Will user-generated content overcome traditional advertising?

#ugcmarketing #digitalmarketing #usercontent #viralmarketing

8 minutes read.

Have Tiktok, Instagram or Facebook users influenced your purchasing decisions?

In the digital age, the influence of user-generated content (UGC) on platforms like TikTok and Instagram has become a powerful tool for brands to promote their products and shape consumers' purchasing decisions. During the decision-making process, customers frequently seek validation and reassurance through the shared experiences of their peers or fellow users. How does this impact your buying behavior? Are firms planning to replace their traditional ads with user-generated content??In this article, we will explore the reasons behind the success of UGC and dive into the insights of this emerging digital marketing trend.

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Why user-generated content is crucial for brands?

User-generated content (UGC) refers to the content associated with a product or service that is generated by individuals, not by the brand itself. UGC can be in various forms, such as social media posts, reviews, blogs, videos, and podcasts. We can often see unboxing videos and photos or reviews on social media (Duke, 2023). Electronic word-of-mouth or UGC significantly influences brand attitude and purchase intentions of customers. UGC enlarges consumer discussion on products through social media. It can create either a positive or negative image of a brand, influencing consumer perspectives. Whereas consumer purchasing preferences are continuously changing due to the influence of online media (Chelliah et al., 2023).

People, especially Gen-Z, are looking for authenticity in content these days. Consumers are 2.4 times more inclined to perceive UGC as authentic compared to brands’ original content. Consumer-created content brings social proof to audiences, which stimulates the level of trust in the brand (Beveridge, 2022). In the concept of Digital marketing mix, UGC is considered as ‘Earned Media’, which can provide organic reach to brands. High engagement and interaction of people on UGC conceive an emotional connection between individuals and brands’ stories. Several brands create UGC campaigns to boost revenue, acquire new customers, and improve customer retention. Most importantly, earned media has a low cost to firms, opposite to paid and owned media, but strongly establishes brand reputation (Chen, 2021).

?Brands Are Becoming More Active on UGC Campaigns.

Coco-Cola initially launched “Share a Coke” UGC marketing campaign in Australia to promote their brand awareness and consumer relationship by printing 150 common and popular names on its bottles and requesting people to share the moment with their loved ones. As many customers posted photos with their personalised Coke bottles on social media, it became viral in over 80 countries globally (Sikder, 2023). Coca-Cola received impressive success through its campaign in Australia with 7% growth in teenagers’ consumption, 870% rise in Facebook traffic, and 3% increase in sales. Furthermore, #shareACoke hashtag became the first rank on global trending topics during that time (Codella, 2021).

Apple is another global brand leader which participated in the UGC campaign by Introducing a #ShotOniPhone campaign that aimed to restore customers' trust in the camera capabilities of iPhones. This came after the brand discovered users' discontent with the average low-light camera performance. The campaign encouraged new and pro users to capture low-light photos using their iPhones and share them online. By showcasing stunning user-generated low-light photographs on YouTube under the "Shot on iPhone" campaign, Apple restored the faith of customers, minimised production costs, and optimised its implementation costs of marketing strategy. Therefore, the campaign helped Apple improve user engagement in the brand’s community and regain its loyal customers (Sikder, 2023).

Impact of User-Generated Content on Customers’ Decision-Making

UGC has a powerful impact on customers’ buying decisions. The insights from others on the product’s details, quality, and usage can shorten the customer journey and speed up the purchasing process. Based on the survey, 90% of 1,000 surveyed shoppers decide to purchase due to the influence of online UGC. 73% of shoppers revealed that UGC increases their purchasing confidence. Additionally, 81% of them are willing to pay higher and wait longer for the products advertised by UGC (O’Shea, 2017).

Acquiring information is necessary for consumers before purchasing. According to Bahtar and Muda (2016), there are 3 values that buyers will receive from UGC. Firstly, customers perceive credibility as they believe that UGC is more trustworthy than content owned by sellers. The different attitudes of users are less biased on the products, although sponsored UGC may lead to more positive feedback on products. Secondly, UGC can reduce the uncertainty of online purchases. Online customers can avoid the risks of online purchases by obtaining knowledge and experiences from other users before making decisions, especially for new and luxury products. Customers are less worried about their decisions. Lastly, customers can perceive usefulness while consuming UGC. The shared experiences on products or services being posted on social media benefit online shoppers to easily understand the products, efficiently make decisions, and quickly decide to purchase.

Regarding the Customer’s Decision Making Process, 5 stages are required in the decision making process: Awareness, Consideration, Decision, Purchase, and Advocacy. UGC can effectively engage people’s attention and awareness of problems or needs. People can sense genuine and physical touch when consuming UGC from others, which increases their willingness to buy. When people consider the various choices of products to purchase, 79% of them research online before purchasing. Reviews and ratings help consumers identify the advantages and disadvantages of products. This information is also beneficial for businesses to enhance customer experience. In the decision stage, UGC can highly influence an individual’s decision. Most UGC collaborating with brands display affiliate links to the product or service landing pages. Consumers can finally decide to purchase within a few minutes. The customers who purchased and were satisfied with the products may provide positive feedback on online media and recommend them to others. This stage generates brand advocacy, which re-establishes the awareness of products to new customers (Chauhan, 2023).

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Traditional Marketing Vs. User-Generated Content

Comparing the effectiveness between traditional marketing and UGC, we proposed 4 indicators to measure including customer acquisition, customer retention, quality and control, and cost-efficiency.

