Widgets are basically embedded code in an HTML page. And whatever you call them, they are popping up all over the Internet.

Since Facebook opened up to
third-party applications in May 2007, nearly 15,000 applications have
been developed. Overall, some 100,000 developers are working on widgets
and applications worldwide.

All the excitement aside, eMarketer estimates that US
companies will spend only $40 million in 2008 to create, promote and
distribute widgets, up from $15 million in 2007.

The figures do not include desktop widgets, which are downloaded and used by a single user.

”Despite the level of activity, questions about the future of
widgets and applications persist,” says Debra Aho Williamson, eMarketer
Senior Analyst and author of the new report, Web Widget and Applications: Destination Unknown, “Are they a fad or are they the future of Internet marketing?”

Concerns related to Web widgets and applications include
“application burnout,” measurement difficulties, distribution
challenges and deceptive techniques used by some widget developers to
increase their installation rate.

But for every nay-sayer, widgets also have many proponents.

In a sign of how much widgets have intrigued the marketing community, 58% of attendees at last December’s iMedia Agency Summit said they thought widgets would play a bigger role in their strategy than mobile.

”The online landscape continues to evolve,” says Ms. Williamson.
“Even as the audience is fragmenting, young people are spending more
and more time within social networks, leaving less time for other Web
activities.”

According to a Dynamic Logic survey, 51% of Internet users ages 18 to 34 reported visiting a social network site at least once every few days.

”Some people believe that social networks are becoming ‘walled
gardens,’” says Ms. Williamson. “So many advertisers are experimenting
with widgets as a way to penetrate them.”

Widgets would seem to be a natural fit in a world where
consumers time-shift television, check user reviews before they buy,
mash up Web content from various sources and spend hours customizing
their social network profile pages.

“One of the hallmarks of Web marketing and media over the past
year has been decentralization and syndication,” says Ms. Williamson.
“The general idea is to reach consumers where they spend their time,
rather than force them to come to a destination.”

The widget industry supports this idea wholesale.

“The days of digital ad sales where you buy a banner and
[consumers] click on it and go to a Web site, that’s dead,” says Chris
Cunningham, founder of a the widget and application marketing company AppsSavvy.
“The idea that media companies or brands need to make a destination of
their own is completely flawed. Rather than drag people to a
destination, [companies can] take some content they want to showcase
and bring it to people.”

”Given the grand ambitions of the widget and application
market, and the social networks that support them,” says Ms.
Williamson, “the business still has a lot of growing up to do before it
can attract significant dollars from major marketers.”

Via eMarketer