Can Slide Balance User-Ad Seesaw?

NEW YORK 2007 is thought of as the “year of monetization” for the many Web 2.0 companies built on gee-whiz technology and vague ad-based business plans.

Whether that holds true for the makers of the tiny Web applications known as widgets remains to be seen. Widgets, which often appear on social networking sites, tend to feature mini slide shows, weather reports—anything that can be encapsulated in a small desktop window. For those companies making widgets, the trick is turning their impressive reach—comScore MediaMetrix estimates that they reach 21 percent of Web users worldwide—into a sustainable media business that doesn’t scare off their user bases.

Slide, the top widget maker, which reaches 117 million Web users worldwide per month, is taking its first stab at this by starting an ad network that relies more on user choice than interruptive advertising. Its alternative offers users the option of downloading branded skins on their photo slide shows, displaying their affinity for movies and series like Discovery’s Last Man Standing. AT&T Wireless has also signed on to sponsor a slideshow that will play a ringtone when a user lands on the page.

The user-centric approach means far fewer upfront impressions than if Slide were to intersperse ads with its slide shows, but the company has found that for every download 100 more people see it on social network profile pages.

One fly in the ointment: For now, ad-supported widgets cannot be put on MySpace profiles because they violate its policy against outside developers including advertising in widgets. Max Levchin, CEO of Slide and a former PayPal executive, is confident that will change, citing Facebook’s embrace of third-party developers that invites them to make money from their efforts.

Levchin believes several models will be tried before widget makers arrive at the right approach. “There’s a giant open question of what else is possible,” he said.