The Next Step in User-Generated Content

DECEMBER 29, 2008

Paul Verna, Senior Analyst
With so much user-generated media populating the Web and mobile channels, content aggregation will become more important than ever in 2009. In the coming year, expect to see real-time aggregation tools that combine algorithmic approaches with human input—like a cross between Techmeme and FriendFeed.

Techmeme is an aggregation tool that uses algorithms to scan the Web for tech-related news stories. FriendFeed is also an aggregator, but it lets users set up custom feeds to pool content from other social sites.

These aggregation tools will develop from the ground up, much like the content itself. They could make it easier for consumers to find video and other content.

Furthermore, in a climate in which advertising is the main (some say the only) means of monetizing user-generated content, aggregators stand to earn more per visitor than the sites that actually carry the user-created content.

An August 2008 study by YuMe and Collins Stewart estimated that online video advertising CPM rates for content aggregators and creators ranged from $20 to $35, compared with $10 to $15 for user-driven sites such as Bebo, Metacafe and YouTube. In addition, the approximate sell-through rates on aggregation sites were 50%, as opposed to 10% for user-generated content sites.

These estimates put aggregators somewhere between premium sites and user-generated sites in terms of the CPMs they command and the rates at which they sell their ad inventory.

To be clear, the trend at hand concerns user-driven aggregation, and the YuMe/Collins Stewart study looked at professional aggregators. It does not specifically address user-generated aggregation, but it reinforces the need for such tools. The larger point is that aggregation is becoming increasingly important as more and more content proliferates across the Web.

Now that the concept is being co-opted by average users (not just analysts and bloggers), it seems that all the pieces are in place for user-generated aggregation to be a real story in the coming year.

Ads and User-Generated Content

APRIL 22, 2008


Paul Verna, Senior Analyst

Despite the massive size and projected growth of the user-generated content (UGC) movement, advertising revenues alongside this content will remain relatively modest.

eMarketer projects US user-generated content ad revenues of $824 million in 2012, up from $162 million in 2007. By 2012, this total will represent 1.62% of US online advertising spending, up from 0.77% in 2007.

eMarketer’s estimates of advertising spending against user-generated content are calculated as percentages of ad spending on online video and social networking sites. Because the bulk of the advertising activity around user-generated content occurs on video-sharing sites like YouTube and social networking destinations like MySpace and Facebook, eMarketer’s ad spending outlook is limited to these types of online venues.

Related content categories like blogs and photo-sharing were not included in eMarketer’s calculations because they account for a tiny fraction of overall ad spending against user-generated media. Similarly, eMarketer did not include Wikipedia entries, since there is currently no monetization mechanism for this content.

The inherent unpredictability of user-generated content is the main barrier to the emergence of a larger advertising market around this medium. Another obstacle is the migration of ad dollars toward professional content on YouTube and MySpace, as well as on newer sites like Joost, the NBC/News Corp. joint venture Hulu and other network-affiliated portals.

Because of these market dynamics, Screen Digest recently downgraded its revenue expectations for user-generated online video. The company now expects US advertising revenues associated with user-generated video streams to reach $624 million in 2012, growing from $229 million in 2007.

While these ad revenue numbers and growth rates are respectable, they are far smaller than Screen Digest’s forecasts from May 2007, which called for ad revenues of $956 million in 2011, up from $515 million in 2007.

Explaining this change in outlook, Arash Amel, Screen Digest’s head of broadband media, told eMarketer: “Video-sharing is continuing to grow beyond our initial expectations. However, whereas consumption has been increasing, the failure of video-sharing sites and social networks to monetize their assets in a meaningful way has meant that we’ve had to downgrade our revenue expectations.”

Interestingly, even though Screen Digest lowered its projections for ad revenue around user-generated online video, the company significantly raised its forecast of video streams. It is now projecting that US consumers will stream 62.6 billion user-generated clips in 2012, up from 49.9 billion in 2008. Previously, the company forecast 49 billion views by 2011.

Reflecting this disconnect between the expected rise in user-generated video views and the guarded forecast for advertising around this content, attitudes of US marketers and media executives are all over the map.

On one hand, 68% of US online marketers polled by iMedia Connection said established media will lose dollars to user-generated content.

On the other hand, essentially the same percentage of respondents to an AdMedia Partners survey of US senior media executives said the growth potential of social networks was overhyped. Those same executives were almost evenly split as to whether the perceived growth potential of user-generated content was overhyped or accurate.

