Skyfire cloud service Rocket Optimizer 2.0 launched in October, boasting the ability to handle LTE support and instant optimization for almost any video format. With the ability to apply granular controls for video optimization based on cell tower congestion, device type, subscriber profile and service plan, the company said it can effectively add 25-percent capacity to any cell tower with its technology. Skyfire is now looking to take its new funding and expand overseas, particularly in Europe and Asia, where it’s building out its footprint.

Skyfire is expanding its role serving mobile operators with the launch of its Rocket Toolbar for carriers, which will be able to create a customizable web-based portal embedded in the default browser on mobile devices. Rocket Toolbar builds off Skyfire’s earlier inclusion of sharing and social features in its popular web browser, giving operators a “beachfront property” on the browser users turn to most often. Carriers that use Rocket Toolbar will be able to customize a user interface with toolbar extensions that offer contextual recommendations, advertisements, app discovery, social sharing and friends’ news feeds.

Skyfire said it has two “tier one” North American carriers that will deploy Rocket Optimizer and Rocket Toolbar by this spring. Skyfire isn’t naming them, but Verizon has to be one, though it’s unclear which product they’re going to use. The company is breaking even in North America and is working on trials with European carriers.

With Rocket Toolbar, Skyfire is trying to help put carriers back into the heart of a user’s mobile experience. They used to be front and center with portals on their device decks, but with modern operating systems, they have been relegated more and more to data providers. Their attempts to include preloaded apps are criticized as bloatware. Now, with Rocket Toolbar, they can get much closer to consumers again on an almost daily basis.

But it’s unclear how consumers will take to this new UI over their browser. Some may find a lot more utility in Rocket Toolbar, which brings a lot of context and social discovery to browsing. But the carriers could overplay their hand by being too pushy with ads or recommendations that don’t provide clear value or by directing people to their own app stores.

Jeff Glueck, CEO of Skyfire, told me the toolbar is customizable and can be turned off by users if they don’t like it. But he said Skyfire has learned a lot of lessons with its browsers, which have been downloaded by 12 million users. Users are able to see what their friends have liked and shared on different websites, and they can get recommendations on what to read, making the browsing experience more engaging. He thinks carriers can benefit by providing these services, making some money and getting an opportunity to be in front of users.

“There is little real estate to let carriers offer new services. They have no touch points with users to offer value added services or sell advertising,” said Glueck. “That’s what Skyfire is all about: leveraging the cloud and letting carriers thrive in an over the top world.”

Skyfire’s approach, becoming the best friend of carriers, makes sense to me. The mobile data boom is real, and offering a smart compression solution should make it attractive to carriers. Getting Verizon as a backer should also provide a big shot of legitimacy as Skyfire takes its technology worldwide. I’m curious how consumers will receive the Toolbar, a lot of which will depend on how carriers implement it. But it’s another way in which Skyfire is capitalizing on the needs of operators.

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In the future the company says it will allow publishers – mostly bloggers – to sell their own keyword-based contextual ads against their search results using Lijit ad-serving technology. Todd Vernon, CEO of the company, talked about this new network last month when he stopped by our offices.

The launch of the network comes at an awkward time – as the global economy is being tossed around like cans on a string attached to a car driving down a country lane. We talked about some of those issues when I had dinner last night in Boulder with Todd and his COO, Walter Knapp.

Like almost anyone whose business is dependent on the constant flow of dollars to online advertising, Vernon and Knapp are nervous. But they feel that they have a better mousetrap, one that will make them more valuable to discerning advertisers.

Vernon repeated the argument that because they have better knowledge of a weblog’s content (and its relevance) they serve up more effective advertising. It is one of the reasons why they go on to claim that they get a “search results to ad click-through rates ratio” of 3.7 percent; in some cases that number is as high as 7.8 percent. This is higher than typical contextual advertising rates. And while those are compelling numbers, I am hard-pressed to feel too optimistic about the immediate future of online advertising networks, though clearly the long-term trends favor folks like Lijit.

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The announcement is a bit like deja vu, since Yahoo and Intel for the last two years have offered a neat little integration for keeping track of your fantasy football league and watching the game on your big screen. But it’s been a lot longer than two years that people have been trying and failing to make TV interactive. There are some companies, like ActiveVideo Networks, that have been trucking along trying to make it happen for 10 years now.

Even online, content and interaction often seem like oil and water. At one time we thought Internet TV service Joost would be able to stand out because it opened up its API to widget developers. No such luck — turns out having the best content and making it easy to get to are way more important. I like where live-chat efforts from companies like Lycos and Paltalk are going, but they’re not there yet (see NewTeeVee coverage). On a more basic level, even YouTube is adding Pop-Up Video-like annotation features.

