Tuesday, October 31, 2006
User-Generated Content Will See Rapid Growth
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Rapidly expanding Web 2.0 sites such as MySpace and YouTube are fed by user-generated content (UGC), and an In-Stat study shows that type of content will continue to grow briskly in the years ahead. By 2010, the revenues associated with UGC could surpass $850 million and most of that money will come from advertising. The sphere illustration above (click to enlarge) explains the source and relative size of various UGC segments.
In-Stat also predicted the worldwide market for online content services will grow by a factor of 10 over the next five years. That is impressive! Although a good portion of this enormous content growth could come from professional sources, the accelerated expansion of MySpace, Facebook, YouTube, Flickr and scores of other similar sites would seem to indicate much of this 10-fold increase will originate from users.
Advertising follows eyeballs and that should bode well for revenue on sites that reach a critical mass in size. However, a new Compete, Inc. report featured in an Internet Retailer story demonstrates the difficulty of getting advertising noticed on social networks and other sites where user content predominates. People who belong to these groups are most strongly influenced by peer recommendations and messages. The challenge for advertisers will be to create enough buzz about their products to influence positive brand recommendations among a site’s participants.
Advertisers won’t be able to do this with the precision and exclusivity they once enjoyed when the 30-second television spot ruled the ad world. In many cases, it is user-generated content that will have to carry the message, and how do you control the message when the Pew Internet & American Life Project says there are already nearly 50 million people contributing online material? That equates to involuntary crowdsourcing at the extreme.
The stakes are high for marketers. Social networks and user content sites are growing fast among all demographic segments. However, Gen-Y and Gen-X consumers are becoming increasingly difficult to reach and influence with traditional media. Other options—usually involving online communication—need to be explored. In addition, the Compete study shows that the annual discretionary income for people who are active on social networks is 20 percent higher than non-network consumers. According to Compete, marketers are using one or more of six different strategies to affect brand buy-in from members:
1) Branded microsites
2) Customer reviews and ratings
3) Online customer forums
4) Peer-to-peer transactions
5) Product-focused blogs
6) Community-created products.
For marketers, learning to communicate in the Web 2.0 era is a bit like trying to settle on the frontier. There is a big element of adventure involved, and the rewards can be huge, but you never quite know what to expect next.
