Tuesday, May 01, 2007

User-Generated Content Delivers More Bang for Your Online Marketing Buck According to Study From BlueLithium Labs

User-Generated Content Delivers More Bang for Your Online Marketing Buck According to Study From BlueLithium Labs

Market Wire via NewsEdge Corporation :

SAN JOSE, CA, April 24 / MARKET WIRE/ --

On average, user-generated content (UGC) sites provide a lower cost per conversion than non-UGC sites. That's the surprising finding from a new study published today by BlueLithium Labs, the research division of ad network BlueLithium.

Questions about the brand risk of running ads within or adjacent to user-generated content have been debated extensively in the advertising trade press. However the issue of whether user-generated content Web sites perform as well as editorial Web sites for marketers has not been explored. BlueLithium had, in fact, received queries from its own marketing clients regarding the price performance of UGC vs. non-UGC Web sites, so to help answer that question for its clients, the company undertook a thorough, unbiased, nine-month quantitative study.

BlueLithium Labs analyzed the performance of campaigns that included 716 ads and more than 1.7 billion ad impressions between August 2006 and April 2007. The study focused on two key factors: the number of conversions registered for each campaign and the cost of the media. "Conversions" included a range of actions such as completing an online purchase, registering for a program, signing up for a service or requesting more information. By dividing the number of actions by the cost of the media, the study arrived at a "cost per conversion" for each campaign. It's this "cost per conversion" that marketers use to determine the bottom line effectiveness of any media, and thus the metric that was used to evaluate the effectiveness of UGC vs. non-UGC sites.

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.

In the second phase of the study, BlueLithium Labs tested non-UGC sites from the comScore top 250 against the same group of UGC sites tested in Phase I. The comScore top 250 is a list compiled by comScore Media Metrix reflecting the 250 highest trafficked Web sites in the U.S. The study showed that the conversion rate of ads shown on non-UGC sites from the comScore top 250 was 175 percent higher as compared to UGC sites. However, given the significantly lower cost of the UGC media, the non-UGC comScore 250 sites have 7 percent higher cost per conversion as compared to UGC sites.

"Marketers are interested in social media but there have been no quantitative studies of the performance differences conducted by research houses," said Dakota Sullivan, CMO of BlueLithium. "Based on the results of this study, we believe that UGC is worth exploring, since it appears to provide a better place to invest your advertising dollars to drive conversions. However, since performance varied across sites and categories of advertiser, make sure that you work with a network to test various messages on different types of sites to see what works best for your specific product or service."

Note: Please contact blast! PR for the complete study.

About BlueLithium:

Based in San Jose, CA, BlueLithium is the leading data driven performance marketing company, using data from 130 million consumers worldwide, sophisticated analytics and advanced ad targeting technologies to create value for both publishers and marketers. Founded in 2004, the company was named 2006 Innovator of the Year by AlwaysOn and has been named one of the top 100 private companies in America for three consecutive years. For more information, visit www.bluelithium.com.

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