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As the Internet's newest way to connect brands with consumers, widgets have officially arrived. These portable applets appear on blogs, websites, and social networking sites like MySpace and Facebook. Offered by third-party developers as embedded Flash (.swf) objects, the self-contained badges allow page owners to personalize their sites with photo slide shows, music playlists, games, and other content. Widgets also allow companies to engage their audience with compelling content while also branding a company and/or product. Recent news of photo-sharing widget pioneer Slide's $500 million valuation gives us more than a clue to the huge potential of these little attention grabbers.

Because widgets are easy to install, the barrier to adoption by page owners is low. At the same time, social network users tend to engage favorably with widgets because of the more personalized nature and entertainment caliber of the content they contain.

How broad is the audience for widgets? According to eMarketer, 69 million adults and15 million teens will use social networks in 2008, representing nearly half of all adults online and more than three-quarters of Net-using teens. Virtually all social network users come across widgets in their online social travels, because widgets are everywhere. More than 15,000 third-party applications have been developed for Facebook alone since the network began allowing them in May 2007. Overall, some 100,000 developers are working on widgets and applications worldwide. For these and many other reasons, widgets are spreading like wildfire.

Yet today, only a faction of widget traffic – perhaps as little as .5% – is being monetized in any way. eMarketer estimates spending on widgets and third-party applications will represent just 2.5% of total U.S. online social network ad spending in 2008. The gap between widget opportunity and reality may very well lie in the reimagining of branding in the age of the social web.

Where once brands spent hundreds of thousands, even millions of dollars, enticing consumers to come meet them on their own websites, widgets offer a completely different path for connecting with Internet users on their terms and also enabling them to share the experience. With people spending more time on social networking sites like MySpace, Facebook, Friendster, and BEBO, the widget path could become the best online path for intersecting brands and consumers.

The behind-the-scenes third-party developers providing widgets and integrated applications for Facebook users are literally re-creating the web. Personalization of profiles with widgets and micro-applications has become standard procedure on social sites. Opportunities to engage with users through these distributed mechanisms – and even to monetize these interactions through new advertising and e-commerce models – are only now emerging. It remains to be seen whether or not distributed widgets can work as a long-term business play.

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