Digital Concept: User Generated Content, Part 1

 Hi, let's take a look at user generated content or UGC for short. Historically, most firms have carefully managed the promotion of their products. One of the reasons why promotion has been carefully managed is because this activity is quite expensive. For example, in the U.S., a 30 second commercial on a national television channel usually costs at $100,000 just to have it broadcast. Since most commercials are shown multiple times, this cost quickly multiplies into millions of dollars and this doesn't even include the cost of developing the commercial in the first place. 

Well, the rise of new digital tools has dramatically changed this equation, low cost digital cameras, free digital editing software and online broadcasting platforms such as Youtube, Facebook and Twitter have made the creation and dissemination of promotional messages much cheaper and far easier than ever before. 

As a result, a growing number of firms are taking advantage of these development to reduce their promotional cost. 

For example, the U.S. beer brand, Old Milwaukee, has dramatically reduced its promotional cost by airing its ads on Youtube instead of on television. 

In addition to reducing the promotional cost for firms, these tools have also enabled customers to take a more active role in the development and dissemination of promotional material. For example, there are now about 300 million Twitter accounts which produce in total about 500 million tweets a day. It is estimated that about 20% of these tweets are somehow brand related, thus every day there are about 100 million free promotional messages just on Twitter alone. 

Today, anyone with an internet connection, a computer and an idea can create and disseminate a promotional message for just about any product. 

So in essence, digital tools have democratized the promotional landscape. This is the basic idea behind UGC. Here are a few examples of user generated content. All of these examples are cases in which firms are encouraging UGC in an active manner; however, UGC often occurs without firm's encouragement or approval, such as when travelers post reviews about restaurants at hotels on websites such as Travelocity.com, perhaps you've done this yourself. Our first example is a company called Go Pro; this California company develops and sells high definition video cameras. These cameras are quite compact, they're very durable and relatively cheap and are often used by extreme sports enthusiasts, such as mountain bikers, wind surfers and skydivers. They use these cameras to capture their adventures so Go Pro strategically uses UGC by holding contests in which they ask their customers to submit photos or videos of their adventures that they have taken with their cameras. 

These submissions provide a steady stream of content to Go Pro's various social media sites and also provides a very persuasive form of promotion by showing potential customers how Go Pro can be used and its value of owning this product. The second example is a company called Warby Parker; Warby Parker is a manufacturer and retailer of eye glasses that has a few physical retail locations but does the majority of its business online. This company offers a service called home try on; in this service, it mails its customers five different pairs of eye glasses. These customers can try them on for five days and then send the ones that they don't want back to the company. 

Warby Parker actively encourages these customers to take photos of themselves and share these photos on social media using the hash tag Warby home try on. 

In fact, many of the customers do take and share these photos online as a way of gaining helpful feedback from others. In addition to helping their customers, these shared photos also provide Warby Parker with increased exposure and a free source of promotional material. The third example is T-Mobile, the mobile phone market is a very competitive industry and has intense competition among carriers such as T-Mobile, AT&T and Verizon. 

T-Mobile has effectively used UGC to help fight these battles. For example, February 2014, it conducted a Twitter campaign called Breakup Letter; this campaign encouraged users of competing carriers to switch to T-Mobile by sending their old carrier a breakup letter and then posting this letter on social media. This campaign was very successful with over 80,000 new customers submitting breakup letters. In addition to generating many new customers, this campaign also resulted in substantial embarrassment for its competition. 

Now that we've had these examples, let's take a look at defining what UGC really is. 

Well, user generated content occurs when a product's customers create and disseminate online ideas about the product of the firm that markets it. These ideas often come in the form of text but can also come in other forms, such as music, photos or videos. UGC has three defining characteristics; first, the contribution is by the users of a product rather than the firm that sells the product. Second, these contributions are somewhat creative in nature and the user adds something new to what's been done before. And third, these contributions are posted online and are generally accessible to others, thus an email that transmits a link to a Youtube video created by somebody else wouldn't be considered UGC. Typically, UGC is not a commercial in nature and doesn't make any direct promotional appeals, thus it's a very interact and very subtle form of product promotion. Now that we have this definition, let's take a deeper dive into this interesting issue and the concern surrounding it. For purposes of this discussion, I want to focus on three key issues; number one, what are the different types of UGC? Although most UGC appears on social media platforms such as Facebook, Twitter and Youtube, it can also appear in other online platforms, such as blogs, discussion forums or even a firm's website. 

Some of the most common types of UGC include blog postings, product reviews and various types of submissions to firm based invitations, such as the T-Mobile example that we discussed earlier. Of all of these different types of UGC, product reviews appear to have the most important impact in terms of convincing customers to buy a product. 

Number two, what motivates users to contribute? 

Well, the factors that motivate customers to engage in UGC are very similar to the motives that encourage them to engage in co-creation which we discussed earlier. The biggest motive by far is simple social recognition. Being an active contributor on a social media platform such as Facebook or Twitter can help provide a certain amount of fame and prestige. In addition, customers can also gain social recognition when a firm profiles their contributions on its web page or in its advertisements. For example, the yogurt company Chobani, has placed its customer tweets on physical billboard signs across U.S. highways. 

In addition to social recognition, some users are motivated by financial incentives. 

Typically there are few financial rewards for UGC; however, a few firms are trying to encourage UGC by holding contests that provide winners with cash, gift cards or some other type of tangible reward. 

For example, Dunkin Donuts encourages UGC by holding contests in which customers submit photos of themselves consuming its products and it rewards winners with a variety of prizes such as smart phones and televisions. 

Third, what are the benefits of UGC? 

Well, user contributions provide firms with lots and lots of benefits. 

First of all, this type of promotion is typically low cost since the content is provided freely by a firm's customers. In addition to this cost savings, UGC also has a positive impact on product sales. 

In fact, research suggests that most customers trust UGC more than they trust traditional promotions such as paid advertising. 

UGC also helps meet a firm's need to keep its content fresh and makes their website much more interesting, thus websites that feature UGC benefit from both higher traffic, as well as longer page views.