Home > user-created content > • Is user-created content anethema to effective marketing?

• Is user-created content anethema to effective marketing?

The following is a modified version of an Ad Nauseam column which appeared in the October 14, 2008 edition of the Metaverse Messenger. The full version (which relates the conclusions to Second Life) can be found here.

TV without commercials (or, you know...quality)

TV without commercials (or, you know...quality)

A TV commercial can cost hundreds of thousands, sometimes even millions of dollars. The reason is two-fold: not only are vast numbers of people watching the shows (and hence the ads), but the production costs of TV shows put their creation well beyond the means of the average person. Even with a few hundred channels, there is still a limited number of programs because it takes big corporations and big bucks to make even the cheapest reality show. So what would happen if a technology came along that allowed people to create their own shows for free?

The answer is simple: ad revenue would disappear.

Let me repeat: ad revenue would disappear.

With an almost endless number of new shows, strategic ad placement would become impossible and the worth of an advertising spot would plummet. Shows with ads would lose audience to shows without. Ads may be placed on the service distributing the shows, but they would have little relevance and be easily ignored. In short, advertisers would essentially ignore the platform and the only way it could make money would be to charge for its use.

As most of you probably realize, this situation is not hypothetical — it’s YouTube. And while nobody can doubt the success of the site in terms of users, its earning power has remained stubbornly untapped. A 2006 article in the Bivings Report by Erin Teeling (“YouTube: Show me the money!”) pointed out that even though the video-sharing service was still in its early days, it had already racked up some impressive statistics: 6.1 million videos, a total of 9,305 people-years spent watching them, roughly 500,000 profiles, and a ranking of 8th most popular site in the US. But these bright and shining figures merely served to cast a darker revenue shadow. “Underneath these amazing user stats,” said Teeling, “there are financial problems. It seems that YouTube and other sites like it that depend on free, user-generated content, have yet to figure out a way to turn site traffic into profit.”

Along with the difficulty of trying to monetize user-created content, Teeling’s 2006 article lists a number of other YouTube drawbacks, including copyright infringement and the risk of a brand’s association with “offensive or questionable” content.

Google bought YouTube in 2006, but as recently as this past June [2008] the corporation had to admit that its famous Midas touch wasn’t working. Sarah Arnott’s article for the UK’s Independent (“Google admits it still can’t make money from YouTube”) quotes Eric Schmidt, Google’s chairman and chief executive, as saying that while there was obviously money to be made from the site, they still hadn’t figured out how to do it.

User-created content is fun for the users creating it and their friends, occasionally reaching out to thousands or even millions of people. But the lack of structure in the platform itself means that marketing will be unlikely to ever find the stability needed for effective campaigns, and the ability of users to completely bypass ads on the platform itself makes it equally unlikely that any campaigns initiated would ever be viewed.

Categories: user-created content
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