• by Mark Walsh  @markfwal, November 3, 2008

The souring economy has not slowed the widget arms race, as RockYou on Monday announced a fresh injection of $17 million in financing from the Softbank Group to fund expansion into the Asian market.

The latest investment in widget distributor RockYou follows a third-round funding of $35 million in June led by DCM and brings the company's total raised so far to $67 million. It also comes just a month after rival Gigya added another $11 million to its widget war chest.

With the backing of Japan-based investment and technology giant Softbank, RockYou plans a pan-Asian push that will extend its widget platform to social networking properties in countries including South Korea, China and Japan. Softbank holds a 40% stake in Yahoo Japan and is an investor in SK Telecom Ventures as well as Xiaonei, the Facebook of China.

Because most social networking in Asia is done via mobile device, that's where Redwood City, Calif.-based RockYou will focus its efforts, according to company CEO Lance Tokuda. "If you look at trends in Asia, social networking occurs more on mobile than the Web, so we believe the region will lead on development of social mobile applications, and will bring those apps back to the U.S. as the mobile market matures here," he said.

He added that RockYou has already launched widgets on Xiaonei, which raised $430 million in funding last spring led by Softbank.

RockYou made its mark in the U.S. mainly through its popular Super Wall application on Facebook that allowed users to share photos, videos and other content. Sponsored apps on Facebook and MySpace now account for the bulk of RockYou's revenues.

In the wake of Facebook's redesign this summer, speculation emerged that widget providers such as RockYou would suffer because of the focus on reducing clutter caused in part by the proliferation of time-wasting apps. But Tokuda said traffic to its Facebook apps has been "relatively stable," noting the popularity of its birthday and "Hug Me" apps.

An Oct. 23 post on the blog Inside Facebook reported that Super Wall had increased traffic slightly over the last month to roughly 18.5 million active users. Facebook temporarily shut down viral components of the app in July as part of its wider effort to crack down on spamming activity tied to apps.

RockYou applications overall have 65 million users globally and 20.5 million in the U.S., according to Web measurement firm Quantcast.

For all the exposure it owes to Facebook, Tokuda said MySpace will likely become more important over time for RockYou because of its much larger U.S. audience.

"Brand advertisers don't pay for international traffic--they pay for U.S. traffic," he said. To that end, the company in the last three months has opened sales offices in New York, Los Angeles and Detroit. In the next year, RockYou will hire another 15 direct salespeople along with several support staff.

With its domestic and overseas expansion, the company clearly isn't sitting tight waiting for economic conditions to improve. Tokuda said the next two months look "very strong" for the company, with campaigns for major marketers including Paramount Studios. "We've already established a brand name, so we have a lot of opportunities," he said.

While some have suggested that budgets for emerging media--including widgets--will be cut because of the downturn, Tokuda is confident that will not be the case. For some advertisers, "we're already past the experimental-stage budgets," he said. "Once you get into the normal budget cycle, then revenue is more steady."