Widgets and Monetization

I like to think about the value chain for widgets consisting of 1) publishing; 2) distribution); 3) analytics; and 4) monetization.

Right now there’s an explosion of activity on the publishing and distribution fronts.  Pete Cashmore hints at the barrage of new widget announcements that he is receiving over at Mashable.  Musestorm is working on a service that will help any content publisher generate and distribute widgets without any programming knowledge.  Snipperoo and Widgetbox continue to work on making it easier for web surfers to find and manage their widgets.  And the MySpace enabled widget industry continues to roll.

But to date, not too much has happened on the analytics side (Musestorm and Clearspring are two companies that I know of that are addressing this), and even less on the monetization side. 

So far, the discussion around monetization has centered on how publishers can monetize the widgets that people embed on other sites. 

Perhaps this is the wrong question – or an incomplete question.  Maybe the discussion should be around how the widget itself can be a monetization platform for the host site.  For example, the Bitty Browser (bitty.com) embeddable browser widget is now being used by tech magazine Information Week to allow advertisers to provide an interactive experience without leaving the Information Week pages.  As opposed to forcing the reader to click away from the host site when interacting with an ad, the Bitty Browser powered ad platform allows the reader to get more info and browse through case studies without ever clicking away.

As Steve Rubel points out, using an embedded browser also enables better analytics about how consumers are interacting with those ads.

What’s brilliant about this strategy is that it provides a new take on two proven commercial widget applications – Google AdSense and affiliate programs like Amazon Associates.  If the Bitty Browser powered ad model takes off, I would expect to see it start to mirror AdSense and Amazon Associates.  It’s not a stretch to imagine Bitty Browser as a clearinghouse for publishers and advertisers where Bitty matches advertisers with publishers (or allows self selection), and publishers can grab a snippet of widget code just like they can on AdSense or Amazon.

While AdSense is primarily CPC driven (with some CPM), and Amazon is commission driven, I wonder what format this widget powered ad model will take?  Will it be CPM?  Will it be CPC?  Or should it be calculated with some new indicator based on consumer engagement with the widget?

I also wonder about how consumers will react to this format.  A widget powered ad format is clearly better for the publisher, as it keeps the consumer within the host site’s experience.  But will it result for better (or comparable) conversions for the advertiser?

In an industry that is almost completely dependent on advertising, I would say that it’s pretty big news when a new ad format is introduced.  Kudos to Bitty Browser and Information Week for showing some innovation.

Comments

[Tony Colan]

We have been testing various ad feeds and affiliate feeds through our adimpact widgets that actually pop or hover on a page. We were able to feed adsense through our creatives and publishers loved it but Google sent legal letters to shut it down. Clickthru rates were much better, the publisher also had control on where and how the creative appeared, take a look at one of our media builders:

http://www.adimpact.com/cmpb/chitika/demo

http;//www.adimpact.com/cmpb/kanoodle/369662451