Widgets In Online Marketing Campaigns - A Balancing Act

Thursday, January 1, 2009 - 00:00

What Is a Widget? A widget or web widget is an HTML code web application typically created by a third party which can be downloaded to a web page (including, for example, a blog or social networking profile) that delivers tailored information, graphics, games, videos, and other non-static content. Widgets are generally available at no cost, enabling users to easily access and distribute them, and are often customizable by the user.

Introduced over a decade ago, widgets are now commonplace on the Internet as a tool for bloggers, social network users, auction sites and owners of personal websites to deliver personalized content. In addition to providing information, widgets have become a vehicle for advertising, serving as delivery systems for targeted messaging. At the time of their inception, however, widgets served a largely utilitarian purpose, such as the downloadable calculator or weather reporting tool. As widgets have evolved, they have increasingly taken on an entertainment flavor. Today, many widgets encompass a hybrid function of the two, depending on what it is designed to achieve.

Are Widgets A Successful Means of Marketing? The first widespread web widget, Trivia Blitz, a java game, was introduced in 1997 by Uproar.com, a game information website. Trivia Blitz was embedded on 15,200 websites as of December 31, 1998 and on 36,100 websites one year later.1Trivia Blitz spread virally through an invitation to add the game to a user's website. Uproar paid participating third-party sites, such as CNN, Geocities, Tower Records and Tripod, a referral fee for new users that registered with Uproar through the widget.

Three years later, WeatherBug released a weather-reporting widget that resides on users' desktops. In its first year, more than 1.5 million users downloaded the WeatherBug widget and more than 65 million people have done so since its release.2Even traditional marketers are using widgets to successfully supplement traditional media spending. In promoting the release of the 2002 film Resident Evil, Sony Pictures offered a sweepstakes tied to RockYou's very popular Zombies widget. While Sony anticipated less than 10,000 entrants, it received over 1 million.3

If you're still not convinced of the potential for using widgets in marketing, it has been predicted that web widget marketing spending in the United States will reach $40 million this year.4

How Can Widgets Change Marketing Campaigns? The tens of millions of dollars invested into the creation of widgets suggest that marketers expect widgets to provide a unique and effective means of reaching consumers. Proponents tout a widget's ability to provide users with a new way to experience the Internet and to interact with (advertising) content. Instead of relying upon users to return to a marketer's website or store or hoping they spot a print ad, television commercial or highway billboard, widgets allow marketers to secure a permanent piece of real estate on a user's desktop. These interactive devices provide tailored information or entertainment that a user genuinely wants and, in doing so, marketers develop and maintain ties to their consumers and, potentially, discreetly utilize the consumer in further delivering the marketing message (for example, through a send-a-friend promotion).

Widgets, however, like all methods of viral advertising, are not without challenges. In addition to the risks of turning over some level of control over your brand to consumers, some critics argue that, due to the mindset of consumers engaged on the Internet, widgets are largely incapable of creating the kind of ties between consumers and brands that other forms of marketing can.5As the argument goes, it is difficult to penetrate consumers' minds when they are interactively engaged rather than simply "logged on" to passively view marketing content.6Internet users are said to be increasingly desensitized to background noise and peripheral distractions on web pages and are highly attuned to seeking out the core content that they are looking for. As such, a widget in the form of branded advertising may be overlooked by site visitors while a widget in the form of unbranded advertising may fail to create the necessary association in the minds of consumers required to add value to the brand.

Widgets are further criticized for enabling web fraud. For example, this year, a California information security company, Fortinet, reported an incident in which Facebook users were lured into a fraudulent scheme known as "Secret Crush" in which victims were informed that one of their Facebook friends may have a crush on them and they can find out who by using the Secret Crush widget. Unable to resist the temptation, users are taken through a series of steps by which they must allow the application to "know who I am and access my information." Once the victim has successfully added the application, he or she is then told that he or she must "invite at least five friends," thereby recruiting the next five victims. No admirer or "secret crush" is ever revealed. Once the installation is completed, the victim has successfully acquired Zango, an ad delivery application.7

How to Manage Your Risk When Employing Widgets in Advertising Campaigns. Due to the nature of widgets, they are quickly and easily transported from location to location and user to user. In this way, with little effort, a widget can disseminate your marketing messages to a widespread consumer audience. However, since control over the widget is easily lost, it is crucial to manage your risk and liability from the outset, even before the widget is created. These risks fall into two categories: (i) viral marketing risks and (ii) software-related risks. Our discussion sets forth both the risks and a few of the corresponding protective measures you can take in order to minimize your liability.

