Companies struggling to find widget advertising strategy, ROI

Computerworld - SAN DIEGO -- Last week, Walker Fenton, general manager of syndication services at NewsGator Technologies Inc., met separately with officials from Home Depot, Staples and Best Buy to discuss online advertising sales strategies. Each of the retailers is still struggling to develop use cases and an ROI for online advertising, he noted.

"They still don't get the online advertising space," Fenton said. "They don't know how to monetize or build ROI use cases around a number of impressions on a Web site to sales in the store."

Fenton noted that each of the companies he spoke to remains reluctant to move away from advertising via newspaper fliers, where responses can be easily measured by analyzing sales in stores in a zip code where ads run.

Companies that create or distribute widgets -- mini-applications that can be used as advertisements that can be posted to user blogs or personalized Web pages -- are working hard to overcome such prejudices, according to executives of companies that distribute widgets who were on a panel at the Graphing Social Patterns West 2008 conference here last night.

Makers of widgets, which often rely on users to spread a campaign message "virally," face more challenges than just proving an ROI for their products. They must also deal with the common misconception that widgets quickly spread like wildfire on the Web and cause companies to give up the tight control over their marketing messages.

"From a technical perspective, you can monitor and report on just about anything under the sun -- where a widget lives, how it go there how many people have seen it," Fenton added. "There is a real education gap ... in trying to tie that into some metric that [advertisers] can build an ROI on."

Pam Webber, vice president of marketing at online widget marketplace Widgetbox Inc., said that companies must be willing to give up some control over issues like where their widget advertisements appear to effectively use the technology.

"The consumer owns your brand," she said. "The more tools you can give them to evangelize the brand, the more successful your marketing efforts will be."

Ben Pashman, vice president of business development at widget distribution and tracking company Gigya Inc., said that companies seeking to use widgets for advertising must first create plans for an end-to-end marketing campaign. Just like any other advertising campaign, companies must have a clear understanding of widget-based marketing concepts, the process of distributing widgets and how to measure success, he added.

"If any one of those three are not completely thought out ahead of time, it is destined to fail," Pashman said.

NewsGator's Fenton added that a successful widget strategy requires that companies identify the "top one or two things that people come to your [Web] site for and then you let them take it away."

For example, if a company's top function is search, then they can create a widget that allows users to make search portable; sites that focus on publishing content need to build a widget to allow users to post that content at various Web locales.

"A widget is just an extension of your Web site," he noted. "It is a little window into your content, your brand."

Another important strategy is not to fall into the common misconception that every widget created will immediately spread like wildfire over the Web, noted Hooman Radfur, founder and CEO of Clearspring Technologies Inc. "If your site is getting 100,000 unique visitors a month, you want to gauge the success of your widget relative to that," he added.

Moreover, many companies mistakenly assume that no matter what type of widget they create, that it will flourish on social Web sites, Pashman said. For example, many companies are eager to create a weekly circular type of advertisement and then try to get users to post it on Facebook, he noted. However, this type of ad would be better suited as a desktop widget, he noted.

"There is no reason why [a Facebook user's] friends are going to think they're cool or will be entertained by a widget that has daily or weekly specials," he said.