To learn more about the amateurs who are creating content that attracts professional money, get your copy of the new eMarketer report,

User-Generated Content Still a Minority Pursuit

DECEMBER 17, 2007

Home movies take a back seat to Hollywood.

Nearly two-thirds of consumers surveyed who watch video on their computers, mobile devices or digital media players are watching professionally-produced TV programming, according to ChoiceStream's "2007 Survey of Viewer Trends in TV & Online Video," conducted by MarketTools.

Choicestream said that the percentage of pro content would increase over the next six months.

Although this could be interpreted as a sign that user-generated content is on the wane, the research company said that traditional TV watchers were simply learning to shift their viewing towards other devices.

Annual US revenues from Internet video services, including user-generated content, will exceed $7 billion by 2010, according to Parks Associates' "Internet Video: Direct-to-Consumer Services" report.

In 2007, approximately 85% of the revenues will derive from advertisements attached to user-generated content and TV and news streams. But by 2010, Parks estimates that fees for renting and downloading TV shows and movies will account for nearly 40% of total revenues.

In general, viewers of user-generated content have a low threshold for ad support, reasoning that if the videos are not professionally created they should not need to be supported by commercials.

This finding is reflected in a January 2007 Harris Poll survey of adult YouTube watchers, 73% of whom said they would visit the site less if a short commercial accompanied every video clip. Only 21% of respondents said their frequency of YouTube visits would be unaffected by the presence of advertising alongside the videos.

Considering these statistics, it is hardly surprising that YouTube has been cautious about introducing ads on all its content.

PowerReviews and Endeca Partner to Deliver Customer-Guided Shopping Experiences Based on User Generated Content

Tag-based Reviews and Guided Navigation Experience Drive Social Navigation of Shopping Sites

http://www.powerreviews.com/social-shopping/news/press_endeca_partner_08212007.html

Cambridge, Mass. & Millbrae, Calif.--(BUSINESS WIRE)--PowerReviews™ (www.powerreviews.com), a leader in customer reviews and social merchandising solutions for online retailers, and Endeca Technologies, Inc. (www.endeca.com), an enterprise information access software company, today announced a partnership to enhance the online shopping experience by extending Guided Navigation®, search and dynamic merchandising capabilities through the use of “tag-based” customer reviews. Endeca’s signature Guided Navigation experience combined with PowerReviews’ tag-based customer reviews gives shoppers first-of-their kind abilities to explore, find and compare products by uniquely relevant criteria and peer recommendations. Shoppers can narrow product selection based on their specific lifestyles, intended uses and desired “pros” and “cons” in the product. The resulting experience offers a preview of the next generation storefront, and is designed to boost conversion rates, increase customer satisfaction and provide competitive differentiation over sites that simply offer product page level reviews.

Customer reviews and ratings have become an integral part of online shopping decisions – 71% of online shoppers read reviews before they purchase a product online, based on a recent Forrester Research study. In addition, customer reviews and ratings are rated the #1 most helpful website feature in making informed product decisions, with 92% of customers finding them extremely or very helpful in making online shopping decisions, according to an April 2006 study by the eTailing group and J.C. Williams Consultancy.

“Customer reviews have long played an important role informing the purchase of new products both on and off line. By working with pioneers like PowerReviews -- and combining the best of both technologies -- we’re now able to inject this valuable information seamlessly into the user’s shopping experience in ways that were not previously possible,” said Matt Eichner, SVP Strategic Marketing and Development, Endeca. “Our early work with PowerReviews highlights the extensibility of the Endeca platform and foreshadows innovations to come in the very near future.”

Social navigation is an emerging capability that leverages user generated content – reviews, opinions, recommendations, posts – to create new ways to explore, find and analyze information. In the case of Endeca and PowerReviews, this is achieved by leveraging user-generated tags (pros, cons, and best uses of products reviewed using PowerReviews) combined with product characteristics (price, brand, specifications) to present a cohesive and comprehensive collection of refinements and navigation options. This is made possible using Endeca’s core MDEX Engine™ technology, which takes PowerReviews’ ever-changing user-review content and displays dynamic refinements with the speed and flexibility to allow shoppers to choose the path that suits them best.

The first live example of this “tag-based” approach to social navigation can be seen on PowerReviews’ shopping research portal -- Buzzillions.com. Buzzillions demonstrates the ease and power of customer-guided shopping, utilizing the combined capabilities of PowerReviews and Endeca. For instance, the Digital Camera page on Buzzillions.com (www.Buzzillions.com/digitalcameras) illustrates how a consumer can find a digital camera that is ideally suited to him based on his photography lifestyle, interests and intended camera uses. With just a few clicks, the consumer answers questions relating to his affinity group (people like him), intended uses, pros he is seeking and cons he would like to avoid, and narrows the product selection from 536 digital cameras to a handful to look at more closely.

