Customers vs. Influencers: User content is changing brands’ marketing mix

As digital shopping platforms find it more valuable to promote reviews with more credible authenticity, online shoppers are starting to earn an income like influencers by creating content on the brands they like.

Direct-to-consumer companies like fashion retailer Myntra and snack platform Farmley pay customers as much as $$20,000 per video to promote their reviews.

This type of user-generated content is becoming increasingly popular among brands as it generates better returns than influencer-generated content.

In September, Myntra launched Ultimate Glam Clan, a shopper-led creator program. “The program encourages shoppers to share high-quality images of products purchased from Myntra as part of their reviews, thereby empowering them to become creators. This approach enhances content discovery, builds trust and fosters a community where authenticity thrives.” Myntra said Chief Marketing Officer Sunder Balasubramanian.

The executive told Mint In one month, more than 70,000 users created more than 100,000 user-generated posts, which received nearly 500 million views.

The brand has spent $1.3 million rupees are used to compensate these creators, with the best creators earning up to $He added that it was $20,000 per video.

On average, influencers with more than 250,000 followers charge $20,000 for a brand video.

Also Read | Brand hopping may no longer be an option for social media influencers

However, incentivizing shoppers to leave reviews is trivial. In 2022, the Bureau of Indian Standards issued guidelines requiring e-commerce companies and restaurants to ensure that online reviews of services or products sold on their platforms are authentic.

In May this year, Mint According to reports, India’s Ministry of Consumer Affairs has proposed a quality control order to ensure the authenticity of product and service reviews on online marketplaces such as Amazon, Flipkart and Myntra.

User-generated content is often a voluntary activity, and some brands incentivize it and others don’t, but in both cases, online marketplaces must ensure the authenticity of reviews.

“E-commerce platforms offer virtual shopping experiences, limiting the ability of consumers to inspect products in person. As a result, consumers rely heavily on reviews from other users to make informed decisions,” Consumer Affairs Secretary Nidhi Khare said in a statement Mint‘s May report.

“These online reviews can serve as social proof, providing potential buyers with insights and confidence, ultimately influencing their purchasing choices. It should not be manipulated to drive sales of any product.”

What to do for whom

While influencer marketing is a great tactic, user-generated content (UGC) makes a brand appear more authentic. Additionally, for most users, leveraging a brand’s visibility to be discovered is an additional incentive to create promotional content.

“We believe our customers are our true brand ambassadors. While influencer collaborations help drive awareness and traction, UGC drives real advocacy and trust,” Atul Sinha, CEO of CaratLane Atul Sinha) said.

The company receives user content on its social media platforms primarily through WhatsApp and Instagram, including dedicated Instagram handles for UGC, CaratLane Expressions, and CLTV, an in-app feature of its mobile app.

User-generated content helps brands target audiences and drive sales from the followers of the user who created the content. Users’ social media presence is very personal and influential within their close circles, so brands encourage UGC regardless of follower base.

“UGC has more authenticity. It really prompts people, especially in the first-level connection of the user, to trust the brand and try it out, which then triggers a virtuous cycle,” said Aman Gupta, head of marketing at healthy snack brand Farmley. People who have not tried the brand’s products also feel that the brand is recommended not only by influencers but also by real customers, so they give the brand a chance. “

Also Read | Banks, Fintech firms launch special products for creators

Brands must pay creators a licensing fee, essentially compensation for rights to the content, which brands need to negotiate on a case-by-case basis to run it as digital ads and boost their social media discovery.

“Companies use various contracts to obtain the necessary rights and permissions to post customer reviews on social media platforms. Typically this is done through the company website terms and conditions, which set out the terms of the license granting the company a non-exclusive, royalty-free Royalty-free, worldwide, sublicensable and transferable license to use, reproduce, modify, publish and display the content,” said Harsh Walia, partner at Khaitan & Co.

“However, in other cases where a company offers pay, rewards, incentives or any other form of compensation in exchange for a review, such disclosure should be made clearly up front and in a prominent manner, including through the use of the ‘advertisement’ label,” Valli Ya added.

“In addition, if customer reviews have been edited or manipulated in a manner that may render them promotional advertising, it is recommended that relevant disclosures be made in this case as well.”

Low investment and high return

Not all customers are willing to share their brand experiences on social media. Still, UGC is expected to gain traction, according to research from tech-driven creative group Accenture Song.

“In today’s digital economy, UGC is rapidly changing the way brands interact with consumers. In fact, according to our research, two-thirds of Indian consumers find UGC to be as entertaining as traditional media forms.” Accenture India said Deepak Bakshi, Managing Director of the company.

But can it be a replacement for influencer marketing? UGC’s low investment and high returns undoubtedly make it a favorite.

Shankar Prasad, founder of beauty brand Plum Goodness, said: “As a brand, I prefer UGC to influencer marketing because it is more authentic and legitimate.”

Also Read | Advertising sentiment remains subdued during festive season

However, due to the wide range of influence and large share of influencer marketing, the founders do not consider it an alternative to influencer marketing, but a supplement to influencer marketing. Plum’s ratio between influencer marketing and UGC is 85:15.

“UGC is an effective marketing strategy, but it is still in its infancy in India. While currently the threat to influencers is not great if brands put in the effort and scale it up to a certain extent, influencer marketing campaigns may Got hit,” said Sagar Gokhale, co-founder of media marketing firm Qyuki Digital Media.

“That being said, this content strategy has a long way to go before it becomes the industry standard and replaces influencer marketing,” he added.

Also Read | How Influencers Avoid Legal Trouble