How Social Media Keeps You Poor!
Summary
TLDRThis video delves into the profound impact of social media on consumer spending habits. It highlights how targeted advertising and branded content blur the lines between entertainment and promotion, making it hard for users to discern ads from authentic content. The script discusses the psychological tactics used by algorithms and influencers, which exploit human tendencies like FOMO and the desire to 'keep up with the Joneses', leading to impulsive purchases. It also touches on the concept of social proof and the ease of online shopping, which can quickly convert social media engagement into financial transactions. The video concludes by acknowledging the double-edged nature of social media, offering both potential financial pitfalls and valuable consumer information.
Takeaways
- 🗣️ Social media has transformed communication, making it easier to stay in touch but also influencing our spending habits.
- 📈 A survey revealed that 57% of millennials overspent their budget due to social media, indicating its powerful impact on consumer behavior.
- 🎯 Digital marketers use detailed consumer profiles and social media algorithms to tailor ads, exploiting our habits and preferences.
- 📺 The line between content and advertising is blurred on social media, making branded content more enticing and less distinguishable from organic posts.
- 👥 The concept of 'Keeping up with the Joneses' has evolved into FOMO, where social media feeds fuel a constant comparison and the fear of missing out.
- 💸 Positive online feedback can lead to reckless spending, as the inflated ego from social validation may cause a lack of focus on financial goals.
- 👍 Simple actions like liking or following a brand on social media can influence others, demonstrating the power of social proof in consumer decisions.
- 🛒 The seamless shopping experience provided by social media allows for instant gratification, potentially exacerbating impulse buying tendencies.
- 💭 Despite the pressures, social media also provides access to a wealth of information, including financial advice, which can help users make informed decisions.
- 🔄 Social media's dual nature allows for both the spread of consumerist influences and the sharing of valuable financial insights, highlighting the need for consumer awareness.
Q & A
How has social media changed the way we communicate and spend money?
-Social media has transformed communication by allowing us to stay in touch with friends and family like never before, but it has also created a powerful marketing tool that influences our spending habits, often leading to over-spending.
What percentage of millennials reported over-spending their budget due to social media according to the survey mentioned in the script?
-57% of millennials said they overspent their budget because of something they saw on social media.
How does social media advertising differ from traditional advertising methods?
-Social media advertising is more targeted and personalized, using detailed consumer profiles to track interests, behaviors, and emotional states, whereas traditional advertising relied on broad demographics.
What is the role of algorithms in social media advertising?
-Algorithms on social media platforms analyze user behavior to assemble a slate of ads custom-tailored for each individual, making the advertising process ultra-efficient.
Why are branded contents on social media considered a cutting-edge marketing strategy?
-Branded content blurs the line between advertising and entertainment, making it difficult for consumers to distinguish between the two, which increases the likelihood of engagement and purchase.
How do modern brands use social media to influence consumer behavior?
-Modern brands use social media to produce viral videos, have social media accounts, and pay influencers to weave their products into posts, making the advertising experience indistinguishable from actual content.
What is the concept of 'Keeping up with the Joneses' in the context of social media?
-The concept of 'Keeping up with the Joneses' refers to the social pressure to match the lifestyle and consumption of others, which is amplified on social media through constant exposure to others' curated and often idealized lifestyles.
What is FOMO and how does it relate to social media spending habits?
-FOMO stands for 'Fear of Missing Out' and it relates to social media spending habits by creating a sense of urgency to participate in or purchase experiences and products that others are showcasing online.
How can social media influence affect a person's financial health negatively?
-Social media can negatively affect financial health by promoting impulsive spending, encouraging comparison with others, and creating a sense of social proof that leads to purchasing decisions without careful consideration.
What is social proof and how do companies use it on social media?
-Social proof is the psychological phenomenon where people are more likely to follow the actions of others, especially in the absence of other information. Companies use social proof on social media by showcasing follower counts, likes, and shares to convince consumers that their products are popular and trustworthy.
