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Widget companies may have widgets that get hundreds of millions of page views and visitors, but measuring their traffic has been tricky. Comscore and other third party services are still refining their methodologies, and have been criticized for undercounting the traffic of some companies.

Widget syndication and tracking service Clearspring has had itself successfully audited by third-party media auditing service, the Audit Bureau of Circulations Interactive (ABCi), both to solve the traffic analysis problem and brand itself as more in tune with advertisers’ needs than its competitors.

Clearspring launched a widget ad network last fall, where advertisers can run ads on widgets that users embed on social network pages and other sites. It already has large clients, like Turner, Disney and NBC. Now, when an advertiser buys an ad that runs in a Clearspring application, they can choose to rely on this third party to feel more confident about Clearspring’s reported numbers.

Metrics that were subject to audit, the company says, included: views, unique visitors, placements created, active placements, clicks, clickthroughs, events, geographic report, computer information, interacted views, clicked views, average time spent, and average interaction time.

This is one step of many that social networks and the third-party applications that use them are trying, with the goal of convincing large advertisers that advertising to social network users can work better than other advertising mediums.

McClean, Virginia-based Clearspring, which claims to be the largest platform that lets users and advertisers create widgets, may spur its rivals, including Widgetbox and Gigya, to also go through an audit. The larger question is how advertisers will react. Clearspring, which recently raised a large funding round, says that many people in the ad industry have been asking about audits for some time. How much will money can the company get for its widget ads, as a result.

Questions continue to swirl around the viability of businesses built around widgets. Sure, there are hundreds of millions of people who interact widgets on social networks and other sites, but how can you make money on all that engagement?

Clearspring is working hard to answer that question — and it has just raised $18 million round led by New Enterprise Associates to help it do so. The McLean, Virginia company provides widget infrastructure: A “platform”, as the company says, that includes widget creation, hosting, distribution, tracking and monetization services for widget creators of all types.

The company claims it is serving and tracking more than four billion widgets a month. It is the largest “widget platform” company in the world, according to Comscore, with 126 million unique widget viewers in March. Competitors include Widgetbox and Musestorm — and many companies, like Gigya, also provide widget hosting and tracking services.

Clearspring has gained its market position in part through cutting deals with all manner of media companies, including NBC, Turner and Disney. Disney-owned ESPN, for example, has found success letting users embed sports scores and other information from the broadcaster’s homepage within social network profiles and pages across the web.

Last December, Clearspring also rolled out a way for big media companies to create advertising widgets — which it is making undisclosed but “substantial amount of revenue,” according to company chief executive and co-founder Hooman Radfar. Clearspring gets a cut of revenue from the widgets it operates that include advertising, and it also gets a cut of development fees from companies that want to have it create or modify widgets for them.

Here’s a sample widget, with an ad:

Note: EMarketer recently downgraded its predictions for social networking ad revenue, including revenue from widgets. Radfar says (as I have) that these predictions — while useful — rely on rapidly changing numbers. For example, if Slide or RockYou were to beef up their sales forces more than expected and really go to town selling widget ads to Madison Avenue, revenue would go way up.

The bigger picture

While not all of these widget ad campaigns end up working, some do, especially entertainment-focused ones. Radfar says that widgets for Cloverfield, Kung Fu Panda and most recently the new Indiana Jones movie are doing well.

Perhaps more significantly, the company is refining its analytics services. It tracks widget performance as well as ad performance widgets, and drops cookies — snippets of code in a web browser that record user data — to track users’ content preferences and behaviors.

The company will use this data to make recommendations about what kind of widgets to build and what kind of content to include for specific audiences. For example, Radfar tells me, widgets that contain ads for movies tend to get shared more heavily on Fridays. Possibly because that’s when movies open.

All good widget and social network application companies are very data driven; Slide, RockYou and many other consumer-facing companies also brag about their analytical abilities giving them an edge over competitors.

Clearspring, though, has big goals for itself. The largest players in social networking — MySpace, Facebook and Google — have all introduced ways for users to share data from within social networks on other sites, through widgets or other cross site integration.

Clearspring, Radfar tells me, wants to help give users a seamless experience for using services and viewing content across the web. Facebook has recently introduced a chat feature, for example, that lets you chat with Facebook friends within its site. Facebook is also working on a way to chat with Facebook friends while within other sites, using third-party applications. As the social networks give more access to the user data they contain, Clearspring wants to be a guide. It wants to offer its data analysis services to help companies understand users and figure out meaningful ways of integrating user data across the web, desktop applications and mobile devices.

Previous investors who participated in this round include Novak Biddle Venture Partners and others. The company raised $8 million in venture funding before this round.

