Summary: Tag clouds are overused. While looking pretty, they use screen space inefficiently, and many users don't know how to use them.
Sidebar to Jakob Nielsen's Alertbox, March 23, 2009 on mega drop-down menus.
Tag clouds were a huge fad in 2009, and have actually been a fad for several years. Even so, usability studies show that most normal users don't know what they are and don't know how to deal with them.
An interesting variant is the word cloud which can be used to visualize the most frequently-used words in a corpus of text. Wordle.net is a free service that draws attractive word clouds. Here are two of its pictures, showing the word use in two of our reports:
Word cloud from Wordle.net of the full text of the 10 Best Applications Design report.
Word cloud from Wordle.net of the full text of the Donation Usability report.
Some things are clear from a glance at the images:
These are usability/user experience reports, as opposed to many other possible takes on the topics of applications and non-profit organizations. ("Users" is the biggest word in both clouds)
The different focus of the two reports is also apparent.
If one digs deeper, one can tell some other differences between the reports. For example, "information" is bigger for Donations than for Applications.
If one digs really deep, more insights appear. For example, at the bottom of the Donations cloud, we see that the tension between local and national charities is one of the issues covered in the report.
Even so, I don't think this is a great way of presenting the contents of these reports. A one-paragraph summary of each report would probably be more enlightening, be faster to scan, and would take up much less screen space, allowing for more items to be summarized on any given page.
For example, look at the summaries of the two Alertbox columns that announced these two reports:
10 Best Application UIs
Many winners employ dashboards to give users a single overview of complex information and use lightboxes to ensure that users notice dialogs. Also, the Office 2007 ribbon showed surprisingly strong early adoption.
Donation Usability: Increasing Online Giving to Non-Profits and Charities
User research finds significant deficiencies in non-profit organizations' website content, which often fails to provide the info people need to make donation decisions.
My conclusion: Just because something looks cool, and just because it's a current fad in Web design, don't mean that it's necessarily best for usability and best for growing your business on the Web. As usual, it's probably better for you to focus on some of the top-10 high-profit design priorities.