TikTok has led to a surge in UGC, or user-generated content, ads.
Advertisers are are turning to it as a cheap, authentic form of promotion.
And creators are cashing in, regardless of audience size.
TikTok is fueling a surge in demand for UGC advertisements.
UGC, short for user-generated content, is not new. Brands have been using this kind of content, which typically takes the form of a customer review, to promote their products and services for decades.
But in recent months, UGC ads have been in high demand from brands, ad agencies told Insider, and at least some of the rise can be attributed to TikTok.
The content feels native to TikTok and appears authentic, helping brands establish trust with consumers, agencies said.
Plus, the content belongs to brands, so creators don't need an audience to get commissions. In fact, some brands prefer creators with small followings because their content is usually cheaper and feels more authentic.
Read more about how TikTok is fueling a demand for UGC advertisements from brands
UGC has become so popular that some creators expressed concern that the high demand for it was driving prices down — caused by inexperienced new entrants not knowing how much to charge. They told Insider that if creators present themselves as professionals, they can negotiate higher rates from brands.
Some of them shared with Insider the pricing strategies and rates that have been working for them.
6 creators discuss how much they charge for UGC, and their pricing strategies
Why UGC ads are surging
UGC is offering TikTok creators a new avenue to earn income for their knowledge of the platform and video-making skills.
TikTokers have been expressing frustration with fleeting fame on the platform. They often blame this issue on the discovery element of the app, which makes it harder to build community with followers.
In this scenario, UGC can become an enticing opportunity and provide extra injections of cash.
Read more about the frustration TikTok creators experience with building stable careers on the platform
And it's not only a frustration with TikTok that's causing UGC to boom. With a shaky economy and tight marketing budgets in recent months, some creators have found that offering brands UGC — which is usually cheaper than the sponsored content creators publish on their social-media accounts — can become a lucrative extra income stream.
Here are 9 ways creators are building new income streams during an economic downturn
How much creators earn from UGC ads
Creators can make good money with UGC, regardless of their follower count.
Those who already have a big following turn to it to avoid saturating their accounts with sponsored content, which can alienate audiences.
Personal-finance creator Erin Confortini, or @moneytomiles on TikTok, has amassed almost 270,000 followers on the platform, and earns money from both brand deals and UGC.
When Insider spoke with her, she said that while sponsored content paid significantly more than UGC deals, it's worth it to split her time between the two, to keep ads on her page at a minimum.
Others, whose following is too small to partner with brands — or who don't have a following at all — turn to UGC as a way to make money from their content creation skills.
Salha Aziz, who goes by @sociallyaziz on TikTok, had been trying to make it as a fitness influencer on the platform, but never succeeded.
"I wished that I could make money doing something I loved, which is being on social media and making videos," Aziz previously told Insider.
UGC provided her with the opportunity to make an income from her content.
Read more about how much she makes and how she broke into the industry
For some creators whose work focused on the movie and entertainment industry, pivoting to UGC is proving a lifeline during the SAG-AFTRA strike that's rocking Hollywood.
Joseph Arujo is one of them. The creator had already been monetizing his user-generated content before, but doubled down on it since July, when the strike began and some of his other income streams ground to a halt.
Platforms fueling the UGC boom
As UGC gains a new layer of credibility among brands, platforms are cropping up that help brands connect with creators who make UGC.
For example, online services like Bounty and The Plug are designed to help everyday TikTok users to earn cashback on their product recommendations.
Startup Catch+Release, which recently closed an $8.8 million Series A round, allows creators to upload their content for brands to easily license it. Brands like Ford, Delta, and Walmart have previously used Catch+Release.
Startup Insense, which connects e-commerce brands to UGC creators, has been around since 2016, and has seen increased interest in the past couple of years.
"Business is going through the roof," Insense cofounder Danil Saliukov told Insider last year. "We are in a great space right now. One of the reasons is the creator economy and the strong demand for user-generated content."
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