- 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)