Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Blue Lithium Study: More Bang for the Buck from User Generated Content Advertising

Posted by Tom Foremski - April 24, 2007

Blue Lithium Labs just released a 9-month study that found advertising on user generated content sites does better than other sites.

When comparing ads shown on non-UGC sites to UGC sites, the ads shown on non-UGC sites had a 32 percent higher conversion rate. However, due to the lower cost of advertising on UGC sites, the cost per conversion for non-UGC sites was 58 percent higher. Therefore, on average, UGC sites generally provide a considerably lower cost per conversion.

"Marketers are interested in social media but there have been no quantitative studies of the performance differences conducted by research houses," said Dakota Sullivan, CMO of BlueLithium.

"Based on the results of this study, we believe that UGC is worth exploring, since it appears to provide a better place to invest your advertising dollars to drive conversions."

Link to User-Generated Content Delivers More Bang for Your Online Marketing Buck According to Study From BlueLithium Labs

The price of UGC site advertising is likely to go up following this study and so the arbitrage opportunities here will diminish. Also, Mr Sullivan points out that finding the right UGC sites is key because performance varies, not all UGC sites are alike.

Many companies are wary of UGC sites because there is little or no editorial control and they don't want their ads next to content that is in bad taste.

If online advertising does shift more towards UGC sites then that could make life harder for newspapers, which are already finding it tough to find advertisers.

Newspapers losing online ad growth plus selling the Gray Lady

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