Flite Is Out to Build a Better Widget For the Internet Ad Industry

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300 people and attempted to go public before being acquired by Vignette in 2002. Epicentric and its competitor Plumtree, eventually purchased by Microsoft, were both built around the idea that a single Web page—say, the supply chain management page in a corporate intranet—might include several software modules, each talking to its own back end. Widgetbox, which Anuff started with Giles Goodwin and Dean Moses after leaving Vignette, took that idea from Epicentric and turned it toward consumers. The company wanted to build a catalog of widgets—say, a Flickr slide show widget, an eBay auction widget, or a New York Times headline widget—and let Web publishers find, configure, and serve up specific widgets for their audiences.

At the time, Will Price was a Hummer Winblad partner. He says he “fell in love with the concept” after working on Widgetbox’s Series A and B rounds. He was brought in as CEO in 2008, after Widgetbox had built a huge gallery of widgets (half a million—which is more widgets than there are apps in the iTunes App Store) but before it had figured out how to monetize them on a large scale. “The vision was eventually to build a marketplace for Web widgets where someone would say ‘I need a pollen count widget that tells me the pollen count in my school district’ and put that on the school’s home page, and pay a dollar a month to the developer, that kind of thing,” says Price. “We never put in a transactional layer where people would pay for them, but the technology was there.”

But by 2008, it was too late anyway. “The concept of being able to build a viable app business that attracted really high-caliber developers was supplanted by two massively scalable markets that emerged—the ability to build iOS and Facebook apps,” says Price. “They had the devices and the users, a lot more than we had. We realized that Plan A was not going to be a venture-return company.”

Unfortunately, there was no Plan B—at least, not until Roslansky suggested that the widget technology could be used to reinvent display advertising on the Web. “It sounds incredibly stupid to say it now, but it had never dawned on us that an industry that had been around for 17 years and had billions of revenue was ready for disruption,” Price says.

There were at least two big problems in the display-ad business that needed fixing. First, CPMs (the cost per thousand impressions) for standard, static banner ads were dropping precipitously, in part because the ads were increasingly ineffective. The number of people who actually click on them, and then buy products from the advertiser, is abominably low. That was driving publishers, advertisers, and agencies to explore new, more lucrative types of ads that contained “rich media” such as audio, video, or even 3D interactive models, or that included Web elements such as newsletter signup forms or click-to-call buttons for contacting a salesperson.

But that led to the second problem: building traditional rich media ads is slow and expensive, with turnaround time measured in weeks and costs measured in the tens of thousands of dollars per campaign. On top of that, most rich-media ads depend on the Flash multimedia format, which doesn’t work on iPhones and iPads, and it’s difficult or impossible to update their content without starting over.

Widgetbox’s technology offered a way out. “The synapse that connected was that we had widgets for slide shows, click-to-chat, and all those components, and if we just hooked up a series of components as a display ad, we could transform industry thinking,” says Price. “Instead of thinking of a display ad on Site A as a portal to a landing page on Site B, you can think about an ad as a mini-website where people can directly engage with a brand.”

Widgetbox already had an extensive infrastructure for serving up configurable software elements at large scale and monitoring usage. All it had to add was … Next Page »

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Wade Roush is a contributing editor at Xconomy. Follow @wroush

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