According to the Interactive Advertising Bureau (2008), the future of online advertising is social networking and involvement with users, customers and other stakeholders. Social media transforms the complete media ecosystem on the internet. (p. 1.) The below study is designed to evaluate the current use, benefits and strategies regarding to user generated content. (UGC) Reviewing the usability, involvement level, the value of advertising through social media and review sites is the main purpose of the current paper. The authors would like to evaluate the marketing power of technologies associated with UGC and the opportunities/challenges of the advertising methods.
User-generated content(UGC) or also known as consumer-generated media (CGM) has been around since the 1980-s when the Usenet network was set up. (Interactive Advertising Bureau, 2008, p. 1.) However, the spread of the internet and the digital age brought the real break through in the spread of the platforms. Today, rating sites on the internet are among the most trusted sources of information regarding brands and products.
Using the most widely used and accepted definition of user created content (UCC) or user generated content (UGC), according to a recent OECD study (2007) is: content that is
a, made widely available over the internet
b, contains a certain level of creative effort
c, is created outside of professional practices and platforms. (p. 4.)
The Interactive Advertising Bureau (2008, p.1.) defines user-generated content as information and material created and submitted from non media professionals. The authors also confirms that it is the “fastest growing form of content over the internet”. (p.1.)
According to the Interactive Advertising Bureau (2008, p. 2), in 2006 user generated content sites attracted more than 69 million users in the USA and accounted for $1 billion media advertising revenue in 2007. The growth of UGC sites around the world among broadband users under the age of 50 is also confirmed by the OECD study (2007). The measurement of user-generated content is problematic, though, because it is hard to obtain studies about the number of posts, videos and review sites created by each person. Researchers need to rely on questionnaires and studies. With the growth of social networking sites, it is hard to differentiate between personal posts and reviews or votes. However, measuring the number of unique visitors a month would provide researchers with an approximate measurement of the growth. According to 2008 statistics published by Balasubramaniam (2009), YouTube had over 23.000.000 monthly visitors, while Facebook got 22.000.000.
- Drivers Of User-Generated Content
There are different drivers associated with user-generated content. Balasubramaniam (2009) set up different categories:
a. Technological drivers
b. Social drivers
c. Economic drivers
d. Institutional and legal drivers.
Technological drivers, according to the recent OECD study (2007) are technologies making communication over the internet faster and more reliable. Memory capacities, enabling users to create and store content have also evolved in the past two decades. Software, including .html editors, video processors, web cameras and mobile devices suitable for instant uploads are also among the main technological drivers of UGC.
Social drivers are based on consumer behavior; such as the increased use of broadband services, mobile devices for internet and the popularity of social media for interacting with friends and peers. The use of internet has shifted towards the younger generation; the group that has high level of technological and internet related knowledge.
Economical drivers of UGC are based on the measurements of user generated content’s effectiveness. Companies focus on social media presence not only for search engine optimization reasons, but also to create and strengthen a brand, target the right customers and increase their credibility. Economical drivers are important, because the cost of social media campaigns is negotiable compared to the possible benefits.
Legal and institutional drivers are based on simplified licensing and copyright regulations over the internet, the appearance of commons licenses and the rise of different end-user agreements.
- Types Of User-Generated Content
The categorization of user-generated content is a subject of industry debates. Some authors use broad categories, like the Interactive Advertising Bureau (2008). Other authors have attempted to create specific categories based on the type of interaction between users. The Losowsky website (2008, web) lists seven types of user-generated content, however, the categories focus on the type of correspondence and not the real effect of the content. The seven categories are set up to differentiate among UGC based on the level of independent user influence. Therefore, the current overview study would like to use the categories set up by Balasubramaniam (2009) as a more suitable method of differentiation. The author lists seven types of user-generated content, differentiating on the level of independent user involvement and the platform used. These are: media, chat, family and friends, e-commerce, groups, news, voices.