How does the seamless shopping experience on social media impact consumer spending?
-The seamless shopping experience on social media allows for instant access to purchase products or services seen in ads or posts, which can lead to impulsive buying and potentially overspending.
What alternative business model for social media platforms is mentioned in the script, and why was it not widely adopted?
-The script mentions a subscription model like Netflix or Spotify as an alternative to the current advertising-based model. It suggests that platforms like Facebook, Twitter, and Instagram chose the latter because it was more profitable to treat advertisers as the real customers, selling user data and attention.
Outlines
📱 The Impact of Social Media on Consumer Spending
This paragraph discusses the pervasive influence of social media on our spending habits. It starts with a nostalgic look at a time before social media, where personal interactions and experiences were more direct and less mediated. The paragraph then contrasts this with the current reality where social media platforms have become powerful marketing tools, capable of influencing our spending through targeted advertising and by creating a constant stream of content that encourages consumption. The discussion highlights how social media algorithms, by tracking user behavior and preferences, can craft personalized ads that are hard to resist. It also touches on the concept of 'branded content', which blurs the lines between entertainment and advertising, making it more appealing to younger audiences like Gen Z. The paragraph concludes with a critique of social media platforms' business models, which prioritize advertisers over users, effectively turning users into the product being sold.
🛍️ Social Pressure and the Role of Social Media in Consumer Behavior
The second paragraph delves into how social media amplifies social pressure and influences consumer behavior. It draws a parallel between the historical concept of 'Keeping up with the Joneses' and the modern phenomenon of FOMO (Fear of Missing Out), which is exacerbated by the curated and often idealized content on social media platforms. The paragraph discusses how social media users often only share the best aspects of their lives, creating a false narrative that pressures others to spend in order to keep up. It also explores how social media can lead to reckless spending, as users may feel validated and popular when they receive positive feedback on their posts, which can inflate their ego and lead to a lack of focus on financial goals. The concept of 'social proof' is introduced, explaining how the visible popularity of a product or service on social media can influence potential customers to make purchases. Finally, the paragraph points out the convenience of social media's seamless shopping experiences, which can lead to impulse buying, and concludes with a reminder of the potential benefits of social media, such as access to financial advice and deals, if used mindfully.
Mindmap
Keywords
💡Social Media
💡Advertising
💡Branded Content
💡Influencers
💡FOMO (Fear of Missing Out)
💡Social Proof
💡Overspending
💡Subscription Model
💡Digital Marketing
💡Consumer Behavior
💡Ego and Financial Decisions
Highlights
Social media has transformed how we interact and perceive trends, making personal connections and information dissemination more accessible.
A recent survey reveals that 57% of millennials overspent their budget due to social media influences, highlighting its impact on spending habits.
Tech companies have turned social media into a powerful marketing tool, engineered to entice users to spend money.
Digital marketers use detailed consumer profiles to target ads, leveraging user data for precision marketing.
Social media algorithms are designed to show ads based on user behavior, interests, and emotional states, creating a tailored advertising experience.
The purpose of advertising on social media is to induce spending without regard for the user's financial well-being or satisfaction.
Branded content blurs the line between advertising and entertainment, making it harder for users to distinguish between the two.
Modern brands use social media to produce viral videos and accounts, mimicking real people to promote products subtly.
Gen Z audiences are more receptive to branded content, preferring ads integrated into content rather than separate.
Social media platforms could have adopted a subscription model but chose to prioritize advertisers' interests over users'.
Social media users inadvertently encourage spending through the 'Keeping up with the Joneses' and FOMO phenomena.
The desire to present a perfect life on social media can turn users into unintentional salespeople for products they may not be satisfied with.
Positive online feedback can lead to reckless spending and a lack of focus on financial goals, as seen in a study of Facebook users.
Social proof, or the tendency to follow popular choices, is exploited by companies to influence consumer decisions through likes and followers.
Social media provides a seamless shopping experience, allowing for instant purchases and potentially exacerbating impulse buying.
