Widgets: The Marketer’s Recession Survival Tool

Michael Jones, CEO of AOL owned Userplane, writes a guest post for TechCrunch:

Widgets: The Marketer’s Recession Survival Tool

Widgets: The Macro Promise of Micro-markets

The top widget providers are proving that widgets can be big business. Slide and Userplane, of which I’m CEO, are two successful providers of distributed applications. Slide’s recent $500M valuation gives credence to the huge potential of these small attention grabbers. The success of today’s widgets is largely a function of the hundreds of millions of ad views they garner each day.

In April 2007, comScore estimated that widgets reach 177M people every month, or 21% of the worldwide online audience. Currently, only a fraction of widget traffic – perhaps as little as 0.5% - is being monetized. And that 0.5% is being monetized most frequently through traditional CPM models. In order for widgets to pay off in the long term, however, new models are required that will drive revenue beyond the top few widget providers and generate significant returns for all customers investing ad dollars.

Brands are changing the way they view online advertising and are becoming more concerned about reaching audiences based on their interests and actions, through so-called behavioral targeting. Traditional brand affinity concerns are taking a back seat to a willingness to meet users on their own terms. And, it doesn’t stop there. Marketing will align with individual social graphs as well.

The idea of a brand’s squeaky-clean “image” appearing next to a porn star would have been cause for reprimand in the old school of media buying. Yet in online advertising, it seems to slide. The new model of advertising, which is focused on customer behavior, makes it not only okay but necessary to meet customers within their preferred areas of interest, or “micro-markets”.

Widget providers are gathering the kind of intelligence that allows for this sophisticated behavioral targeting. They can assure brands before investing ad dollars that particular users are interested in their product or service. If behavioral intelligence demonstrates that a particular consumer is effectively engaged by the brand in proximity to MySpace vampires with blood-coated fangs, the new breed of media buyers will be more willing to put their old placement fears aside.