In the latest evolution of this fast-paced but not yet lucrative world of widgets, Clearspring, a leading widget company, has launched an ad network for widgets (sample widget left).

It comes at a time when advertising agencies on Madison Avenue are finally getting comfortable with the idea of buying ads in widgets to get their client companies in front of social network users. A market for widget ads is forming, although its still unclear which forms of widget ads will deliver the best results.

The McLean, Virginia will use Adify’s ad technology, including ad serving, ad operations and ad reporting. PointRoll will be the exclusive provider of its ad units and technology that allows interaction within ads.

This news follows other widget-related announcements last week. Leading advertising network Advertising.com launched its so-called “WIDGNET” network, another ad network. Webs.com (formerly Freewebs.com), launched what it calls a “Social Gaming Network” — interactive gaming applications that run in social networks and rely on social network data. As in-gaming advertisers like MochiMedia are showing, this niche can be quite valuable.

Also, PointRoll — the Clearspring partner — will give advertisers the option to “widgetize” their rich media banners, so the next time an ad for a theatrical release expands over the page you are reading, you can “snaggle” a widget from the ad and put it on your MySpace or Facebook page.

Widgets are taking over advertising, content syndication, social gaming, and more.

For the uninitiated, a widget works when a website owner places an embeddable snippet of code on a web page. Widgets are also called gadgets, Widgets with a capital W (at Yahoo), minis, flakes, snippets and badges. Facebook applications, and now Google-led OpenSocial applications, are more advanced: These widgets offer third parties access to their data, so applications can design interactions around your relationships.

Otherwise, what distinguishes a widget company is largely semantic. YouTube is a massive widget distributor while MySpace (and now Facebook) are huge widget receptacles. MySpace, as the first mass-scale social network to allow users drop widgets into their page, is largely responsible for the growth and reach of widget companies like Photobucket and Slide. Now Facebook and other company’s platforms are similarly responsible for the birth of a new category of start-ups, technologies and revenue streams.

The advent of Facebook’s platform in May changed the game for widget companies because — beyond the new access to valuable user data - it let third parties make money without fear of being banned. Myspace, for example, sometimes blocked Photobucket, although it eventually bought it.

Now these widget companies are gunning for Madison Avenue, with overlapping but increasingly differentiated strategies to build, distribute, and track widgets across social networks.

Or is Madison Ave gunning for them? Ro Choy, VP of Business Development for RockYou says the adoption of Facebook applications by large advertisers has been “radical.”

Here’s who’s in the game and what they’re doing:

Clearspring

Clearspring earned its reputation as the market leader developing widgets for Big Media, and counts among its clients NBC (exclusively), Disney (recently launched over a dozen widgets for ESPN) and Turner.

Clearspring’s network allows advertisers to distribute their widgets across properties like Break.com, The Huffington Post, NHL.com, 20^th Century Fox, and paparazzi haven X17online. Virgin Mobile is sponsoring a Futurama widget running on Fox’s site (see screenshot). Clearspring gets a cut of the revenue as well as possible development fees. If Fox wants to offer one of its own advertisers a widget integration, Clearspring now gets a cut of that deal too.

Peggy Fry, a former vice president of sales at Netflix and AOL Time Warner, is well-positioned to head up the advertising effort for Clearspring, and several people I interviewed attested to Clearspring’s mindshare in the market.

In an interesting twist, Clearspring and Webs.com are bedfellows. The two companies share a common venture backer, Novak Biddle, and Clearspring offers widgets for Webs.com’s millions of websites, Clearspring CEO Hooman Radfar saidin an interview.

However, one executive familiar with the situation notes that the relationship is growing uncomfortable as the companies deal with overlap in services.

There are other, smaller players that are trying to do what Clearspring does, including Musestorm for example (see our coverage).

Webs.com (formerly Freewebs)

Webs.com’s sales efforts are being led by Chris Cunningham, a regular on the Madison social circuit, who’s become a go-to widget evangelist and educator for ad agencies. The company is trying to monetize the millions of pages people have created with Freewebs service, which lets people create their own web pages. The company wans to make sure ads are relevant for its users, and so wants to match them according to each site’s subject matter.

Webs.com builds and distributes widgets, but relies on companies like Clearspring and YourMinis to provide the tracking analytics for how widgets perform. It wants to distribute widgets through its new game network.

According to a source, the company has a quarter-million dollar deal on the table to develop a Facebook app for a client. Webs.com already includes P&G, Ford, Universal Pictures, Sony and AT&T in their roster of ad clients.

