The Role of UGC in the Post-Advertising Era
As empires rise and fall, so too do social media monetization models. Today’s youth is rising up to drive demand for models that no longer rely on traditional advertising. This is starting to send the digital advertising empire that big tech built into retreat.
Social media has irreversibly transformed the way we communicate, consume information, and interact with brands. In their heyday, social media platforms such as Facebook became the go-to destinations for people seeking information, entertainment, and social engagement. However, as social media advertising has become increasingly prevalent – a trend exacerbated by the pandemic and the impact this had on digital consumption – so too has the feeling of disillusionment among users. This is even more true of young consumers who have shown their disapproval over the past few years by increasingly disconnecting from all major social media platforms except for TikTok (Piper Sandler). In their place, more authentic and meaningful platforms, such as Discord, as well as those that are ad-free and encourage more simple and less staged content, such as Poparazzi, are gaining in popularity.
Social Strikes Back
As discussed in the article "Social Strikes Back After Ads" by a16z, there is a growing consumer preference, particularly among GenZ, towards social media platforms and monetization models that do not rely on traditional advertising. Subscription models, in-app purchases, and branded content collaborations are becoming increasingly viable alternatives. These trends reflect a growing recognition of the limitations of traditional advertising, which can be intrusive, irrelevant, and ineffective in building trust and engagement with audiences.
With young social media users becoming more discerning, brands are realizing that traditional advertising is no longer as effective as it once was. In the US only 4% of consumers trust brand-sponsored content (Writer’s Block Live), whereas user-generated content, particularly in the form of online recommendations, is trusted by 88% of people (LXA).
Word-of-mouth recommendations have always been one of the most powerful forms of marketing. Still, they happened in private conversations among friends and family, making word-of-mouth too intangible to turn into a mass marketing strategy. Today tools such as the WOM Protocol provide the technological infrastructure to replace traditional advertising because they make it possible to find, track, reward, and mass market word-of-mouth content.
Replacing Ads With UGC
The WOM Protocol enables creators to earn for their recommendations, which are peer-reviewed in an authentication system for authenticity and quality. Once passed, creators earn irrespective of any brand involvement. Brands can then find the content and spend money through campaigns to boost it in integrated platforms or display it on their websites. Half of the campaign budget goes into the so-called Creator Fund, to ensure that the protocol can sustainably reward creators for their content, even if no brand decides to use it in campaigns.
By leveraging user-generated content recommendations, brands can tap into the power of social proof and build trust with their audiences. Rather than bombarding users with traditional ads, brands can create campaigns that encourage their audience to create and share content that promotes their products or services. This approach not only generates authentic, high-quality content but also fosters a sense of community and engagement.
User-generated content recommendations have several advantages over traditional advertising:
They have the authenticity of being created by people consumers can relate to, which instills greater trust when compared to branded content.
They are more engaging and memorable. People are more likely to remember content that they have created themselves or that has been recommended by someone they know.
They have a longer lifespan than traditional ads. They can be shared and repurposed across multiple channels, reaching a wider audience and generating more engagement.
The WOM Protocol is one of a growing number of tools challenging traditional advertising and offering up alternative social media monetization models. By creating a system that rewards creators for their recommendations, the protocol incentivizes high-quality content creation and ensures authenticity and quality. Brands can use the WOM Protocol to find and leverage this content and boost it on their platforms. This approach not only saves money on traditional ads but also creates a more engaging and authentic relationship with the audience.
In addition to providing a solution for brands and creators, the WOM Protocol also creates new opportunities for platforms. Platforms can integrate the WOM Protocol, providing the interface for displaying WOM content instead of intrusive ads. This enhances the user experience on the platform, as users see native UGC content instead of ads that disrupt their experience. This approach not only improves the user experience but also generates revenue for platforms, as they can earn a percentage of the fees paid by brands to boost the content.
The overall goal of the WOM Protocol is to replace the ad market with user-generated content recommendations. Global advertising spending in 2023 is forecasted to increase by 3.8% YoY to $740.9 billion (Dentsu). In today's digital age, consumers trust the recommendations of their peers more than ever before. In fact, studies have shown that user-generated content can increase purchase intent by up to 4.5 times compared to traditional marketing. This shift highlights the growing recognition of the effectiveness of UGC content recommendations in building trust and engagement with audiences.
Creating a protocol like WOM that can be integrated into any platform aligns with the incentives of all participants: creators, brands, advertisers, and platforms. Brands can access high-quality, authentic content that resonates with their audience, while creators can be rewarded for their recommendations. Advertisers can benefit from the trust and engagement generated by UGC content recommendations, while platforms can generate revenue and enhance the user experience.
Social in the Post-Advertising Era
The WOM Protocol represents a revolutionary approach to social media marketing, one that replaces intrusive traditional ads with user-generated content recommendations. The shift towards UGC content budgets suggests that brands recognize the value of authentic, high-quality content in building trust and engagement with their audiences. By creating a protocol that aligns the incentives of all participants, the WOM Protocol provides a scalable, efficient solution to replace the ad market with user-generated content recommendations. As platforms continue to integrate the WOM Protocol and brands embrace UGC content recommendations, we can expect to see a new era of the kind of social media marketing that more closely aligns with the online habits of young consumers by prioritizing authenticity, engagement, and community.