A recent study by advertising company BlueLithium determined that advertising on user generated content is a great deal.
There currently is a struggle for online advertisers to feel comfortable advertising their brands on user generated content sites like social networks, blogs, forums, and video sites. These are the areas in which ad inventory is growing rapidly on the web, so advertisers need to start learning how to best use this ad inventory and become more comfortable with it.
While there is no argument that it’s riskier to advertise on this type of content, BlueLithium decided to actually test the conversion value. Their study showed that:
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.
To summarize, user generated content sites don’t convert as well as others, but because the ad space is so much cheaper you pay less per conversion as an advertiser. This is great news for direct response advertisers, but I’m not sure if it does anything to help brand advertisers decide that it’s a great place to spend their money.