Already a Bloomberg.com user?
Sign in with the same account.
The customizable bits of software on Facebook and other social networking sites are the latest trend in viral marketing. But are widgets here to stay?
The cards were stacked against A&E Television Network as it tried to generate positive buzz about its new series, Parking Wars. For one, it's a reality show about meter readers. Two, the show doesn't feature celebrities. "We thought if we could find a clever way of increasing consumer interaction with the concept behind the show that we would increase curiosity in the show itself," says Lori Peterzell, A&E's vice-president for consumer marketing.
So A&E hired area/code, a multimedia game developer, to build an online game based on Parking Wars. Played on the social network Facebook, the game has users park virtual cars on friends' profile pages, or "streets," while slapping tickets on cars parked on their own page and avoiding tickets themselves.
Grand Theft Auto it's not. What makes Parking Wars unique is how it's distributed. The game is passed from one person to the next by way of widgets, small bundles of software that users can download, customize, and forward to a single pal or an entire contact list with the click of a mouse. Widgets like Parking Wars, which are designed for a specific social networking site, are typically referred to as applications. Since its Dec. 17 introduction, Parking Wars has attracted more than 198,000 unique users, many of them repeat players, and generated more than 45 million page views.
Raising Brand Awareness
"It's surpassing our expectations," Peterzell says. A growing number of companies hope they'll be wowed by widgets, too. Electronic Arts (ERTS), Viacom's (VIA) Paramount Pictures, Sony Pictures, Gap (GPS), Hewlett-Packard (HPQ), Hallmark, and Blockbuster (BBI) are among the businesses hoping to spread a marketing message or raise brand awareness through these modules of content used by millions of social network users to customize profiles or communicate with friends.
Interest in widgets is rising as marketers become disaffected by other methods of online advertising, especially on social networks. Google (GOOG) executives said in January they're not generating as much revenue as expected (BusinessWeek.com, 1/31/08) from placing ads on News Corp.'s (NWS) MySpace.
Some marketers say widgets may do a better job engaging users than, say, so-called banner ads emblazoned across the sides of social network profiles. "Content and functionality are the new creativity—it's not about whether you have a whiz-bang rich media banner running," says Andy Bateman, CEO of brand consultancy Interbrand New York. "Are you doing something that's actually helpful and useful to people?"
Some Facebook Campaigns Have Fizzled
There's plenty of anecdotal success. Sony Pictures promoted its Resident Evil zombie flick by running a sweepstakes in conjunction with Rock You's popular Zombies application, which lets people send virtual zombies to bite their friends. Sony Pictures had hoped 10,000 people would sign up for its contest, and instead got 1 million takers, says RockYou CEO Lance Tokuda.
But there are even more examples of branded Facebook applications from household names such as Blockbuster, Hallmark, and Verizon (VZ) that have fallen flat. The market for ad-related widgets is still in its infancy, as evidenced by eMarketer projection that U.S. Web widget and application ad spending in 2008 will amount to $40 million, just 2.5% of the $1.6 billion in U.S. online social network ad spending. The verdict is out on whether widgets will become an integral part of social networking marketing and ad campaigns or whether they are, as some critics say, a passing fad.
The potential audience is vast. MySpace has some 110 million active users worldwide, and Facebook has a little more than 66 million. Yet of the nearly 17,000 applications on Facebook, only 138 had more than 1 million installations on Feb. 25, according to Adonomics, a firm that tracks Facebook statistics.
A Short Shelf Life for Many Widgets
To do well, branded widgets typically must engage users often, piggyback on existing popular applications, and be aimed at the right audience. "It's very challenging to maintain someone's interest over a long period of time," says Debra Aho Williamson, a senior analyst at eMarketer. "Applications and widgets have a pretty short shelf life."
In fact, the adoption rate of many applications on social networking sites looks something like a steep bell curve, typically with rapid adoption at the outset and a quick drop when the enthusiasm ebbs. Depending on the application, that lifespan can be days, weeks, or months. The applications with the longest life tend to be those where developers constantly add new features to get users to come back.