The 2007 OECD report, however, categorizes UGC based on platforms only, and that seems to be the most reliable type of categorization. Table 4 (OECD p. 16.) shows the different distribution platforms of user-generated content. There are eight different platforms detailed, namely:
Personal or on blog network platforms like Tumblr are popular. In 2006, there were more than 200 million blogs online, according to OECD (2007).
b. wikis and collaboration sites
Yahoo voices and other media sites publish user-generated content based on experience and knowledge sharing. Wiki sites are suitable for distributing information quickly and changing content.
c. feedback sites
Rating sites provide background information for customers on products, services and brands. The most popular feedback sites are detailed by
d. group-based aggregation
Consumer groups are able to influence online audiences.
e. social network sites
Social networking is quickly growing worldwide, and the fact that people share experiences, preferences and reviews provides advertisers with a great opportunity.
f. virtual worlds
Advertising in virtual worlds is a great opportunity for game, music and application developers.
g. content or file sharing sites
Content and file sharing is gaining popularity, however, it has several copyright and user agreement challenges.
The formats of content can also differ from text through images to music and videos. However, the authors do not talk about the different level of creativity and spontaneity when categorizing user-generated content. Some content can be a simple share of another person’s blog post or Facebook post, while others involve comments and detailed reviews on other sites’ content sharing platform, for example TripAdvisor. The site allows users to rate the attraction or tour company, location, submit images and videos alongside the text based review.
- PUBLISHING CHAINS AND EMERGING BUSINESS MODELS
The emergence of Web 2.0 technologies has opened the way for new business models based on online reputation management, social media and content based advertising. Hoegg et al. (2006) highlights the importance of the existence of web 2.0 communities on the internet formed around the same interest and views. The study analyzes forty different Web 2.0 sites; some of which by today have lost their significance. However, the study provides a great overview of the different publishing models and platforms. The authors analyze the new models of media based on user-generated content using the mcm Business Model Framework. Analyzing the social environment, the medium features, value chains and flow of goods and services seems to be the best approach to evaluate the newly emerging business models based around UGC.
The Interactive Advertising Bureau (2008) details the latest trends in UGC advertising. While the older web 2.0 models still work, including widgets, content sharing and social media platforms, there are emerging media strategies to be considered when looking at different business models. One of the main trends in recent years has been “overlay video ads”. The most popular advertising network for this business model is YouTube. After the video site’s acquisition by Google, users who create unique and original video content are offered a share of the advertising revenue. The most important benefit of this type of advertising for media companies and firms is that the overlay ad is aimed at the audience. Demographic and interest-based targeting is the main strength of emerging advertising methods, including Facebook ads.
Conversation targeting is another effective method of online marketing; placing ads next to user-generated content, on forum pages and popular blogs is an effective way of finding new customers based on their interest.
Custom communities is another emerging way of involving existing and potential customers in conversation. A good example quoted by the Interactive Advertising Bureau (2008) is Adidas’ soccer community, based around one single brand. The site targets customers who have a high brand-awareness and interest in sports.
UECD (2008) analyzes the emerging value of publishing chain of user-generated content. (p. 21.) While most user-generated content is created without the expectation to make a profit, advertisers are able to build upon the popularity of the site, video or publication. While incentivizing customers to recommend, share and review the products is against Google’s current search engine optimization policies, some companies are able to motivate their users in a non-incentivized way to share and recommend products. A happy customer does not need remuneration to make recommendations for their friends and family through social media sites, and word of mouth advertising is free for companies.
In the emerging market of online branding and media campaigns, there is a great focus on platforms, tools, online collaboration and community services, according to Hoegg et al. (2006). However, the report does not mention the latest methods used after the spread of mobile computing. Widgets, apps and quizzes created by companies are popular methods of increasing brand awareness and company reputation.
