Posted April 25, 2007 1:55 pm by with 7 comments

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Ad network BlueLithium studied 1.7 billion impressions, from 716 ads, across more than 100 sites, and determined that user-generated content (UGC) generally offered a lower cost per conversion than traditional media.

When comparing ads shown on non-UGC sites (sites with a more structured editorial process) to those sites with UGC, the ads on the non-UGC sites had a 32% higher conversion rate. However, due to the lower advertising costs associated with many UGC sites, the cost-per-conversion on non-UGC sites was 58% higher than the consumer generated alternatives. According to CMO, Dakota Sullivan, the cost savings “more than balanced out” the lower conversion rates of ads running on UGC sites.

BlueLithium also explored UGC against non-UGC sites from the comScore Top 250.

The comScore top 250 is a list compiled by comScore Media Metrix reflecting the 250 highest trafficked Web sites in the U.S. The study showed that the conversion rate of ads shown on non-UGC sites from the comScore top 250 was 175 percent higher as compared to UGC sites. However, given the significantly lower cost of the UGC media, the non-UGC comScore 250 sites have 7 percent higher cost per conversion as compared to UGC sites.

BlueLithium didn’t provide a breakdown of what sites made up each segment analyzed, so it’s hard to say whether the study’s findings can be broadly applied to all consumer generated content, but it certainly demonstrates that advertising on blogs and social networks is worth exploring, as part of a you total marketing efforts.