Another recipe for success is joining forces with an already popular application. Independent widget makers Slide and RockYou have mastered the art of building applications that hook users and get passed liberally from one person to the next. One of Slide's most popular Facebook applications is SuperPoke, a communication tool that lets people do everything from send virtual hugs to throw virtual objects at friends. At one point, Samsung Electronics (SSNGY) sponsored a tool that lets users throw a picture of an HDTV at pals.
Reaching Out to a Younger Audience
Many adults may not immediately see the appeal of throwing a sheep or an HDTV at a friend. Then again, they're probably not the target demographic. RockYou, for instance, designs applications that appeal to teen girls. "Our goal is maximum reach, and teen girls are the most viral people on the planet," RockYou's Tokuda says.
In creating applications for Facebook, TripAdvisor wanted to reach a younger audience than its traditional 35-44 demographic. It has tried a mix of buying advertising on other applications and creating its own. "You can spend a lot of money buying installs if your application is not viral," says Christine Petersen, the company's senior vice-president for marketing.
Petersen would rather create her own applications and hope for organic growth. In-house application building is less expensive. It's also a better way to build a brand, she says. The efforts don't always pan out, but the stakes are sufficiently low that it can afford some flops. TripAdvisor's Cities I've Visited, a map where people can show where they've traveled, has been very successful. At its peak, Cities I've Visited was installed by 7.8 million people. It took two people about three days to build that application. Another app, a quiz called What Obnoxious Traveler Are You?, launched on Jan. 29, fared considerably worse, and has garnered only 500 installations as of Feb. 26. "It's been a dud," says Petersen.
Developers Are Lining Up to Make Widgets
Peers at other companies concur. "The great benefit of doing a Facebook application that only took three weeks to build is that it's very inexpensive and your opportunity to experiment is very high," says Neil Young, group general manager at Electronic Arts. Young says that Electronic Arts has spent less than $200,000 over several months with developer Context Optional to build and run a trivia game called Smarty Pants, a pared-down version of a Wii game by the same name that EA sells. He estimates that many independent developers charge between $15,000 and $50,000 a month to build and maintain branded applications such as Smarty Pants.
There's certainly no shortage of programmers willing to make widgets. Facebook has attracted more than 150,000 active developers since May, 2007, according to Developer Analytics, a company that tracks the Facebook developer community. One draw is that Facebook lets indie developers sell advertising on their applications and keep the profit. Yet some social networking sites, including MySpace, were initially reluctant to open pages to an influx of third-party widgets (BusinessWeek.com, 5/22/07). MySpace is now offering developers the opportunity to make money from their applications.
The same goes for social networking site Bebo, which officially opened to third-party developers on Dec. 12. Already NBA, Yahoo! (YHOO), Gap, and other brand marketers have created applications for the site. About 5,000 Bebo users have added the Gap's ModelMaker application, where they can become virtual Gap models by adding their photos and choosing outfits, a pose and a scene.
Plagued by Lack of Standard Metrics
RockYou's Tokuda says he also expects social networking sites hi5 and Orkut to give developers tools to create third-party applications within the next five weeks or so.
Still, it may be a while before widgets become an advertising and branding force to be reckoned with. Because of a lack of industry standard metrics, it's difficult to compare the relative success or failure of widgets, and just how much a widget is worth (BusinessWeek.com, 1/7/08). What's more, many users are getting turned off by advertising on social networking sites (BusinessWeek.com, 7/7/08). "I think application fatigue is real, and it will force people to look at what they're developing and how much they're spending," says TripAdvisor's Petersen.
Others wonder if advertising widgets can work at all on social networking sites. "Frankly, I'm very skeptical about the whole thing," says Ben Kunz, director of strategic planning at Media Associates, a media planning firm. Part of the problem, says Kunz, is that a person has to be receptive to advertising, and that's not the case with many people when they're surfing around social networking sites. "There's so much talk about viral marketing, but if it were really that easy to do, then everybody would be doing it."
Still, that isn't deterring A&E from going to the ad widget well. The company is considering widgets for shows besides Parking Wars, Peterzell says, adding: "We're in the middle of looking at concepts for returning series and for some other shows and titles being launched later this year."