Reporting on Slide‘s rumoured $500m valuation Ivan on Snipperoo looks again at the question of widget business models. Apparently the valuation is based on Slide turning itself into an ad network. Ivan isn’t too thrilled and says:
It looks like all widget companies are trying to turn themselves at one level or another into ad networks – pace Clearspring and Netvibes and others. And while I wish them all the best of luck with this, it will be a bit sad if the promise of widgetization just turns out to be another way to build an ad network.
All the companies he mentions have big audiences and if they are to succeed they need to start monitising. For me that means either advertising or subscriptions. I.e. they either turn themselves into an ad network and put ads in their widgets or people start paying to use the widgets (without ads).
I don’t see much evidence of people paying for widgets (I’d love to hear about examples though) which explains why everyone is going down the ad network route.
Even that will be a little challenging though. Given that a widget takes up only a fraction of the screen it will need to have many many more users/page views/widget views than a traditional site to have the same monetisation potential. And that is before you consider that in the limited real estate of a widget it is hard to place ads without compromising the user experience.
As the Business Week article, for the ad network strategy to work, Slide will have to build a ‘jaw droppingly huge audience’. They are on their way though, a bunch of the more famous Facebook apps are from their stable, including FunWall and SuperPoke, and according to their website they have 144 million uniques a month globally and 84 million apps installed on Facebook.