Seventy-three per cent of respondents to a survey by social media outfit Reality Digital said they do too little to moderate UGC, particularly when using it commercially.
More than 90% of the agencies, advertisers and publishers surveyed predicted that user-generated video would be the biggest growth sector in online advertising next year.
But media agencies are being put off UGC due to the lack of moderation. Rob Proctor, head of EMEA at Reality Digital, said agencies were not buying ads around UGC because it could damage brands.
However, online audiences are rapidly moving toward UGC websites and advertisers will have to follow this audience, according to Proctor.
He said: "Under British law, something has to be fit for purpose if you wish to sell it. Most agencies operate a blanket ban on UGC because it can be changed from one day to the next."
He added it was widely recognised that further moderation of user-generated video is needed. Forty-eight per cent of survey respondents believed moderated video would grow faster than unmoderated UGC next year.
This article was first published on mediaweek.co.uk