Traditional Viral Marketing Risks. The concept behind viral marketing is that online users will voluntarily forward your marketing or advertising message to their friends. Such message may be in the form of a blog, game, video, software application, email or widget, among others. Part of the appeal of using a viral technique lies in the less obtrusive nature in which a user is confronted by it (consider for example, a "chance encounter" with a blog or a game on Facebook that is actually part of a larger online advertising campaign) and the fact that it was sent by a trusted source. It is important to remember, however, that the same rules that apply to more traditional forms of online marketing and advertising apply to viral marketing, including widgets, as well. As such, to avoid claims of deceptive practices or consumer confusion, you should ensure that your widget, when accessed or downloaded (as the case may be), includes all necessary disclosures, including, but not limited to, clearly indicating that it is part of a commercial campaign and identifying the sponsor of the widget. Additionally, you must provide a terms of use policy governing use and/or access of the widget; and if by your widget, you collect any consumer information (whether personally identifiable or not), provide a privacy policy, similar in each case to what you would include with a traditional website or other form of traditional online advertising, such as a banner ad.

Software-Related Risks. Although it may be possible to utilize in-house resources, it is more common to hire a third party to develop your widget. You may provide the graphics or content for incorporation into the widget, but the developer will likely program the widget's source code. Fundamentally, a widget is a piece of software. As with any software application, the source code is what brings the widget to life and is the most valuable proprietary component of a widget. As such, you should make sure you retain authority over the source code programming. This means, have someone who is technologically savvy on your side - usually a member of your information technology group. Although you may not be able to read or review the source code once it is developed, you should always work with a developer with whom you are comfortable, who has a dependable reputation and who agrees to follow your instructions to a tee with respect to how to build the widget. Always make sure to have a written agreement with your widget developer so that you can expressly address the appropriate risk allocation. To the extent the agreement does not provide for your ownership of the source code, to minimize your future liability for a widget "gone wrong," consider adding a source code escrow provision to the agreement such that you have the ability to access and analyze the source code at a later date to confirm compliance by the developer with the agreed specifications and legal requirements prior to distribution of the widget to the public. If your developer resists adding this escrow language, explain that adding such language also provides evidence on the developer's behalf that he/she was not in breach of the agreement.

In addition to traditional concerns regarding functionality, compatibility and viruses, one priority to keep in mind is to avoid the incorporation of spyware code into your widget. Spyware is software that is surreptitiously installed on a user's computer without express consent from the user. Spyware software often collects personally identifiable information from a user. Unless you have requested it, you should protect against the introduction of spyware into your widget to avoid being in breach of any state data collection and security laws or rules. To the extent that you authorized the incorporation of spyware into your widget, be aware of what information is being collected and by what method each time your widget is downloaded, and make sure that under the applicable agreement your third-party developer is liable to you with respect to any breach by it of any data security laws or rules. Moreover, you need to ensure that you comply with all applicable legal disclosure and consent requirements for this type of application.

Lastly, protect the integrity of your brand by keeping security in mind from the get go and securing your widget (for example, by encryption or by retaining the ability to remotely disable the widget upon the occurrence of a certain event) so that it is not easily manipulated by anyone other than you or your third party programmer. A widget for a pet supply business that delivers a "puppy of the day" photograph can easily be manipulated to deliver pornography if not properly secured. It is important to note, however, that no matter how much security you implement, it is virtually impossible to protect against all potential security breaches or hacks into your widget's code.

The above is merely an introduction on how widgets may benefit you and how to protect yourself if you decide to use widgets in your marketing campaigns. With the continued growth and development of interactive media, widgets are certain to continue to grow and develop as well, and we can look forward to widgets taking on new forms in connection with such development. 1 What's the Word on Widgets, eBiz Insider, August 7, 2008, http://www.ebizinsider.com/2008/08/07/ what%E2%80%99s-the-word-on-widgets.

2 Thinking: The Latest from Bozell, Widget Works, May 27, 2008, http://www.bozellthinking.com/article/widget-works.

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4 Marketing Charts, Widgets to Wiggle In Budgets- $40MM Worth in 2008, http://www.marketingcharts.com/interactive/widgets-to-wiggle-into-budgets-40mm-worth-in-2008-3877/emarketer-widget-app-ad-spend-2007-2008jpg .

5 Why Widgets Don't Work, Business Week, March 3, 2008, http://www.businessweek.com/print/technology/content/feb2008/tc20080229_131531.htm.

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7Blog ANTA, Widget Inflicts Malware - Facebook Ignores Advisory? January 5, 2008, http://blog. anta.net/2008/01/05/widget-inflicts-malware-facebook-ignores-advisory/. Zango is an infamous malware distributor that has run into trouble with regulators over its practices. Zango has already run afoul of the Federal Trade Commission for its malware practices. In a $3 million settlement with the FTC reached in November 2006, Zango (formerly known as 180Solutions) agreed not to install its adware without obtaining consent after providing clear and prominent disclosure.

James L. Johnston is a Partner, Oriyan Gitig and Alison Winter are Associates, in the Advertising, Marketing and Promotions practice group of Davis & Gilbert LLP.

Please email the authors at jjohnston@dglaw.com, ogitig@dglaw.com or awinter@dglaw.com with questions about this article.