During the last couple of years a new type of advertising has emerged. The younger generations are migrating from TV to Internet entertainment channels such as YouTube, and consequentially they are getting harder to reach through traditional advertisements. Increasingly, the young tech savvy audience is producing entertaining content of their own, freely distributing it around the online communities, and the advertising industry is utilizing the trend. By inviting the users to create their own ads, companies are now launching campaigns in the name of creativity and competition. However, this collaboration incorporates the users’ ads into the marketing strategies, which has traditionally been very closely controlled. A strategy that may seem worrying for some, while appropriate for others. We find that this new form of marketing has yet to be properly analysed in order to get a full perspective of its challenges and potentials, and our thesis is therefore concerned with establishing a theoretically and empirically founded understanding of the phenomenon. Our analysis is built on the assumption that users and corporations have diverging interests. In order to understand the challenges and potentials associated with usergenerated ads (UGA), this report will uncover these interests within different areas of focus, using theories of cultural, psychological and sociological character. Furthermore, we have analysed the market for UGA and the related marketing strategies. Since users and corporations have different interests in user-generated ads, the concept of “control” is a central issue when considering the challenges of this kind of marketing. We find that corporations need to change the way they see the “message”. Rather than constructing a “unique sales proposition”, they should learn how to make the message an experience, which may entertain and maintain social communities. Creating a campaign with a sufficiently engaging appeal is challenging and dependent on the target audience, but it is evident that rewards play a major role. Rewards should not necessarily be tangible, as it is proven that attention in various ways is highly attractive. As a consequence, some users will take it upon themselves to obtain attention whether their ads get accepted or not. Users and corporations each have a number of resources available which may help them in obtaining their goals. The users have efficient channels for communication and distribution of their opinions and their ads, whereas the corporations have a greater amount of technological, economical, legal and informational resources available. Consequently they are capable of “controlling” the campaigns to a certain degree, thereby establishing some premises of conduct and participation which may ideally lead to win-win situations for both parties involved. By launching a campaign with user-generated ads, companies now have an alternative way of reaching an audience, which is spending an increasing amount of time online. Those watching the majority of online-video belong to the younger generations, and especially the young males aged 18-29 are producing their own content. When assessing the trust of advertising messages, Denmark is found to be the most sceptical nation of 47 select countries. Employing UGAs may be a way to prove the message more credible and help turn this trend around. With UGA campaigns, corporations are able to distribute a significantly greater amount of ads than in traditional ad-campaigns, which means that viewers have a better chance of finding an ad that appeals to them and which is found trustworthy. User-generated ads should be seen as part of our new participation culture where creative interests have a governing role in the activities of users. In this culture, UGAs could help create and re-create communities and social networks, at the same time as they provide an opportunity for corporations to benefit from what we call “collective intelligence”. The backgrounds of the participants in UGA vary from “amateur” to semiprofessional, and as a result the users constitute a group with an ability to think in alternate ways. This creates a situation where corporations are able to locate and recruit new creative employees, while simultaneously observing the interests of the participants along with their views on the corporation itself.