• by Cory Treffiletti , Featured Contributor, December 13, 2006

This year the biggest buzz of all was created via user-generated content. I fanned the flame quite a bit myself--but as the year ends and I continue to see people talking about the topic, I wanted to offer something that I see no one else offering up. I want to propose a solution for you as you consider how to use UGC.

UGC simply refers to content that is created by the user. The web is 98% user-generated, so this concept is really nothing new--but this year we saw the technology catch up and bandwidth increase, so it became easier for anyone to create content and share it with people who might find it interesting. Some of it is video, some of it is text and some of it is graphical. Marketers have been falling over themselves trying to figure out how to harness the power of the consumer and what the outcome of this shift is going to be. Well, I think I've figured it out.

From one perspective, the impact of UGC is to apply some competition to the folks who generate professionally produced creative and content. The Web has now proven that unique, interesting, well-produced content can be created by anyone, and distributed for a fraction of the costs that Hollywood and Madison Ave charge. That doesn't means agencies and production companies are going out of business, but it does mean that their pricing will have to shift to reflect the marketplace. It is similar to how margins have been shrinking in interactive advertising and traditional agencies have been hesitant to get in the space because they knew the possibility of losing money from inflated production costs for TV commercials, which are typically their bread and butter. Now we know that this shift is inevitable and will affect all business.

Of course, this could result in a renaissance of creativity and strategic thinking, which still does and always will command a premium price. That'll be the saving grace of the agencies, production companies and third-party vendors.

Of course, the big question is, "How should I use UGC in my marketing plans?" The answer is that this space will only provide one of two things. First of all, in the video category of UGC, we see an increase in the volume of inventory that brands can align themselves with to reach their target consumer.

This brand association or contextual brand imaging is the primary responsibility of UGC, typically a low-engagement medium consisting of short bursts of information, such as YouTube videos or various Blog Postings. Consumers come back often and interact with many different elements of the UGC space, which provides a great opportunity for reminding them about your brand and associating your brand with a specific type of content.

This means that UGC should really be measured as a branding tool. You should analyze the association of your brand and the increase or decrease in the favorability of your brand due to its association with this kind of content. You should pepper your brand throughout this space and try to build frequency in the eyes of the consumer, which will help it break through the clutter, or even create this type of content to allow for interaction with your brand. If you create a video or create a blog, you provide the chance to further change and update the image of your brand, which hopefully results in sales or an increase in market share.

Others will suggest that the medium can be used for direct response advertisers. My answer to this idea is "sort of, yes." The space is not a strong performer from a DR advertising perspective; however, the affiliate model of incentivizing the consumer to act as a remote sales force for your products and services does apply in this area, especially within the context of social networking. In fact social networking is the element of UGC where the Amway model, or multi-level marketing, can be most easily applied. Companies like Commission Junction and Linkshare should certainly be able to apply their models to the social networking space and provide a tool for digital word-of-mouth to be harnessed.

Think about Mary Kay Cosmetics or Tupperware. These companies found ways in the real world to incentivize people to talk to other people and sell products. In the digital world, the closest thing is the affiliate model, but it hasn't yet been applied in the right manner.

I think this is an untapped resource that will be the primary revenue generation model for UGC as we move forward. Just think about the power of remote storefronts popping up on your MySpace page! If you see someone you think is cool, and they have a storefront that markets the brands they like, it's inevitable that like-minded people will emulate them and look to purchase those same brands. It's a powerful tool!

What's really important is that we understand that UGC is not a silver bullet. There are no silver bullets in marketing as we move forward. The landscape has changed, consumer have become more advanced, and reaching and convincing them requires a multi-faceted marketing and advertising program.

UGC is one tool in the toolbox, and its responsibility is to associate your brand, build its image, and support the image you broadcast in other forms of media. The affiliate model supports that while adding a performance component, but once again you cannot expect this to drive all of your sales. Your consumers in MySpace may help you sell your products, but they will not drive all the sales. You need to find additional avenues for reaching them.