Gordon's Republic

Gordon Macmillan

Its 'User Generated Content and Social Networks Advertising Overview’ looks at all areas of the one thing everyone wants to know how to crack. These last few weeks, it has been Twitter again and it will be interesting to see where that goes and how it develops and grows.

The report puts social media sites like Twitter at the centre of the user generated content, which began almost a decade ago with Open Diary. The first blogs became tipping points for this social media ground swell where "social networking is the ultimate manifestation of user generated content, and as such, holds more potential for growth than any other form of content on the web today".

Part of that is down to how it changes the dynamics of web relationships (to a degree) and puts content creation into the hands of the many rather than the few because of the proliferation of cheap, quality and easy to use technology.

However, the report is right when it says that while this has led to a growth in content from individuals and groups, what it hasn't done is filtered through to brands and agencies whose fears and unanswered questions keep them from taking full advantage of this changing dynamic.

And there is a lot to take advantage of. In 2006 UGC sites attracted 69m users in the US alone, and in 2007 generated $1bn in advertising revenue. That is just the thin end of the wedge. By 2011, UGC sites are projected to attract 101m users in the US and earn $4.3bn in ad revenue. Still, obstacles remain that prevent advertisers from taking advantage of this dynamic new medium. In the UK as well the numbers are good, such is the fervour and interest in social networking.

The report shows how relevant UGC is at all levels, demonstrating why brands should care. It isn't all about geeks on Twitter and kids on Bebo. At the very sharp end of consumer interaction some of the most popular and successful (and obvious as well for that matter) UGC social media sites are review sites where consumers share their brand experiences, which is something that extends across about every area you can think of and is set to extend further still.

In October 2007 a Nielsen study found that consumer recommendations are the most trusted form of advertising around the world. Over three quarters of respondents from 47 markets across the world rated recommendations from consumers as a trusted form of advertising. Compare that to 63% for newspapers, 56% for TV and magazines, and 34% for search engine ads2. Review sites are frequently where consumers go to find those recommendations, making them an important place for marketers to have a voice.

The report looks at some of the biggest sites on the web for this kind of thing, namely electronics site CNet and automotive site Edmunds.com.

CNet and Edmunds are both a decade plus old and include a lot of content from professional editors, but alongside those are the consumer or user reviews that you'll find on any number of other sites like Amazon or Reviewcentre.com.

Another good example the IAB gives is Conde Nast's food and wine site Epicurious.com. According to CondeNet, of almost 100,000 recipes in Epicurious.com's database, 92% have ratings and/or comments. In addition to these reviews, over half of the recipes in the Epicurious database are user submitted.

These sites are good models as they're long established and they have already progressed a long way through the learning curve. They have established what is dubbed "user agreements" that ensures that the user reviews on the site are a high standard and don't contain any defamation, profanity, threats, illegal or inappropriate content.

That seems to work as Edmunds says that less than 1/10 of 1% of all user comments are deleted, and only a small percentage of those are for profane or derogatory language (most are the result of salespeople posing as customers).

So while review sites by nature foster an honest, consumer-led discussion about product and service experiences, they are not the “wild, wild west”. While advertisers cannot be guaranteed they won't be advertising alongside a negative comment about their brand, they can reasonably assume their ad will not sit next to profane or defamatory content.

On the blogging front the HuffingtonPost and Gawker network gets credit for showing where that particular side of social media can go and how blogs in particular could develop into news businesses combining professional salaried teams with UGC.

The change in the online landscape has had a major impact on where the ad dollar goes --- namely that the dollar is being spread among an increasing number of vertical sites.

The IAB cites Avenue A/Razorfish as saying that in 2007 adspend was distributed across 1,832 websites, more than double the 863 properties on which the agency purchased media in 2006. More importantly UGC sites, predominantly blogs and "owned and operated" sites, were playing an important role in niche ad networks such as Glam Media, iVillage's Sugar Network, and MarthaStewart's Lifestyle Network.

As AvenueA/Razorfish's 2008 Digital Outlook Report says: "One related area to watch closely is the growth of vertical ad networks. Martha Stewart Living's lifestyle network and Forbes' Audience Network are two recent examples of strong brands extending their reach by building out ad networks. It is a reasonable extension for brands and helps the smaller sites and blogs within a vertical network gain needed exposure with large advertisers. Look for more vertical ad networks in the year ahead."

What all that points to is the change in mindset that advertisers need to make and the issues that need to be thought about.

For instance, traditionally advertisers would take space, place it exactly where they wanted and have some control over the context. That is no longer the case and as the IAB puts it, "that lack of control can be a source of great anxiety for marketers. But it also represents an unrivalled opportunity.

"Advertising in UGC requires marketers to alter their approach. Instead of broadcasting one-way messages at their audiences, advertisers are compelled to engage in a conversation. Doing so carries risks, but failure to do so carries more."

And conversations can be risky and requires "those marketers to behave differently, or risk what can be very vocal disapproval from those consumers".

The IAB Leadership Forum on User-Generated Content and Social Media takes place in New York on June.

You can download 'User Generated Content and Social Media Advertising Overview' on the IAB.

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