It’s possible we’ve evolved past the need for interaction in one place; we all have our laptops and phones out when we watch TV anyways. But I think there’s still some opportunity to do this right. Yahoo and Intel may have pretty good timing with this announcement given that only now are people starting to use their PCs and TVs for consuming content more interchangeably. An iPhone App Store-like product for TVs? Now that wouldn’t be so bad. Extending Google’s Android open platform to set-top boxes? That seems like it will actually happen too. What do you think?

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All this negative thinking is a result of pondering over the $18 million in Series C funding raised by Mclean, Va.-based Clearspring from New Enterprise Associates (NEA), Novak Biddle Venture Partners and other current investors. Competitors include Musestorm and Gigya, that have come up with platforms that allow publishers to publish, distribute and monitor their widgets.

Their total funding to date is $35 million. Other investors include Steve Case, former CEO of AOL who is said to have put in a big dose of cash. One of the other investors is said to be Adobe Systems, mostly because Clearspring is a big proponent of Flash-based widgets, and at one time ADBE was rumored to be buying the company.

More than the funding, the pre-money valuation is what made me gulp hard. It is said to be in high double digit millions – somewhere north of $60 million. Why is that? Because the company is said to have some astonishing numbers…

* served over 34 billion widgets to date; that’s up from 3 billion in May of 2007
* serves nearly 4 billion widgets per month
* has 126 million unique views per month worldwide
* had 50 million unique views per month in the U.S. alone; that’s up 6.5% from February

…. not that they really matter. Because they really don’t tell the story about Clearspring. First time I met Hooman Rafdar, CEO & Co-Founder of Clearspring was back in Fall 2006 at the Widgets Live conference that was co-orgnaized by me. His idea was that as widgets phenomenon spread, the widget makers would need infrastructure – platform and analytics – to publish and distribute the widgets as they grew in numbers. Then later they started old media companies and sports leagues with development of widgets and then they launched a widget ad network. So from that perspective this company is a infrastructure provider + consultant + ad network. In other words it doesn’t really own the widget impressions, per se. Not that the company has to!

Radfar didn’t give me any revenue numbers (typically no start-up talks about it) or divulged the percentage of widgets on his network that carry ads. He did mention $5 CPMs, which is much higher than the CPMs being reported by some of the other social media operators. Many of the widgets that carry CPM ads, have low CPMs – somewhere in the $0.15-to-$0.20 range, down from nearly 40 cents in late 2007.

I think there in lies the bigger problem with the widget sector as a whole: no one seems to have come up with a business model that makes sense. The widgets have become too successful, and have created too much inventory that keeps growing but doesn’t perform as well, forcing advertisers to re-adujust their efforts. Yet you have companies like Sprout getting funded, which tells me that there is a mismatch between market reality and VC expectations and lack of understanding of this sector.

The big opportunity is in analytics that lead to a better widget advertising system does a great job of behavioral targeting. The other opportunity is in developing new kind of ad formats that can be scaled. Radfar’s company plans on building better analytics that will improve the widgets and widget-based advertising. Lets hope for the sake of Radfar’s investors he is right and gets there. That is before Google does.

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ComScore’s tracking methods are debated (see also Techcrunch: “The Widget Kings” and GigaOM: “ComScore Widget Metrix, more like a Jellybean Contest”), but clearly widgets offer an opportunity to create a positive brand experience. Take a moment to review comScore’s latest rankings of the most-viewed widgets (released in January):

Now, what can you do to make sure your widget has the best chance of success? I have some pointers…

10 Tips for Using Widgets (Well!) to Build your Brand
1) Make your widget engaging. Successful widgets let the user DO something. Beyond bling, they facilitate some social action on the part of the user – picture sharing, sharing of tastes in music, sharing a contest or poll – anything and everything social.

2) Use flexible formats. Offer your widget as a square, a rectangle, in various colors, sizes and shapes to appeal to the personalization desires and expectations of social media users.

3) Don’t Hesitate. Deploy your widgets fast and often. The best way to garner traffic and engage site visitors is to be one of the early developers and deployers of a widget. Being an early adopter lets you leverage the loudest phase of word-of-mouth.

4) Don’t be a one-trick pony. Have new widgets ready to follow. A single look/feel/function for a widget will wear out its welcome after a time. So plan follow-on widgets or upgraded functionality to expand upon the widget’s initial capabilities without forcing the user to change code. Make your widget part of a larger campaign, not a static event.

5) Maximize Adoption. Let visitors to your widget’s users pages also adopt the widget without registration barriers. A “best of” widget works well in this capacity (aggregating the most interesting from your widget user base for others to showcase on their pages).

6) Keep it Simple. Make the code for the widget so easy to copy and integrate that your baby brother could do it. Offer rewards or incentives for people to pass it on.

7) Promote, Promote Promote! Just because you build it doesn’t mean they’ll come. You have to actively promote widgets in order to increase findability and shareability. This involves a little marketing for the marketing.

