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Simeon Simeonov points to some data from a Comscore survey talking about the effectiveness of advertising in UGC sites vs general media sites by advertising category for the coveted 18-34 year old demographic:

Effectiveness of advertising by category for UGC vs general media sites

It suggests that this demographic is more receptive to advertising on UGC sites in “high fun” categories such as music, movies, food, apparel and entertainment than it is to advertising on general media sites. For “high expenditure” items (travel, autos, etc) their responsiveness is about equivalent between UGC and general media sites, but for “high trust” items (healthcare, financial services) they prefer general media.

Its interesting to compare these categories to where advertising dollars are being spent. I’ve pulled this data from an old Deutsche Bank analyst report initiating coverage on Primedia; they sourced Ad Age 100 data from 2003 so its a little dated but probably directionally correct:

ad spending by category

Movies/Music/Entertainment features prominently in both charts. Hopefully this bodes well for our portfolio company Flixster!

More generally, note the categories where there is both a lot of advertising and a lot of consumer passion. Its these areas where explosive growth of user generated content and social media can combine with an online media model that works. When you overlay the criteria of reasonable receptiveness of the audience to advertising within social media channels, it suggests that other than in movies/music/entertainment, other categories with potential include apparel (we’re an investor in Stylehive), food/beverage, travel and auto. I would be interested to hear from social media companies with meaningful traction in any of these categories.

  • http://www.seatwave.com Taylor Wescoatt

    I’d be curious if you’ve come across any comparisons of advertising effectiveness on UGC sites v. on News / Gen Media sites. The referenced survey indicates about a 40% reduction in trust and likelihood of noticing an ad on a UGCsite. Do their rate cards tend to reflect this?

    It will be interesting to see if/how this attitude has/will change over time, and how exactly one might overcome this apparent skepticism of ads in their chosen media by this UGC-literate demographic.

  • http://tickerhound.blogspot.com Wayne Mulligan

    I think the challenge on a “high trust” site – at least from our perspective – has been in “reputation management”. While we don’t target this exact demographic we’re experimenting with adding UGC features to our site(s) in an attempt to gauge the level of interest/adaptability on the part of our customers (they tend to be a bit older than the 18 – 24 year olds). Right out of the gate we failed to take into account that investors tend to want to really “know” the people they work with, take advice from, etc. and we had very little advanced reputation management features built into our applications. While that’s being fixed now as we relaunch our site, I feel that it’s extremely important for any company getting into the online health and/or financial services space to spend some serious time and brain power thinking through how users can establish and systematically enhance their reputation in an online community.

  • http://lsvp.wordpress.com jeremyliew

    Taylor, rate cards don’t necessarily reflect this, but sell through rates do. Sell through rates are typically low on the general social networks (Myspace, Tagged, etc) and you see a lot of remnant ad network ads running through there.

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