Despite its drawbacks, social media also offers consumers access to more information, deals, and financial advice than ever before.
The video concludes by encouraging viewers to stay balanced in their social media use and to seek financial guidance from reliable sources.
Transcripts
- Can you even remember a time before social media,
you actually had to talk to somebody
to see how they were doing.
- If you wanted to know what was trending,
you'd have to go down to the mall,
check out the new styles
- And arguing with your uncle
about politics only happened at family reunions.
Thank goodness
- You might also have had a little bit more money
in your pocket because of social media's influence
on how we spent in a recent survey.
57% of millennials said they overspent their budget
because of something they saw on social media.
These tech companies have made it possible for us to stay
in touch with friends and family, like never before
but they've also created an incredible marketing tool.
Perfectly engineered to part you from your hard earned cash.
(piano music playing)
- Social media is such a constant part of our lives.
It's often hard to step back and see the many ways
it affects our spending habits.
So let's start with the most obvious one. Advertising.
- Since ye old shopkeeper posted a flyer in the town square,
advertising has become a centuries long arms race
to capture consumers, eyes and dollars.
If that flyer was a primitive spear
the internet is a laser guided nuclear tipped smart ball.
Unlike old fashioned advertising that relied
on broad demographics, like age, race, and income
today's digital marketers can create detailed profiles
of each consumer tracking their interests
behaviors and emotional state.
- Social media has made this process ultra efficient.
By analyzing what posts you like
what locations you've visited
and even what words you type algorithms can assemble a slate
of ads, custom tailored for you.
Well, what's wrong with that? You might ask.
Better to show me things I want than things I don't,
but remember the point of advertising is not
and has never been to get you to spend money
on things you need or things that will make you happy.
But just to spend money period, the algorithms don't care
whether you can afford it or whether you'll regret it.
Their only job is to get you to buy something.
Anything. Now they're experts on human psychology
and they know your specific habits and weaknesses.
It's not a fair fight
- But the real cutting edge stuff is branded content
where the line between advertising
and entertainment is so blurred it's basically non-existent.
Back in the eighties and nineties
the TV networks used to show these weird bumpers
in between cartoons and commercials.
- (TV playing) After these messages we'll be right back ♪
(whistling)
- I didn't think much about it at the time,
but those bumpers were actually mandated
by the federal communications commission because they worry
that children cannot distinguish conceptually
between programming and advertising.
Keep in mind, there was a time when people questioned
the morality of advertising to children at all.
So that was considered a compromise.
You know, if you're going to manipulate underdeveloped
brains with visual stimuli and advanced psychology,
at least give a little tykes a heads up.
- That concern seems positively quaint today.
Modern brands produce their own viral videos.
They have social media accounts that get likes
and follows just like real people.
And they pay influencers to seamlessly weave their products
into their posts.
There are some loose rules around labeling
but the general idea is to make the experience
of watching it ad indistinguishable
from watching actual content.
And it's working
- In a recent study.
Researchers found that gen Z audiences were far
more receptive to branded content than previous generations.
They're more likely to check out branded photos
like and share ads and even tag their friends in them.
They actually prefer their advertising to be a part
of the content than separate from it.
- And Hey, that's you no judgment
but you should be clear about the relationship.
These ads may feel no different from authentic content
but unlike a musician artist or other creator
whose goal it is to make you laugh, dance cry
or think brands are only after one thing. Your money.
That is the dark truth.
They worked so hard to make you forget.
- It didn't have to be this way.
Social media platforms could have adopted a
subscription model like Netflix or Spotify,
where you the customer pay for access to their services.
But sites like Facebook, Twitter and Instagram
instead decided it would be more profitable
to treat their advertisers as the real customers.
And the product they sell them, is you.
- But we're not entirely blameless in this process
whether we know it or not,
most users of social media are encouraging each other
to spend more money.
In the early part of the 20th century,
there was a popular comic strip about a family who obsessed
with their social status was always trying
to match the fashionable lifestyle of their neighbors.
