Selling advertising on entertainment-focused widgets such as Scrabulous or Zombies is about as easy as spinning straw into gold, yet there are plenty of people trying. And there are ways of generating revenue through specially focused widgets designed solely to sell rather than toss sheep. Brand and comparison advertising done through ad-focused widgets is emerging as a viable way of using the ubiquitous applications. Widgets’ interactive features, their ability to be virally distributed and potentially be placed on a target’s own page makes the creations appealing to advertisers.

Where that leaves startups such as RockYou and Slide, which develop entertainment widgets, and the ad networks that cater to those applications, is still unclear. I’m waiting to see if enough users buy into ads shown on their fun widgets or click through enough transactional widgets to make a viable business. However, existing online ad networks and possibly a few new widget creation and advertising firms are already proving that widgets aren’t just fun and games.

WidgetBucks is one such widget-creation/ad network company making money with this approach. CEO and Chairman Matt Hulett says the company sees click-through rates of 0.5 percent to 1 percent with its ads, which resemble interactive, dynamic banner ads. The company expects to pull in $10 million in sales this year. The company’s approach, however, has come with its share of drama, as some publishers have complained about WidgetBucks’ rates and practices.

When it comes to making his widgets a success for advertisers, Hulett based his design on the theory that people using widgets for fun aren’t expecting to be engaged in commerce, but people in other venues (such as those reading a product blog, for example) might welcome widget advertising that shows the latest deals on a device.

“It’s kind of like pre-roll advertising,” Hulett said. “It’s really hard when the context is around having fun. People do not like monetization in front of those platforms and the CPMs are awful.”

A similar approach to using a widget as a more interactive ad rather than entertainment is Toyota’s new campaign for its Scion vehicles, which launched on Tuesday. This is an example of widgets as brand advertisement, which can be spread virally around the Internet. The idea is that consumers use the widgets on social media sites as an identification of their aspirations, much like one might wear a Nike shirt.

Adrian Si, an interactive marketing manager for Scion, says the firm is using widgets as an extension of the rich media banner ads it runs through Interpolls. Si is hoping to achieve the same 1 percent to 2 percent click-through rate Scion sees using Interpolls’ rich media banners. That translates to a 4 percent to 5 percent engagement rate. Scion will measure both click-throughs as well as the number of times the widget is installed on someone’s site.

“This could be more valuable [than banner ads],” says Si. “Obviously, it shows they have a lot of interest in the brand. On their MySpace pages they can put a whole bunch of stuff, so it must have meaning to them. It’s also an opportunity to get our brand in front of them every day.”

Listening to these two companies I realized that widgets aren’t a new business, but rather a new form of advertising and entertainment. Those focused on advertising are making money; the question is, will the ones focused on entertainment do so, too?