The Shareholder Value of User-Generated Content
New data measuring the shareholder value of user-generated content (UGC).
“Cultural relevance” has become a highly desirable brand objective in the age of the algorithm.
Analyzed through user-generated content (UGC), cultural relevance is both widely acknowledged for its importance and yet nearly impossible to link to financial outcomes.
Sure, we may know of its importance. But how do we measure it? How do we justify to the CFO the importance of building “cultural relevance”?
Today, that changes.
User-generated content is the currency of modern brands.
In this finding, we present a compelling financial case for user-generated content (Brand Magnetism®) demonstrating that attracting consistent and popular UGC directly translates to significant shareholder value.
UGC Fashion Risers Outperform the S&P 500 by 6X
An index of the fashion brands with the largest increases in user-generated content (Brand Magnetism®) outperformed the S&P 500 by nearly 6x over the last year and outperformed the Invesco QQQ by 2x.
The brands included in this index are those Most Improved Fashion Brands that saw a significant increase in organic, user-generated content between Q4 of 2022 and Q2 of 2024, and can be seen in the visualization below:
UGC Fashion Fallers Underperform the Market
We see similarly conclusive evidence for the Least Improved Fashion Brands. The Least Improved Brands saw an overall decrease in engagement with UGC from Q4 2022 to Q2 2024. This subsequently resulted in these brands underperforming against the S&P 500 and other benchmarks, at a negative 8% return, as visualized below.
The brands included in this index are the Least Improved Fashion Brands that saw a significant decrease in organic, user-generated content between Q4 of 2022 and Q2 of 2024, and can be seen in the visualization below:
What is Brand Magnetism®?
Brand Magnetism® is a term coined by dcdx describing a brand’s ability to attract Gen Z, measured through the popularity and consistency of user-generated content.
Over the past few years, we have measured and tracked Brand Magnetism® for thousands of brands through our proprietary metric, the GenZ Score®, a 0-100 number analyzing the popularity (engagement) and the consistency (variation) in organic, brand-relevant user-generated content about a brand.
Simply put, Magnetic Brands do not need to push; they pull.
They do not ask for attention, they attract it organically.
While being Magnetic has always meant that Brands become the center of an attention ecosystem, this new data shows that brands gaining Magnetism are brands gaining value.
How did we analyze this data?
To understand the correlation between Brand Magnetism® and financial performance, we looked at our most recent Q2 2024 Gen Z’s Fashion Industry Ranking Report, where we analyzed 50+ brands by their Brand Magnetism®.
As part of our recent analysis and for the first time, we compared average engagements across time frames in our 2022 Fashion report to 2024 Fashion averages to understand the change in overall conversation around these brands in fashion over the last 1.5 years with Gen Z. We had 41 overlapping brands in our 2022 and 2024 rankings, and these were the top performing (most improved) and worst performing (least improved) brands.
To compare these brands against the financial benchmarks above, we removed both a) private companies and b) companies part of a larger conglomerate that did not compose 50% or more of its revenues.
For the dates of comparison, we dated back one year from the end of Q2 2024: June 30, 2023, through June 30, 2024.
Conclusion
In marketing, the significance of user-generated content (UGC) has long been acknowledged. Brands have understood that content created by real people has real impact—whether it is a food review, a get-ready with me, or a day-in-the-life vlog. While the importance of UGC has been recognized in principle, its practical impact on strategy has often been underestimated.
User-generated content (UGC) is no longer just a "nice-to-have" component of any marketing strategy.
It is a core pillar of the health of any business.
As brands continue to navigate an increasingly chaotic, noisy, and fast-paced culture, those who embrace and prioritize Brand Magnetism® will attract consumers in; controlling their ecosystems, driving pricing power, fueling innovation, and ultimately driving shareholder value.