How Social Media Keeps You Poor!

Summary

This 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

00:00

📱 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.

05:01

🛍️ 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.

Keywords

💡Social Media

Social media refers to digital platforms and applications that enable users to create and share content or participate in social networking. In the video, it is highlighted as a double-edged sword that connects people but also influences their spending habits. The script mentions how social media platforms have turned into powerful marketing tools, customizing ads to individual users' preferences, thus making them more susceptible to spending.

💡Advertising

Advertising is a form of communication intended to persuade an audience to take some action, typically to purchase a product or service. The video discusses how traditional advertising has evolved into highly targeted digital marketing on social media, where algorithms curate ads based on users' online behavior, making it more effective in driving consumer spending.

💡Branded Content

Branded content is any form of content that has been created and controlled by a brand to promote itself. The video explains how the line between branded content and entertainment is blurred on social media, making it harder for users to distinguish ads from regular content. This tactic is effective because it subtly promotes products without the audience feeling they are being sold to.

💡Influencers

Influencers are individuals who have a significant following on social media and can influence potential buyers' purchasing decisions. The script points out that influencers weave products into their posts, making advertising seem like a natural part of the content, which influences the audience's spending behavior.

💡FOMO (Fear of Missing Out)

FOMO is a term that describes the fear of missing out on experiences or events that others are having. The video uses FOMO to illustrate how social media feeds filled with others' experiences can pressure users into spending to keep up with perceived social norms or to avoid feeling left out.

💡Social Proof

Social proof is a psychological phenomenon where people conform to the actions of others under the assumption that those actions are reflective of correct behavior. The video explains how social media platforms use social proof by displaying likes and followers to convince users that a product or service is popular and值得信赖, thereby influencing their purchasing decisions.

💡Overspending

Overspending refers to spending more money than one can afford or more than is necessary. The video cites a survey where 57% of millennials admitted to overspending due to social media influences, indicating that the platform's marketing strategies can lead to financial strain for users.

💡Subscription Model

A subscription model is a business model in which customers pay a recurring fee to access a service. The video contrasts social media platforms' advertising-based model with subscription models like Netflix or Spotify, suggesting that the latter might be less intrusive in terms of targeted advertising and potentially less likely to lead to overspending.

💡Digital Marketing

Digital marketing refers to advertising delivered through digital channels such as social media, search engines, and websites. The video discusses how digital marketers on social media can create detailed consumer profiles and track behaviors to deliver highly personalized ads, which is more efficient and potentially more persuasive than traditional marketing methods.

💡Consumer Behavior

Consumer behavior is the study of how individuals make decisions about what and when to buy. The video explores how social media influences consumer behavior by creating a constant stream of advertisements and branded content, which can manipulate users into making impulsive purchases based on social cues and peer influence.

💡Ego and Financial Decisions

The video suggests that positive feedback and social validation on social media can inflate users' egos, leading to reckless financial decisions. It implies that the desire for social approval can override rational financial planning, resulting in overspending and poor financial management.

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)