear within a social networking environment. eMarketer forecasts that marketers will spend $1.6 billion on social network advertising in the US in 2008. The primary social network revenue drivers are targeted advertising, banner ads and search.

Despite the level of activity, questions about the future of widgets and applications persist. Some pundits claim they are a fad, while others insist widgets are the future of Internet marketing.

To find out more about eMarketer’s Web Widgets and application Report, click here.

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