The study of the impact of UGC and traditional media on customer acquisition and retention in automobiles and mobiles game industries shows that both UGC and traditional marketing activities possess positive effects to customer acquisition and retention. However, UGC generates more influence on new customers, while traditional advertising such as broadcast media obtains a higher impact on customer retention. This is because UGC shared on social media can catch greater users’ attention through stories, triggers, and emotions related to products. In contrast, traditional marketing is more efficient to remind existing customers about the product’s development. It can promote customer loyalty programs and prolong product maturity (You and Joshi, 2020).

In terms of quality and control, brands can fully control the production of traditional content and directly manage the content quality. Meanwhile, UGC is difficult to control, and the quality may be inconsistent depending on each user’s content. The negative UGC may create a huge impact on brand image, customer visits, and sales. With this uncontrollability, brands can experience unexpected difficult situations. For instance, ‘Shushiro’ Japanese sushi chain restaurant was severely damaged by the viral video showing a teenager licking a soy sauce bottle and wiping saliva on passing food. Consequently, the business sued a teenager for ￡383,280 for the loss of brand reputation and customers’ confidence in its food (McCurry, 2023).

For the cost comparison, UGC requires fewer costs to the company than conventional marketing. UGC campaign either has no cost or few costs related to sponsored users. Traditional content is usually expensive due to the high production costs that align with the high quality (Salukov, 2021). Although the lower costs of UGC may lead to lower quality of content, UGC could be more creative and personalised to the audience than original brand advertising.

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Future of UGC in marketing

In conclusion, the continued rise in social media platforms and advanced artificial intelligence algorithms have influenced multiple companies to better engage with consumers through UGC campaigns. UGC is a powerful marketing tool for brands to establish credibility and awareness with cost-minimising. Whereas businesses tend to depend less on traditional advertising but retain some part of an investment to retain the brand identity and customer retention.

Viral UGC Videos

With the growing popularity of video content on YouTube, Tiktok and Instagram reels, I suggest brands coordinate with individuals to create enthusiastic video content. Authenticity is important to buyers in making decisions. Hence, the UGC videos should be authentic and accessible to the audience, which can establish more trust from consumers. The future of marketing is expected to further integrate UGC, leveraging the reliability and relatability of real users to drive brand advocacy and organic reach.

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Further Reading (References)

Almund. (2022) How to Tap Into the Viral Potential of User-Generated Content On TikTok. [Online]?Available from: https://almund.io/how-to-tap-into-the-viral-potential-of-user-generated-content-on-tiktok/ [Accessed 18 June 2023].

Bahtar, A. Z. & Muda, M. (2016) The Impact of User – Generated Content (UGC) on Product Reviews towards Online Purchasing – A Conceptual Framework. Procedia Economics and Finance, 37: 337-342.

Beveridge, C. (2022) What is User-Generated Content? And Why is it Important?. [Online] Available from: https://blog.hootsuite.com/user-generated-content-ugc/ [Accessed 18 June 2023].

Chauhan, R. (2023) How UGC Helps In Decision Making Process in 2023. [Online] Available from: https://taggbox.com/blog/decision-making-process-ugc/ [Accessed 18 June 2023].

Chelliah, A.A.E., Nawaz, N., Gajenderan, V. (2023). User-Generated Content and Its Impact on Brand Attitude and Purchase Intentions. In: Alareeni, B., Hamdan, A. (eds) Impact of Artificial Intelligence, and the Fourth Industrial Revolution on Business Success. Lecture Notes in Networks and Systems 485. Cham: Springer.

Chen, J. (2021) What is earned media? 5 Tips for a successful earned media strategy. [Online] Available from: https://sproutsocial.com/insights/earned-media-strategy/ [Accessed 18 June 2023].

Codedesign. (2023) Digital Marketing Vs Traditional Marketing: What is Better for you in 2023[Updated]. [Online] Available from: https://codedesign.org/digital-marketing-vs-traditional-marketing-what-is-better [Accessed 17 June 2023].

Codella, D. (2021) The Winning Coca-Cola Formula for a Successful Campaign. [Online] Available from: https://www.wrike.com/blog/winning-coca-cola-formula-successful-campaign/#:~:text=During%20the%20initial%20Australian%20release,overall%20sales%20increased%20by%203%25 [Accessed 18 June 2023].

Duke, D. (2023) Why User-Generated Content Is Winning. [Online] Available from: https://www.forbes.com/sites/forbesbusinesscouncil/2023/03/13/why-user-generated-content-is-winning/ [Accessed 17 June 2023].

McCurry, J. (2023) Japanese sushi chain sues viral food vandal for damages. [Online] Available from: https://www.theguardian.com/world/2023/jun/09/sushi-what-he-did-japanese-chain-sues-viral-food-vandal-for-damages [Accessed 19 June 2023].

O'Shea, D. (2017) Study: User-generated content's influence on purchase decisions grows. [Online] Available from: https://www.retaildive.com/news/study-user-generated-contents-influence-on-purchase-decisions-grows/445358/ [Accessed 17 June 2023].

Salukov, D. (2021) Traditional vs. User-Generated Content (UGC): Which One Should You Focus On?. [Online] Available from: https://insense.pro/blog/traditional-vs-ugc#:~:text=Here's%20what%20we%20mean%20by,products%20and%20the%20brand%20itself [Accessed 19 June 2023].

Sikder, T. (2023) Top Examples of Successful User Generated Content Campaigns Worldwide. [Online] Available from: https://wedevs.com/blog/141859/user-generated-content-campaigns/ [Accessed 18 June 2023].

You, Y. & Joshi, A. M. (2020) The Impact of User-Generated Content and Traditional Media on Customer Acquisition and Retention. Journal of Advertising, 49: 213-233.

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