YourMinis

YourMinis, a service launched by Mark Cuban-funded Goowy, lacks the sales presence of Clearspring or Webs.com but is another notable widget contender. Clients from CBS (multiple deals in place) to MTV, AOL, Redbull and Real Networks use YourMinis to build, syndicate and track brand-content widgets. Similar to Clearspring, YourMinis syndicates its widgets to the top social networks, blog platforms and Facebook apps, but also offers desktop extensions to Adobe AIR and Mac Leopard.

Developers whose widgets get under 50,000 views a month use YourMini’s services for free, while clients above that threshold pay a widget development fee and a monthly fee for syndication, hosting and analytics.

The company is experimenting with widget monetization, including looking at skinning widgets and inserting unobtrusive text links, CEO Alex Bard said.

Slide.com

Slide has enjoyed its position as the largest widget distribution service online, with three of the top ten Facebook applications (apparently ceding the #1 Facebook app spot to RockYou’s SuperWall last week). Since the company’s user base is built upon consumer-powered widgets like photo slideshows, its approach to monetization has been markedly different. In August, Slide started allowing users to incorporate branded images into their widgets, with Paramount Pictures, AT&T Wireless, Activision and the Discovery Channel as early ad partners (VB coverage here).

Slide is emphatically not in the business of making and distributing branded widgets. It is more focused on carefully monetizing their existing ones. Within Facebook, Slide is now experimenting with skinning canvas pages (pages where users interact with Apps) and it recently ran a campaign with Comedy Central, allowing users to skin their slideshows with a promotion for the Sarah Silverman show. Nam notes that an impressive 5 percent of users clicked further to watch a video promo of the show from within their slideshow. Unlike RockYou’s ad network, Slide appears to have no plans to leverage its Facebook presence for pay-for-play for other widgets.

RockYou

Before Facebook Apps, RockYou was focused on doing things like adding features like glitter text to its Myspace slideshow widget. As of last week, they now hold claim to the most popular app on Facebook (their SuperWall has surpassed Slide.com’s FunWall) and they’re reaching some 40 million Facebook users a month, by Quantcast’s measure.

They launched an ad network shortly after the Facebook Apps launch (VB coverage here) designed to leverage their presence on Facebook to promote other apps. They started by offering cross-installs and now offer banner-style advertising on their canvas pages.

RockYou’s opportunity for real advertising dollars has been a bit unclear. Goowy CEO Alex Bard notes: “If you think about the majority of what RockYou is doing, let’s call it widget advertising revenue, it has come from promoting other applications. It hasn’t been in true ads, right? I’ve got an application, I want to distribute it as quickly as possible. More like a widget distribution network.”

Indeed, RockYou VP of Business Development Ro Choy notes that half of the top 50 apps on Facebook are paying clients in RockYou’s ad network. He also points to deals with Expedia, Paramount, Sony Pictures and CBS News to explain their foray into traditional ad dollars. Paramount didn’t want to take the leap into developing a full Facebook App, so instead they developed a quiz for the upcoming Sweeny Todd theatrical release. It’s integrated into the existing Likeness Quiz App, is seeing some 15-30K completed quizzes a day, and is getting virally extended through Facebook Feed updates. This mass reach on Facebook and readiness to leverage it has garnered interest from major agencies like Ogilvy, Digitas and 360i. Average RockYou deal size? $30-70,000, par for the widget course, the company says.

RockYou works with partners to build applications too, including with ContextOptional, Trignos and RealBranding. RockYou handles distribution. Clearspring provides their tracking analytics.

Updated

More and more publishers and retailers rely on so-called “widgets,” little boxes placed on other web sites, to deliver their news, entertainment and product advertisements.

So measuring Web traffic to those widgets is important for deciding what content to deliver, and what sites to deliver it on. A number of companies now offer widget traffic measurement tools, with Quantcast being the latest.

Here’s a summary of some of the main players in this nascent but increasingly important field:

Quantcast – This relatively new San Francisco company monitors traffic to Internet sites. Today, it adds a video and widget measurement service, also free. It is still a test version and publishers include Slide, PictureTrail, RockYou, MetaCafe and MochiMedia. It reports on traffic to all Flash-based media, including online games and downloaded desktop widgets. The service reports a widget’s “reach,” the number of times a video has been “played” or that widget has been clicked on, and the categories chosen (a publisher can tag a widget or video as a “game” or “comedy,” for example). It will also report things such as which users clicked on the widget most often (frequency), and the demographics of these users, based on other information Quantcast collects. It provides this information in a pie chart. To use it, you have to register here www.quantcast.com/quantified-publisher.jsp, and more info is here www.quantcast.com/quantified-video.jsp. See chart below.

