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User Generated Content: The Risks and Rewards for Advertisers

They say everyone has a story to tell. And thanks to growing connectivity, proliferating social platforms and the explosion in smartphone use, it seems as if everyone in the world is telling theirs online. About 70 million images are posted on Instagram every day. 300 hours of video are uploaded to YouTube every minute. And 80% of all online content is coming from consumers, with much of their storytelling and sharing relating to their everyday experiences with brands big and small. In the wake of this social tsunami, strategies for harnessing the power and influence of user generated content (UGC) have emerged as an increasingly critical component in every marketer’s toolkit. To wit, nearly 70% of brands leverage UGC in some fashion.

Content Reigns Supreme—Especially When Crowned by Trust
It’s no wonder that they do. Mary Meeker, in her 2016 and 2017 Internet Trends Reports, highlighted the value of user-generated content (UGC) by pointing out that consumers interact with UGC 6.9 times more often than with brand content, mostly because they find that content far more trustworthy and authentic than that put up by brands. In fact, 88% of consumers trust online reviews written by other consumers as much as they trust recommendations from their personal contacts, 84% of consumers say they trust peer recommendations above all other sources of advertising, 74% of consumers rely on social media to inform their purchasing decisions. But beyond ratings and reviews—which function pretty much the same as old-fashioned word-of-mouth marketing, albeit with the superpower reach and speed of digital—brands are using UGC to effectively and inexpensively meet a growing need.

Feeding the Beast
The primacy of YouTube—especially among the Millennial and younger demographics—the emergence of Instagram TV, the myriad of new streaming video options and other examples all highlight the ever-expanding draw of online video. For brands trying to keep pace with consumers’ seemingly insatiable appetite for online video, UGC—which thanks to smartphone cameras can be close to professional in quality—offers marketers a way to address the “content crunch” of creating the fresh, inexpensive video and photo content needed to meet consumer demand while also building awareness and engagement. GoPro is perhaps the poster child in how brands can use UGC to transform an emerging business. And Apple’s “Shot on iPhone” and Toyota’s annual “Feeling the Street” campaign are examples of how established brands are creatively and intelligently curating UCG content to keep customers close and engaged. Sometimes really engaged—at minimal cost. In Toyota’s case, the UGC effort received more than 1.2 million likes, comments, and shares across the campaign. And, without raising their budget, they managed to secure a 440% increase year-over-year in ad engagement.

Surfing the Wave Safely
But for all the benefits brands can reap from the social tsunami, there are plenty of risks, challenges and uncertainties to operating in the digital universe in general and UGC more specifically. Earlier this month, for example, The Media Rating Council released a draft update to existing Guidelines for Brand Safety Ad Verification to address concerns around the incidence of programmatic ads getting loaded adjacent to UGC that is out of sync with a brand’s mission. P&G and Unilever both made highly publicized decisions to halt digital ad spend until the brand safety issue could be resolved. And the launch of IGTV spurred a flurry of articles wondering, once again, how the expansion of digital video online might affect TV ad spending. While there’s no way to know for sure, our take is that TV advertising spend will co-exist with digital and UGC spend because cross-channel, multi-platform campaigns are what’s called for in our increasingly fragmented landscape. UGC offers marketers a tremendous new power tool in the kit. But it doesn’t replace old-school hammers and screwdrivers.