March 21st, 2008

Portland widget startups on the cusp of something big


Portland is well-known as an creative town. Especially when it comes to marketing and advertising. It’s hard to avoid the moniker with a powerhouse like Wieden+Kennedy in town.

But, anyone who lives here realizes that it’s not just W+K. There are marketing and advertising agencies and boutiques of every size dotting the Portland corporate landscape.

Within that environment, it’s not surprising that marketing and advertising wend their way through the culture of the city. Lately, however, I’ve begun to see this marketing influence popping up in a rather unexpected—but extremely interesting—space: Portland’s Web startups. Specifically those startups that focus on widget development.

It seems that the heretofore lowly widget is taking on the role of something more than a cute small-footprint app. It’s beginning to appear that it may be more than just a way to serve up some content, remotely. Today, in fact, it’s becoming clear that the widget is starting to take on a very important role in the world of marketing communications as one of the most tangible means of interacting with customers.

And two Portland startups on the leading front of widget development have the potential to capitalize that trend.

Earlier this week, Portland-based SplashCast revealed that the company’s Facebook widgets for popular recording artists were outperforming traditional online advertisements. Well, that might be an understatement. SplashCast pegs that performance at “75 times better than the clickthrough rate of traditional banner ads.

Now, to put that in context, SplashCast is seeing about 3% clickthrough rates on those Facebook apps. And that 3% is 75 times better than banner ads are performing.

But, the dismal downfall of banner ads as a format is not the focus, here. The point is that banner ads are an accepted and prevalent format for advertising that don’t hold a candle to the performance of widgets.

Later in the week, SplashCast continued to tout this finding by beginning to describe their apps, not as widgets, but rather “social advertising”:

SplashCasting represents a new form of online marketing called social advertisements – tools marketers use to reach the growing demographic of social network site users.

Social advertising. I might have left it at that, had not another Portland-based widget-building startup taken a tangential and complementary position on the issue.

That startup is StepChange (conspiracy theorists may begin churning on the “companies named with a capital ‘s’ and capital ‘c’” theories, forthwith), a small consultancy that both develops widgets for a number of customers and has some widget-based side projects in the offing, as well.

StepChange is beginning to notice a similar trend. And StepChange’s insight only lends credence to the position that SplashCast is taking on the world of widgets:

While we’ve done some basic Flash/Feed widgets, most of our design and development work has been on Social Media Apps that function more like true “applications” – with our clients requiring a relatively high degree of administration, content management, targeting reporting and integration.

I think these kind of ‘super-widgets-turned-applications’ need a better name, so I’m going to start calling them Distributed Marketing Applications.

In my opinion, the position that StepChange and SplashCast are taking is one that makes absolute—if not completely obvious—sense: social media marketing should be, well, social.

Social media is about interactivity. And feedback. And conversations.

Traditional online advertising—with its dancing gifs and whack-a-mole come-ons—just isn’t cutting it anymore. Traditional advertising is not, for lack of a better term, “interactive.” It’s one way. It’s broadcast.

And those who are deeply engaged in social media are hesitant to consume—if not completely avoid—those grating and annoying advertising formats, leftover remnants from last century’s dotcom failures.

Today’s Web consumers are wanting more. And they’re wanting something with which they can interact.

Widgets—and by extension Portland’s widget developers—offer that interaction for users. They offer something more than broadcast. They offer the potential for communications that are far more interactive.

To put it quite plainly, widgets offer us a form of marketing communications that we, as those being marketed to, “can actually do something with.” And if Portland’s widget developers can crack that code for the untold billions interested in interacting with us as customers, then they stand to have marketing and advertising executives beating a path to their door.

StepChange’s Kevin Tate makes a bet:

I’m also willing to bet that, as more and more companies look to extend their existing sites and services into Social Media, we’re going to see a significant market need for these types of platforms.

I’m beginning to agree with him. And I’m excited to see Portland continue to serve its role as a creative town. And, as a leader in marketing and advertising for what could truly be the next generation of ads.

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3 Responses to “Portland widget startups on the cusp of something big”

  1. I agree that widgets are a great way to offer persistent, positive opportunities for brand interaction. Nike+ is another great example of this; it’s on my Dashboard, in my shoe, and in my nano – and I love it.

    But I don’t see much of a future for monetizing independent widgets outside of a marketing context. They’re really cool and easy to create, but it’d be tough to get people to pony up.

    RIAs? Maybe. Mobile? Yep. But widgets? Not by themselves.

  2. “Distributed Marketing Applications” huh? Certainly a more impressive name for powerful widget technology. So, should we nickname them DMAs? Marketing Apps? Ooo … MApps! Or how about The Apps Formerly Known as Widgets?

    =)

  3. Mike Berkley says:

    Great post, Rick! You really nailed it.

    Scott, regarding monetization of widgets… As “social advertisements” (marketing context), widgets are by-definition monetizable, as you point out. However, there are also compelling e-commerce and 3rd party advertising opportunities for monetization. In this sense, a widget is not very different than a concentional web site (a distributable web site, that is).


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