8) Make sure it works! This sounds obvious, but all of us have had the experience of inserting code that doesn’t work. Few things bug Internet users more than taking the time to install something on their site only to have it show up as a blank box, cause problems they didn’t have before, or just plain not work as described. Test your code in various environments and within as many types of social media sites as possible before offering it to users.

9) Push the envelope. Go beyond the normal boundaries of what’s possible within the widget and also how it connects and enhances any given social graph. Connect your brand and value proposition to your customers’ areas of interest and enable something they couldn’t do before. Or improve something your customers are already doing enhance their online or offline experience.

10) Manage and cultivate the existing community. Killer widgets aren’t introduced and then forgotten about. There’s a sense of community building that needs to take place in order to keep people active — and also increase the buzz factor of word of mouth marketing.

* Widget Definitions (from comScore):The current universe of widgets is defined as embedded Shockwave Flash objects, certain JavaScript objects, and Facebook applications. The comScore Widget Metrix service will evolve in its tracking of widget file types as the market dynamics and content delivery systems change. The report currently focuses on the individual widgets, and not the platforms that deliver them. Desktop widgets are not included in the reporting.

Mike Jones is the CEO and cofounder of Userplane, a premier provider of communication software for online communities such as MySpace, Friendster and eHarmony.

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It is a pretty simple install process. You download the latest build of Google Desktop for Mac. Install the application and once you are done installing, a window opens and offers you many different widgets. You click on the ones you like, and the widget is installed inside your Dashboard. My favorite Google Gadget: Google SMS. Easy way to get local information.

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[Widgets] are all the rage on the Web. Marketers are thinking of ways to use them to sell ads, and venture capitalists are mulling investments in the hottest widget makers. The stampede reached a roar this month, when market leader MySpace and Facebook expanded their services for targeted ads, including widgets designed by marketers.

But look at the numbers for investments in widget distribution platforms and widget suppliers, and it becomes clear that this not a stampede but more like a Sunday stroll through the widget park.

A widget is just an embeddable bit of web or desktop content wrapped up in a nice user interface. You can put widgets on blogs, social networking profile pages, or on an Ajax start page, though not all widgets can be embedded on all kinds of pages.

Though many companies might use widgets to promote and distribute their content or features, there are two categories of startups that, to me, represent relatively pure bets on widgetization. The first is widget development, distribution, and packaging platforms like Clearspring or Widgetbox; the second, widget suppliers like RockYou or Slide.

I’m leaving out many other kinds of widgets and widget startups, of course. You can have desktop dashboard widgets, widgets to be embedded on blogs like Blogburst or MyBlogLog or Lijit, Ajax start pages that support widgets, video syndication widgets, and more.

But taking a look at widget platforms and social networking widget purveyors, we can get an idea of whether 2007 has seen a stampede towards widgets or perhaps something more genteel. I’ve gathered funding data for widget distribution platforms and widget distributors in the table below.

This doesn’t represent all the funding for such companies. Fox Media is building SpringWidgets, so that investment doesn’t appear here. Widgetbox has been rumored to have taken additional funding from Sequoia. And some companies have reported investments but declined to provide specific figures. Still, this gives an idea of the magnitude of interest in the space.

You could also argue that companies like YouTube and PhotoBucket are widget companies — and if you added in their acquisition prices the numbers do start to get really big, really quickly (partly, of course, because acquisition prices represent the entire value of those companies). But I think those two are examples of how embeddable web content can help promote a broader web service. iLike might fit better with those, too.

The total funding for these companies is just under $60 million, a respectable number but by no means a stampede towards widgets. This could reflect the uncertainty around how to make money with widgets and widget platforms. Or perhaps it’s more evidence of investor sobriety.

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Google will announce its new social networking initiative, Open Social on Thursday. Joining Google and its Orkut social network are other partners such as XING, Friendster, hi5, LinkedIn, Plaxo, Newsgator and Ning.

OpenSocial is a set of common APIs for building social applications on the web. These common APIs mean that developers only have to learn once in order to start building social applications for multiple websites, and any website will be able to implement OpenSocial and host social applications.

OpenSocial attacks Facebook where it is the weakest (and the strongest): its quintessential closed nature. Several Facebook developers have groused that a special Facebook-only mark-up language makes the task of writing Facebook apps tougher. (Recommended reading: Anil Dash on the historical limitations of proprietary development platforms.)

Google has managed to attract some of the key Facebook app companies Flixster, Rock You, Slide, and iLike to work with them on OpenSocial. The lure of expanding their widget base to other Social platforms such as hi5 and XING, perhaps was too hard for them to resist.

Even if you take Facebook out of the equation, the task of writing and adapting widgets for the every increasing number of social platforms was going to turn into a colossal mess. OpenSocial looks to address some of those issues. This is a mild negative for start-ups who are offering middleware services around widgets.

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