The title of the strip became synonymous
with conspicuous consumption, driven by social pressure.
Keeping up with the Joneses.
If the Jonesses is get a new car,
we feel like we need to get one.
If they put in a pool, darn it. We should too.
We don't want to be left behind.
- Today, We might know this phenomenon by another name.
FOMO. Our Instagram feeds are filled with reminders
that everyone else is out there living their best lives.
Shopping at the trendiest boutiques,
staying at five star hotels, eating at gourmet restaurants,
sitting in the VIP section of the hottest music clubs.
We're not just comparing ourselves
to our immediate neighbors.
We're comparing ourselves to everyone all the time.
And the only way not to feel left behind
is to get out there and drop some coin.
(plates breaking)
- The problem is that your Instagram friends
aren't that much more trustworthy than the advertisers.
We don't admit to each other
that the lobster at Luigi's was actually kind of dry
and we wish we hadn't spent 75 bucks on it.
Or that those $300 pumps from uptown gave us a blister
and we haven't worn them since October.
And we certainly don't share the fact
that we missed a payment on our credit card.
Our desire to present our own lives
as perfect can turn us into unwitting salespeople
for every product and service we use.
Whether or not we were actually satisfied with the purchase.
- Even if social media makes you feel better about yourself,
it can still have a negative financial effect.
A study of Facebook users in 2012 found out
that people who got a strong, positive feedback
from their online social network tended to be more reckless
with money and less focused on their goals.
Basically feeling popular online can inflate your ego
and make you careless.
- You don't even have to make a post or write a review
to influence someone else's spending.
Just liking or following a brand will do the trick.
Humans don't like to be the first to try something new.
We need to know that a product or brand
has already been accepted by the group
before we spend our money on it.
It's called social proof.
And it's the reason why companies try
to accumulate followers and likes on social media.
They know that without any other information,
consumers will go with whatever seems to be
the most popular option.
Advertisers used to have to fake social proof
by making commercials filled
with ordinary people using their product.
But now they can actually show you the numbers.
See, can 105 million people be wrong?
- All of these tools will prime a customer for a purchase.
But social media has one more powerful trick
up its sleeve to seal the deal.
A seamless shopping experience.
In the old days, you might see a TV ad
for a razor scooter and think, Hey, that looks cool.
And then your friends at the skate park tell you
how much they love theirs.
And you've made up your mind to buy one
with your birthday money, but you still have to get your mom
to take you to sharper image before they sell out.
And by the time they get new ones in stock
everyone has moved on to Heelys
and your life is ruined.
- Babe, you got to let it go.
Today, If a social media influencer shows off a new handbag
or visits a fancy resort,
there's often a link to where you can buy it
or book tickets instantly.
Marketers know that a lot can happen
between the ad and the sale and they want to hurry you
through checkout while you're still full of FOMO.
While I love how easy the internet has made shopping
it can be a curse for people who struggle
with impulse purchases.
- For all the talk about how social media
lets us express ourselves and show our individuality.
It's also revealed how susceptible
we are to social pressure.
- We trust messages more,
when we think they come from friends.
We tend to follow the herd when we don't know what to do,
and we'll do anything
to avoid feeling left out or left behind.
Modern marketers, know these weaknesses
in a figured out ways to use them against us.
Which can make social media hazardous
to your financial health.
- But social media also offers consumers more information
than they've ever had before.
Finding deals and comparison Shopping
can be just a few clicks away.
And you can find lots of great advice
from financial groups and channels like,
oh! I don't know this one.
So if you're going to keep scrolling and sharing
give us a like, or a follow
so we can help you stay balanced.
And that's our 2 cents.
- Thanks to our patrons
for keeping 2 cents financially healthy, click the link
in the description to become a 2 cents patron.
(Gentle music playing)
- If you want to know more
about how advertisers follow you through cyberspace
check out our video, "How Retailers Stalk You Online."
(Gentle music playing)
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