What's the Newest Way to Get Your Ad Seen Online? Widgets

Google, Others Are Working to Monetize Third-Party Applications on Facebook and Other Social Networks

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NEW YORK (AdAge.com) -- Jake Ginsky, like more than 3 million other Facebook users, lists his "top friends" using a nifty little application from a company called Slide.
AT&T: Advertises on a widget on the social network Bebo.
AT&T: Advertises on a widget on the social network Bebo.

In the application, the 31-year-old designer also recently displayed an affinity for someone else: Sarah Silverman. She's not actually a friend; Mr. Ginsky was using a branded widget from Slide that advertised Ms. Silverman's Comedy Central program.

Slide increasingly is viewing its widgets as media vehicles. The company's advertising is user-initiated, meaning Mr. Ginsky chose to add the branded graphic to his slideshow.

Slide is just one of many developers trying to sell advertising in widgets. While Slide sells its own sponsorships, several application developers have opted to use ad networks for monetization. In fact, the latest mover in the widget-as-media-network space is none other than Google.

Facebook strength
In a recent chat with reporters after Google's Zeitgeist event, CEO Eric Schmidt said Facebook is strong in the U.S. and college markets -- and has had great success enticing developers to create applications that run on the social network.

"How will those developers get paid for those services?" he said. "We would like to have our ads in those applications." Google hasn't officially announced its plans, but when it does, it will join several other players -- from widget companies to existing ad networks to start-ups.

The widget-monetization land grab had its genesis this spring, when Facebook announced it would open up its platform and allow third-party developers to create applications, also known as widgets or gadgets, to run on the social network. To entice developers, Facebook said it would allow them to monetize the applications how they saw fit (through advertising, e-commerce, whatever) with only a few restrictions. Now some enterprising companies, including Google, are hoping to be the ad network that helps monetize the thousands of applications that have been created.

"Widgets could be a really good way for advertisers to have an appropriate, welcome space in the social-networking area," said Margaret Clerkin, managing director at MindShare Interaction, who said social networking is like a bunch of high school kids -- you're either invited in or you're treated like an outcast.

One of the first companies to launch a business around ads in Facebook applications was Videoegg, a Bay Area start-up that counts WPP as an investor. Videoegg already has been selling ads in and around videos on social networks such as Bebo and added application inventory to its network.

"We see great engagement rates," said Troy Young, chief marketing officer at Videoegg, which counts engagement when a user rolls over an ad, initiates a video view or gives a virtual gift to a friend. "We're bringing major brands and seeing 3, 4, 5 and 6% engagement." What's more, Mr. Young said, Videoegg can see large variances in applications. "That enables us to find best-performing pieces of real estate and heavy up on those."
Google CEO Eric Schmidt
Google CEO Eric Schmidt

Slide said its ads generate between 2% and 5% click-through rates -- far above a typical display ad on a social network.

So far, marketers have taken two approaches to widgets. Some have created their own branded widgets, with the hope that users will find them compelling enough to add to their Facebook profiles and personal blogs. Other marketers have opted to advertise in existing widgets that already have wide distribution.

Sean Muzzy, group media director at [email protected], said it makes sense to do both. "I would look at an application as a site," he said. "Like a site has visitors, I would say what type of people use the widget? How much time do they spend?"
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