U-G-C, the acronym for “user generated marketing,” has exploded online. With the prominence of content creators and influencers being included in the marcom process, UGC is defining a whole new world of brand marketing.
UGC transactions typically occur in one of two ways. One method involves content creators pitching themselves to brands to showcase video or pictures in exchange for payment or free product. The other method, which seems to be more popular for larger creators, involves the brands themselves reaching out to influencers for collaboration. In both cases, generally, contracts are involved which protects both the company and individual creators. Outlined in these contracts are parameters like the specific agreements for content production, fees brands will pay creators, and more.
To provide an example of how UGC works, a popular skincare brand might reach out to a influencer/content creator to create an Instagram Reel or TikTok of the person testing out the product, analyzing the packaging, and maybe even reciting a script bragging on the product’s performance. After this content has been created, the creator submits it to the brand for approval, and, if satisfied with the content, the brand then sends the creator their payout. Since marketing new products can be time consuming and expensive, brands have shifted their focus to creators who, not only can do the hard work of creating hype and shooting the product for them, but who often have a large group of followers that represent a brand’s key target demographic. This might just be the future of brand marketing.
For such a small name, UGC is no small industry. It is predicted that UGC is “valued at $770 million in 2020 and has grown to $5.36 billion in 2024,” according to Aztekweb. With skyrocketing values like this, UGC has definitely earned a permanent place in the world of marketing – but why is it so lucrative?
According to Aztek, a digital marketing agency, UGC is popular for a couple of reasons: it builds trust with viewers and feels authentic. When watching ads, most people don’t want to feel like they’re being sold a product, and UGC takes the formal presentation of a product out of the equation. For instance, consumers may be more likely to purchase a product from a creator who they may already trust, and who seems like they genuinely enjoy using a certain product. This is becoming more and more attractive versus a company-produced commercial or ad, because consumers may feel more connected to the product through the influencer and the content they create.
Many content creators have been able to swap their traditional 9 to 5s for the flexibility that lucrative UGC partnerships can offer. With the potential to secure multiple partnerships simultaneously with multiple brands, influencers can make real money – really fast. Brands also may be drawn to UGC as they may be able to pay a content creator a few hundred dollars per product versus several thousand dollars to a marketing agency to produce an ad for their product.
With nearly anyone being able to create UGC without needing the highest quality cameras and phones, certifications, or prior marketing experience, UGC becomes that much more appealing to the everyday person. While no one knows just how the marketing and PR space will morph in the upcoming years, it’s safe to say that UGC is here to stay.