- 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.
TikTok is fueling a new 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.
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 blame this issue on the discovery element of the app, which makes it harder to build community with followers.
Other creators have been struggling with low payouts from the app's Creator Fund. It pays per video views, however, the rate fluctuates daily, and it's unclear the exact factors that determine the daily rate. Some said the payouts were so low they dropped out altogether.
In this scenario, UGC can become an enticing opportunity and provide extra injections of cash.
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 over 180,000 followers on the platform, and earns money from both brand deals and UGC.
She says that while sponsored content pay 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.
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 Insense, which connects e-commerce brands to UGC creators, has been around since 2016, and has recently seen increased interest.
The company's revenue grew by three times since 2021, and it has recently closed a pre-Series A round.
"Business is going through the roof," Insense cofounder Danil Saliukov told Insider. "We are in a great space right now. One of the reasons is the creator economy and the strong demand for user-generated content."