Advertising through commercials, billboards and magazines have been influencing our purchases for decades, so much that conspiracy theorists claim they contain ‘subliminal messages’ which trick us into buying products against our better judgment. In spite of this legacy, a powerful new king of advertising is taking their place: social media.
Social media platforms like Twitter, Facebook, Pinterest, or Instagram are no longer just places to share pictures, ‘like’ or ‘follow’ people and trending topics, or collect your ‘favorite things’ onto virtual pegboards. Businesses are truly beginning to grasp the influence these social gathering places have on nearly every aspect of our life, including our finances.
How many business or product pages do you ‘follow’? Do you rely on social media to inform you of the latest trends, the greatest new gadgets, and what products your friends and family are using and buying?
If so, you’re not alone. Socialmediatoday.com gathered statistics that show exactly how powerful social media is on our purchases:
- 71% of consumers are likely to purchase an item based on referrals from social media
- 81% admit being influenced based on recommendations/posts from friends
- 78% of us admit to being influenced directly by businesses’ posts
- 74% of us rely on social media to make a purchase decision
Allowing your financial decisions to be influenced by social media can be either positive or negative. Awareness of the pitfalls while using the advantages is the best way to approach this unavoidable blending of your social and consumer life.
Here are the sneaky ways social media affects your spending:
1. Exploiting the crowd mentality.
The crowd mentality applies to more than finances, but in this case, it’s the voice that urges you to buy something because ‘everybody’ else already did and you don’t want to feel left out. Before social media, we didn’t have as much awareness of what other people were purchasing.
2. Capitalizing on the influence of friends.
As consumers, we’ve learned to be leery of cold calls and blatant sales pitches from questionable sources, but we tend to trust the opinions of friends and family. This isn’t necessarily bad unless your friends’ social media activity is causing you to blow your budget or use money set aside for your savings goals.
3. Grabbing your attention: it’s all in the eyes.
You may have learned to avoid commercials and ignore direct advertisements, but businesses who approach you with a casual tone in a social atmosphere use realistic pictures, graphics and consumer feedback to grab your attention – and your credit card.
The Helpful Side of Social Media’s Role in Purchasing Decisions
Businesses aren’t necessarily trying to manipulate you using your newest favorite hobby all the time, and their intrusion on this more intimate sphere isn’t entirely negative. The following are some of the ways social media can help you be a better steward of your finances.
1. It can teach you more about a company’s identity and products.
Following businesses’ social media pages can allow you to learn more about what they have to offer without sales pressure. As long as you’re using this information to make informed, deliberate purchases based on your needs and budget, you can enjoy the benefit of research coming to you.
2. It provides an outlet for feedback and influencing the brands you love.
The flip side of being influenced by the things others recommend and share is being able to influence others’ opinion of a company and their products based on your experiences. This helps others and the company, and might even result in free samples or coupons when you provide positive feedback and honest opinions.
3. It allows you to save money by cashing in on frequent promotions and sweepstakes.
If you’re honest, you’ve been sucked into a social media sweepstakes at one point or another. Even if you never win the grand prize, it costs nothing to ‘share’ or ‘comment,’ and businesses may again express their thanks with free products or coupon codes.
So what about you? Does social media influence your purchases, and is that good, bad, or a mix of both?
{ read the comments below or add one }
I agree with this post. Another very powerful way social media negatively affects spending is by contributing to the problem of conformity – that is, where people do things not because they actually want to, but because they want to do, or be seen doing what their ‘friends’ are doing. I actually think of this type of spending like a tax for belonging to society. After all, they don’t pay it for their own benefit – they pay it for everyone else’s.
It’s not like the retail industry needed anymore help from us, but we have to invent social media to boost their sales even more. Viewing it as a tax is right. It’s not just the money either, because we spend so much of our life on those sites nowadays that our available time is seriously challenged as well!
One type of purchase in which I know I am influenced by social media is books; seeing bloggers I like recommend a book puts it on my tbr list.
That’s a good way to put books on the to-read list. Thanks for the suggestion!
What I buy more than anything else is stock shares for investing, and I would strongly recommend against using social media to make selections for this purpose. You can look up “pump and dump” to get an idea how such a system can be gamed.
That said, there could be benefits to using social media in researching certain kinds of investments. For example I’ll break my rule of never talking about my own investments by making the statement that I believe Vanguard family mutual funds are usually a good choice for your 401k or IRA because they are mostly well diversified and carry low expenses.
As for consumer goods like cars, clothes, electronics, and food, I have my own tastes and whether someone famous or someone close to me has those same tastes doesn’t matter to me and won’t affect my purchasing decisions. I guess I’m not desperate enough to fit in that it can change my own opinion about something. If it’s as strong as you suggest, then I suppose it’s just a matter of time before MLMs virtualize.
I second the recommendation for Vanguard funds! They just sent notice today that they reduce the expense ratio again.
Getting a raise baby!