Why Financial Pressure is Driving CMOs to Leverage UGC

In the high-stakes game of commerce, Chief Financial Officers (CFOs) are urging Chief Marketing Officers (CMOs) to unlock new, innovative methods for strengthening brand loyalty, driving consumer sales, and bolstering the company’s bottom line.

One trend disrupting traditional marketing is the rise of User-Generated Content (UGC). As platforms like YouTube, Instagram, and TikTok gain ground over conventional media, UGC has become an influential force that brands can no longer ignore.

Explore how businesses like Fabkids have mastered the art of UGC and why CMOs are turning to UGC to supplement traditional branded content and give their brands a competitive edge.


The Emergence of UGC: A New Era in Marketing

The beginning of UGC can be traced back to the growth of social media and digital platforms. These platforms allowed users to broadcast their experiences, opinions and creativity. Facebook, YouTube, and Instagram became the canvas for users to paint their narratives, sparking a new digital interaction and community era.

The continuous evolution of social media, aided by short-form platforms like TikTok, Snapchat and Twitter, has further boosted this trend. These platforms host a range of user-generated content ranging from personal updates, artistic creations, and tutorials to viral challenges that capture the attention of millions within seconds.

Platforms like TikTok, a virtual home for about 150 million U.S. users and 5 million businesses, serve as a breeding ground for UGC. This shift towards UGC has given power to consumers to create and engage with content, forming an authentic, word-of-mouth marketing strategy.


The Business Case for UGC vs. Branded Content?

The transformation toward UGC empowers brands to use a vast network of content creators. These creators document authentic user experiences and craft targeted advertising with a more substantial punch than conventional marketing strategies.

Here’s how UGC is making a dent in traditional branded content:

  • Cost-effectiveness: Traditional branded content often requires significant resources for production and distribution. UGC capitalizes on content created and shared organically by users, making it an attractive option in a company’s marketing mix. Advertising costs, such as cost per actio (CPA) and cost per click (CPC), can be reduced with UGC, leading to a better return on investment.
  • Authenticity: People are more likely to trust and value recommendations from peers over branded content. A user sharing their positive experience with a product can be far more impactful than a brand simply stating the product’s benefits. UGC allows brands to use this peer-to-peer trust to build credibility and influence consumer behavior.
  • Engagement: UGC tends to be more relatable, making consumers more likely to engage with the content, whether it is a product review, creative use of a product, or a personal story highlighting the brand’s value. UGC also takes advantage of interactive features of social media platforms, such as polls, challenges, or contests, encouraging participation.
  • Social proof and trust: Seeing positive UGC about a brand or its offerings can influence potential customers to perceive those offerings favorably. UGC also bolsters trust, an essential ingredient for building long-term customer relationships. UGC is perceived as more unbiased and authentic than traditional branding and as a credible endorsement, leading to greater trust in the brand.
  • Diversified content: UGC users come from various backgrounds and experiences, and the content they generate reflects this diversity. They use different styles, tones, and contexts to express their thoughts and experiences with a product or service. This variety can help a brand keep its messaging fresh, relevant, and engaging without investing heavily in creating new content or rebranding campaigns.
  • Viral potential: A single piece of engaging UGC can quickly spread across social media platforms, capturing the attention of millions and generating substantial brand exposure. The viral nature of UGC also ties back to the concept of social proof. As more people create and share content about a brand, it sends a message to others that the brand is popular and valued by its customers.
  • Adaptability: UGC is a real-time reflection of current trends, consumer attitudes, and behaviors. By monitoring UGC, brands can quickly identify shifts in customer preferences or emerging trends, which can then inform their marketing strategies and product development. For instance, if a brand notices that users are creating content around a particular product feature, it can use this insight to highlight that feature in its marketing efforts.


The Transformation from Traditional to UGC: Winning Brands

Several brands have experienced success with UGC marketing. By partnering with companies like Brkfst, which has over 3,000 content creators, brands can improve their reach and engagement, leading to higher returns on assets (ROA) and revenue.

Take a look at the success stories of Perfume.com, Michaels, and Hard Rock Sportsbook, which used UGC effectively to drive increases in profit, revenue, ROA, and sales.

  • Perfume.com:Using tailored UGC ads, Perfume.com saw a 3x increase in ROAS on TikTok. The brand tested through 120 unique videos to achieve their growth in revenue. UGC content included top trends, testimonials, and on-screen reviews.
  • Michaels:Popular arts and crafts retailer Michaels used UGC to launch a new product line. The video content focused on green screen and product demonstrations. With this strategy, the brand beat its conversion goals with a 36% lower CPA, 79% lower CPC, and 125% higher ROAS.
  • Hard Rock Sportsbook:Top online sports betting platform, Hard Rock Sportsbook launched a UGC campaign test focusing on generating authentic UGC content versus brand style content and which would drive greater performance. The UGC content resulted in a 54% lower cost per registration and a 38% lower cost per purchase.


Navigating the Challenges of UGC Marketing

Implementing UGC isn’t without its hurdles. Challenges include balancing creativity and authenticity with the brand’s message and tracking the campaign’s success.

With UGC, brands must manage and monitor user contributions while maintaining their brand image and messaging. Striking the right balance between allowing user freedom and ensuring brand safety is essential. This means companies must set up moderation processes to filter out any content that might be offensive, harmful, or not in line with brand values.

With multiple users contributing content, maintaining a consistent tone, quality, and messaging across all UGC can be tricky. Brands must establish clear guidelines and communication with contributors to ensure the content aligns with their marketing strategy and resonates with the target audience.

Because UGC comes from various sources, such as social media posts, reviews, images, and videos, gathering and analyzing data can be challenging. Also, unlike branded content, UGC lacks standardization in terms of messaging and metadata. Users may not always use consistent hashtags, tags, or keywords, which makes it difficult to categorize and measure the impact of specific UGC pieces accurately.

Brands can use a UGC management platform like brkfst.io to address this issue. This technology helps gather and track accurate data to analyze metrics such as engagement, reach, and conversions for UGC ads so brands can make the most of their UGC campaigns.


UGC: The Future of Marketing

UGC is reinventing the future of marketing. By connecting brands and consumers more deeply, UGC offers an innovative approach to fostering authenticity, relatability, and trust. UGC encourages collaboration and participation, making everyone a part of the brand’s story.

Despite its popularity and effectiveness, UGC is unlikely to replace traditional marketing entirely. To meet the demands of CFOs, CMOs should consider a hybrid approach that combines creating UGC that scales alongside traditional marketing.

The blend of structured, targeted branded content and unique and authentic UGC is the key to unlocking future success for brands in the new consumer-centered landscape.

Why Financial Pressure is Driving CMOs to Leverage UGC