Clearspring – The company offers traffic analytics for publishers like Time, NBC, Universal and Maxim – which together now have more than 4.2 billion widget views. Last month, the company began letting developers write, distribute and tracking widgets through Clearspring. Like other offerings, it provides a dashboard, and tracks things like a widget’s source domain, number of visits and geography of visitor. Clearstone, like Quantcast, is hands-off on the widget creation process. You’ll need a third-party developer to build a widget if you want one built.

WidgetBox – This company provides a “wrapper” to widget developers so that they can track the widgets. Again, you’ll need to build the widget yourself.

Musestorm -– The company distributes widgets for both the Web and the desktop. Notably, though, this company goes a step further. Other companies put a “wrapper” around the widget and then track that widget. However, they can’t track activity of content within the widget. Musestorm lets you do that -– for example letting you know how many times a video within the widget has been played, and how users switch between surrounding audio and text. Quantcast, Widgetbox and Clearspring don’t offer that. Musestorm also lets you update widget content, adding and removing items, and so lets you track performance of variable kinds of content. Musestorm has a new release coming this summer containing other features.

Update: Comment below mention other providers, Comscore (see here) and Yourminis.

Updated

Here’s the latest action:

USA Today launches new social networking features, but stiffs Google — The newspaper has offered an array of new features, letting registered readers have their own profile pages, where they can recommend articles, solicit comments — and there’s more. Alas, the new content of all these users won’t be tracked by Google or found in Google’s search results, because USA today has used Javascript technology to defy it. That hurts USA Today’s traffic. VentureBeat contacted Steve Kurtz, director of IT at USA Today. He said use of Javascript was intentional, explaining the company is being careful “about what content is associated with the brand…We’re still a newspaper.”

Reuters wants to start a financial Myspace — Details here.

Latest Google tidbits — Here are the latest items emerging from Google’s latest filings: It has 30 subsidiaries and many international offices ; it has about $11 billion in cash and other liquid assets to spend; it paid 100 times YouTube’s $15 millon annual revenue when it bought the photo sharing site last year for $1.65 billion. Meanwhile, the troika of leaders at Google (Sergey, Larry, Eric Schmidt) earn $1 salaries again, while four other Google executives will get $450,000 this year, or $200,000 more than last year: Robert Eustace, senior VP of engineering and research; Omid Kordestani, senior VP of global sales and business development; Jonathan Rosenberg, senior VP of product management; and George Reyes, the company’s chief financial officer.

Google criticized — Google hasn’t had a very smooth early marketing of its paid software application package. Meanwhile, its chief foe, Microsoft goes on the attack, its lawyers saying Google is “cavalier” when it comes to copyright protection. Google, in response, points people to a comment by the CCIA, which says Microsoft is out of line, and that it should consider its own practice of reverse engineering products under “fair use.”

Latest Newswire stories — There’s Peer39, which wants to bring natural language technology to an ad marketplace. It has backing former Shopping.com CEO, Dan Ciporin, and $3 million from Dawntreader, VentureBeat has learned.

There’s Clearspring, a company that says it serves 30 million widgets a day (!), and which has just raised $5.5 million. It’s smart, going after mainstream users. For example, its widgets are being offered by the NBA to fans, giving them a way to feature NBA all-star dance team members (see photo left) on their sites, scoreboard tables and more.

Finally, Ticketsnow gets $34 million for event tickets online.

Rockyou raises $11 million — Speaking of widget companies, Rockyou, which provides a way for you post your photos/slideshows on other sites, has raised $11 million in venture backing, led by Partech International, a VC with offices in SF and Europe, and including Sequoia and Lightspeed Venture Partners. Rockyou has a valuation of more than $50 million, or around the same as competitor Slide, according to Techcrunch. It raised $1.5 million earlier from Sequoia and Lightspeed.

Webcasters to get snuffed by music royalties? — The music industry has pushed up royalty rates paid by Internet radio sites like Pandora and Last.fm, potentially causing them serious pain.

Yahoo’s Mixd shuts — Wow, that was quick. The SMS group networking service launched by Yahoo at test in November, rendered some lessons, but has been discontinued — though it might live on in future mobile products, Yahoo tells Read/Write Web.

Geni, the Web site for family trees, raises a $10 million second round of financing — It is led by Charles River Ventures. See our earlier coverage here. By all accounts, Geni is doing well. The Los Angeles company got unexpected traffic from people abroad, clamoring to use it in their native languages. [Update: David Sacks, the chief executive, confirms that company is valued, after the investment, at $100 million, a significant jump from the $10 million valuation of the company after it raised money in June. Some 100,000 users have input about 2 million people on the site (themselves and their relatives).]