How to make money from UGC as a creator, despite new entrants and low rates flooding the market
- TikTok has fueled a boom in UGC, or "user-generated content" used for advertising purposes.
- New, inexperienced creators are entering the space, and some accept very low fees for their content.
- Seasoned UGC creators expressed frustration and gave advice for others to increase their rates.
Kristen Bousquet is frustrated.
In January, she received an email from a brand offering her a deal to create UGC, which refers to "user-generated content" that is used for advertising. She would get paid $500 for 30 short-form videos, or just under $17 per video.
Bousquet, who has 24,000 Instagram followers, usually charges a minimum of $300 to create a single UGC video for a brand.
"As a creator who has created high-quality content for brands for over five years, it's a slap in the face to get an offer that barely even covers the cost of lunch," she told Insider.
But it's a situation that veteran UGC creators have increasingly faced, as the space has surged in popularity thanks to the rise of short-form video on TikTok — with marketers investing in this type of advertising because of its authentic feel.
With this type of collaboration, content creators produce assets for brands in exchange for payment. The brands usually post the assets on their own social-media accounts, or use them for paid advertising. Creators are not required to publish the content on their profiles, and they don't need to have an audience — they just need the skill to create high-quality videos.
Because it's so easy to start pitching yourself as a UGC creator to brands, inexperienced new entrants have flooded the market, with some of them accepting very low fees.
"Many UGC creators who are just getting started do not see their value, so when they are offered any compensation at all, chances are they're going to take it," Bosquet said.
"I personally have seen offers as low as $10 a video, which to a professional UGC creator would be insulting," said Nicole Marks-Martinez, a creator coach who runs the social-media agency KoliMarksMedia.
@kolimarksmedia UGC creators listen up!! #ugctips2023 #howtobeaugccreator @kolimarksmedia ♬ original sound - Content Creator💖 || KoliA lack of education and experience in UGC is causing confusion
Kyle Wong, who cofounded the UGC company Pixlee in 2012, said the exponential growth of the space came as a consequence of the rise of short-form video and the pandemic.
The combination of TikTok's success with the limitations imposed by the coronavirus — which made it difficult, if not impossible, to shoot professional marketing content — created the perfect storm for the rise of UGC.
But this steep growth has left brands and creators without a blueprint for payment structures, and generated a "free-for-all" on both sides, according to content marketer and creator Jayde Powell.
Chloë Gibbions, director of influencer-marketing agency Ours, said that much like in the early days of influencer marketing, brands are often just unaware.
When they offer low rates, they underestimate the time and skill required to create content, and assume that high fees are only justified when creators have big audiences.
"It's the same amount of work, the quality is the same, the production is the same, but there's some sort of miscommunication between the content living on the brand channels and the content living on the influencer's channels," she said.
On the creator's part, accepting low rates can depress the market.
"Newbies are happy to accept any form of payment, since this is their first time getting a yes," Marks-Martinez said. "What does this mean for experienced creators who offer valuable, engaging, high quality content? Brands are laughing in our faces when we send our rates."
As the UGC space grows, creators need present themselves as professionals and not be afraid to negotiate
The key for creators to build valuable relationships with brands is to rethink their role as freelance marketing professionals, rather than influencers, Wong said.
Being responsive to the requests of brands, delivering content on time, and showing an understanding of marketing is crucial.
"Similar to any other marketing profession, the more you really understand how the core business operates and makes money, probably the more effective you'll be at producing content," he said.
When pitching their services to brands for the first time, creators should already have a portfolio of content to showcase, and ideally be able to prove that they can drive good ROI for brands.
"A great way to do this as a beginner creator is to use affiliate links and promote products to drive clicks," Marks-Martinez said. The proven ROI can be used as a leverage to charge higher rates.
"If you have a really great portfolio or you have a creative concept that can justify the ask, most brands are fairly flexible," said Reagan Baylee, a fashion and beauty creator who has also been creating UGC for a year.
UGC creators Sean Mari Sagun and Salha Aziz started with cheaper rates and focused on building longer-term relationships with brands. Then, they slowly increased their fees as they gained experience. Aziz, who charged $160 per video in August 2022, now charges $600.
Having built on years of experience in marketing, Jayde Powell charges a base rate of $2,500 for a short-form video asset. For less-experienced creators, she recommends a minimum rate of $500.
"There's always budget, and you can get it, if you know how to ask for it," she said.
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