Consumer Generated Content Offers Better ROI for Marketers
Wednesday, April 25th, 2007;
-- Andy Beal |
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.
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April 25th, 2007 at 2:43 pm
I can back up the findings of this study. It’s hard to scale non-UGC effectively and profitably if you plan on keeping the content top notch. UGC on the toher hand doesn’t have to be expert driven and can drive huge amounts of traffic with little investment.
I can take a UGC driven site and spend $2k a month on advertising and have the site quadrupal in size every month or I can take a non-UGC site and spend the same $2K on the content and not have any money left over for advertising.
May 5th, 2007 at 8:39 pm
I appreciate the info. It made me think about why this would be so, and got me to write a post exploring how this could be the case and what the potential is for UGC as applied to paid posts.
August 14th, 2007 at 2:06 pm
[...] is still sparse, some studies are showing that it has a higher ROI than traditional advertising. Marketing Pilgrim reported a study by BlueLithium which showed significantly better returns. While the actual number of conversions using consumer [...]
August 16th, 2007 at 3:08 pm
[...] consider subscribing to the RSS feed. Andy Beal posted an article last week where he reported that consumer generated content offers better ROI for marketers. He cites a study that compared cost per conversion between websites with user-generated content - [...]