Half of brands eyeing a shift from paid advertising to earned content creation as budgets tighten

With a possible recession looming, brands’ marketing budgets are under increasing pressure to maximise ROI while minimising spend, and research suggests that UGC might be a winning strategy.

Just over half (52%) of brands are considering moving their budget away from paid advertising efforts to owned and earned content creation, while 30% are already doing so, research finds.

The move is potentially propelled by the revelation that 48% of the survey respondents feel like they can only somewhat gauge how successful their paid advertising is.

The study, by product reviews and user-generated content (UGC) solutions provider, Bazaarvoice, surveyed over 500 budget holders and decision makers from brands, retailers and agencies on their channel mix.

It found that 61% of respondents expect their budget to be impacted by a possible recession, increasing the need for brands and retailers to evaluate their advertising channel mix to ensure they are maximising return on adspend (ROAS).

According to the research, a more even balance of paid and organic media is becoming critical to creating an optimised channel and content mix, and it indicates a higher proportion committed to authentic UGC needed to achieve success.

Just over a third (36%) of the 8,000+ shoppers surveyed in Bizaarvoice’s 2022 Shoppers Experience Index said brand advertisements do nothing for them when making a purchase decision and 78% said product reviews from other customers are most influential to their purchases.

Alister Dell, Digital Marketing Manager at Hardys Wine, said in response to the findings: “We’ve seen that by using UGC in our social media advertising, we’ve been able to reduce our cos-per-click by 60% whilst driving higher click-through rates.”

Recession on the horizon?

The pressures associated with a looming recession are likely to have a significant influence on how marketers behave. Not only are almost half of brands uncertain whether or not their paid advertising is effective and considering moving away from it, but the shift is likely to be a considerable one.

47% of those surveyed are considering moving 10% or more of their budget to owned and earned content creation, taking that chunk away from paid advertising. And 86% of respondents believe this shift will facilitate improved performance of their ads and content because of the opportunity to generate more authentic UGC as opposed to paid and owned media.

As reflected in previous reports, consumers are more responsive and trusting of UGC that appears authentic and regardless of if they shop in-store or online, this report found that the bulk of shoppers' product research occurs online.

Budgets will be less flexible because of recession however, with 81% of brands expecting to reduce their marketing dollar spend and 34% expecting to make internal layoffs to their team.

Zarina Lam Stanford, Bazaarvoice CMO, said: "For years, brands have leaned on paid channels to amplify branded content, tactics, and offers. In fact, more than $700bn was spent on paid advertising alone in 2022.

“Now we are seeing a rebalancing to optimise the marketing mix modelling as consumers are yearning for more organic content from other shoppers.”