- ECONOMIC AND SOCIAL IMPACT OF USER-GENERATED CONTENT
Companies today are able to target internet users in a way that it is cost-effective, suitable for brand and reputation management as well as market research. Internet audience can be attracted through different channels. According to UECD (2008), there are various economic incentives in the value chain of UGC management. These include professional content creators, web services, online marketing agencies, portals and internet service providers. One of the recently emerged services in the economy of user-generated content is app development. Companies are able to create not only mobile optimized sites for their customers, but also allow them to set their own preferences and provide feedback. Applications that allow not only content sharing but purchase online using mobile devices based on other people’s recommendation are the most innovative ways of gaining new customers and increasing sales. One of the best examples for this type of targeting is Amazon’s Kindle device development. Customers get recommendations based on what they read or watched, as well as their Facebook friends’ interest. Netflix uses a similar platform, sharing the activity of users through social media among their friends.
The emergence of the new user-generated content based advertising methods also has an implication on traditional advertising, as it has several advantages. Costs are usually lower than TV and magazine campaigns’, and the fine targeting of customers is much more effective.
Social impacts of user-generated content include increased autonomy of users, higher level of credibility, more effective advertising types and interaction. From the search engine optimization point, companies can benefit from users’ input on social media sites, their mentions and shares of the company website, while users can create their own authority as an expert, becoming leaders. An e Book can today simply become a best-seller based on the high number of positive reviews shared on social networking sites.
- OPPORTUNITIES AND CHALLENGES USER-GENERATED CONTENT
There are still many opportunities not fully utilized by companies over the internet. There are some companies that develop tools and applications that enable sharing, recommending and reviewing products. However, digital content policies and single site rules change from time to time, therefore, advertisers need to continually review the publishing and advertising rules in order to comply with the regulations. Content delivery is one of the main areas where privacy rules play a great role. Facebook has so far managed to keep its user-targeted advertising method involving videos and images alive, but is constantly under attack by groups claiming that it is sabotaging users’ privacy. The unstable regulatory environment (UECD, 2008) calls for extra caution regarding content, targeting and platforms. Identity theft and phishing is still a great problem over the internet, and while many large content sites do their best to protect their users, there is a growing concern regarding the publicity of data. Moderation is one of the options that companies use, however, when the content is moderated and filtered, it is not considered fully democratic and user-generated. Finding highly motivated content owners, who are either authorities, community facilitators or information seekers requires a lot of research, and a company needs to target all three levels of user engagement: producing, participating and consuming content. (Bruns, 2009, p. 18.)
While the use of the internet (home or office-based and mobile) provides endless opportunities for companies to engage their customers and potential clients, there are still challenges ahead. Democracy and trust is the main benefit of user-generated content, however, some experts state that once advertisers get involved and sponsor posts, videos, the beauty of the platform disappears. This would also mean that as the level of advertisement connected to UGC increases, the popularity of the site would be reduced. However, today, there are various exampled of successful social media and user-generated content campaigns. Creating competitions and social responsibility campaigns is a “soft advertising” method that would work perfectly for all users, including those who are not looking to see brand names next to a user-created video. Therefore, the main focus of companies using social media and user-generated content should be on branding and reputation management, ensuring that all the ethical norms are followed and digital rights management legislation is followed.
Platform Status Report: User Generated Content, Social Media, And Advertising. Interactive Advertising Bureau. 2008. Web. http://www.iab.net/media/file/2008_ugc_platform.pdf
Bruns, A. (2009) Social Media: Tools for User-Generated Content Social Drivers behind Growing Consumer Participation in User-Led Content Generation. Smart Services CRC.
Balasubramaniam, N. (2009) User-Generated Content. Business Aspect of the Internet of Things. Web. https://edit.ethz.ch/im/education/FS09/iot_2009_slides/09_IOT_SEM._UGC.pdf Participative Web And User-Created Content: Web 2.0 Wikis and Social Networking. OCED Project. 2007. Print.
Hoegg, R., Martignoni, R., Meckel, M., Stanoevska-Slabeva, K. (2006) Overview of business models for Web 2.0 communities. Web.
Losowsky Website. The seven types of User-Generated Content. Web. <http://www.losowsky.com/magtastic/2008/ugc/>
Searle, N. (2011) Changing Business Models in the Creative Industries: The cases of Television, Computer Games and Music. Intellectual Property Office. Web. <http://www.ipo.gov.uk/ipresearch-creativeind-full-201110.pdf>