“As both a client and a partner, we have seen first hand the incredible opportunities this partnership creates with the use of social navigation on our shopping research portal Buzzillions.com,” said CEO Andy Chen. “And as we see it, we provide the “social” and Endeca provides the “navigation,” and together we provide the opportunity for any retailer to experience the customer satisfaction, trust and sales benefits first hand.”

About Endeca™
Endeca is a next-generation information access company, uniting the ease of search with the analytical power of business intelligence. Combining patented intellectual property, breakthrough science and a deep focus on user experience, the Endeca Information Access Platform helps people find, analyze and understand information in ways never before possible. Leading global organizations like ABN AMRO, Bank of America, Boeing, Cox Newspapers, Dice, The (US) Defense Intelligence Agency, The Home Depot, Hyatt, IBM, John Deere, The Library of Congress, Nike, and Walmart.com rely on Endeca to power business-critical applications that increase revenue, reduce costs and streamline operations. Headquartered in Cambridge, MA, USA, Endeca is a private company with worldwide operations. For more information: www.endeca.com or info@endeca.com.

About PowerReviews
PowerReviews is an enterprise solutions company that provides customer reviews and social merchandising solutions to multi-channel retailers, driving higher conversion and increased purchase satisfaction. PowerReviews’ patent-pending PowerTags™ technology captures customer opinions in their own words, making reviews more useful for shoppers, empowering them to make more informed and confident purchase decisions. Its customers include Staples, ToysRus, Ace Hardware, Ritz Camera, The Sports Authority, over 100 more. With the introduction of Buzzillions.com, the company has entered the consumer shopping portal market, leveraging its tag-based technology to introduce social navigation and affinity recommendations into the shopping research process for consumers. Based in Millbrae, California, PowerReviews is a privately held company with funding from leading venture capital firms Menlo Ventures and Draper Richards. For more information on the company, visit www.PowerReviews.com To experience the shopping benefits from Buzzillions, visit www.Buzzillions.com.

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Editor's Contact:

Lisa Tarter
TidalWave PR
415-440-4278
lisatarter@yahoo.com

Revenues to Grow at YouAd

JUNE 22, 2007

The content consumer becomes the creator.

An explosion of user-generated content has reshaped the media landscape, shattering the status quo of content ownership and distribution and creating new opportunities for marketers.

Led by the companies that started this revolution — YouTube, MySpace, Facebook, Photobucket and others — eMarketer estimates that US user-generated content sites will earn $1 billion in 2007 and reach $4.3 billion in ad revenues in 2011.

On a worldwide basis, user-generated content ad revenues will rise from $1.6 billion in 2007 to $8.2 billion in 2011.

"Gone forever are the days in which giant media conglomerates control the creation, distribution and monetization of content," says Paul Verna, eMarketer Senior Analyst and the author of the new report, User-Generated Content: Will Web 2.0 Pay Its Way? "The media companies are still around and still wield considerable clout as a result of their content and their distribution networks, but today much of the power is shifting to the consumer."

Not only are consumers able to choose how and when they consume virtually any media, but they are also increasingly in control of the actual creation of content thanks to the popularity of sites like YouTube, MySpace and Wikipedia.

"Of course, user-generated content in itself is not a new phenomenon," says Mr. Verna. "For as long as 'content' has existed, common folks have used all manner of public forums to make their voices heard. Witness America's Funniest Home Videos, subway graffiti, folk songs, Speaker's Corner and cave paintings."

The difference now is that the Internet has democratized the creation and mass distribution of content. Anyone with the basic tools of a PC and an Internet connection can reach literally millions of people with a keystroke.

"This capability has put enormous power in the hands of the estimated 64 million Internet users in the US who created user-generated content in 2006 — and that number is expected to swell to 95 million by 2011," says Mr. Verna.

Currently, the US dominates the space, but other geographies are expected to contribute increasing amounts of user-generated content over the next several years, with 238 million user-generated content creators worldwide in 2011, up from 118 million in 2006.

To see how this explosion of user-generated content is reshaping the media landscape, shattering the status quo and creating new opportunities for marketers, read the new eMarketer report, User-Generated Content: Will Web 2.0 Pay Its Way?