How Social Media Is Influencing Your Financial Decisions
The Philippines has the most numbers of social media users across Southeast Asia according to Statista. As of January 2020, the country stands with a social media penetration rate of 67 percent and an average of four hours of daily use.
In a way, social media has become the go-to channel for Filipinos for news, entertainment, communication, and even shopping due to its accessibility. Because of that, it’s also inevitable to impact our day-to-day decisions.
From picking a restaurant, a travel destination, clothes to buy, or simply deciding whether to spend money or not, social media has more influence than you think!
How? Let’s start first with the obvious…
To be fair, advertising predates even the earliest social media platforms, it’s been the tried and tested method for businesses to reach their customers. TV and radio placement for example has been an effective means of advertising before the internet, and it works for many businesses.
However, with social media, advertising efforts are easily delivered to the audience in an extremely precise and targeted manner. It’s an established fact that social media platforms gather and analyze our digital footprint through the pages and people that we follow, the posts that we engage with, and the websites we visit. Through this, they’re able to curate advertisements that closely match our interests. This is why you see that air fryer ad on Facebook after looking it up on Google.
Aside from direct ads placement on your social media feed, other means of advertising are also on the rise in social media channels. Like it or not, the influencers or Youtubers that you follow are also participants in this chain of advertising, and it’s actually working.
In fact, according to a study done by the National Retail Federation in the US, Gen Zs are more receptive to branded content; they even adore it. While it can be argued that it boils down to the authenticity of the content, it doesn’t negate the fact that they are drawn to it. The study also shows that they love to interact with brands on their own terms, and would rather have advertised as part of the content they digital than a separate advertisement.
This explains the rise of personification of brands in Social Media, with most of them injecting humor and sass into their tone of voice.
Whether it’s through an influencer to reach the social media savvy Gen Zs or through paid campaigns to reach the general audience, at the end of the day both contribute to the likeliness of a person in social media to buy a product. A separate study conducted by a branding/ marketing firm found that 76 percent of consumers purchased a product they saw on social media. On top of that, 50 percent of the consumers are likely to buy a product if they see their peers or a person they follow and trust (influencers) bought it.
Aspirational content can lead to instinctive spending
Social media is flooded with “inspiring content” from influencers, gurus, and entrepreneurs that subtly sell us lifestyle choices that may not be practical.
Popular Travel pages (at least in the Philippines) and travel bloggers for example have been injecting travel ideas in a form of humor as a relief from our day-to-day woes. We’re not saying that this is bad, we’re just saying that lifestyle options like this were gradually normalized thanks to social media. On one hand, it dispelled the belief that traveling is only a lifestyle option for the rich. On the other, traveling to these Instagram-worthy locations is not cheap and not everyone can afford it.
It’s one thing to take a short trip (that’s within your budget) to recharge yourself, but it’s something else to chase the lavish and luxurious lifestyle being sold over social media.
Likes and follows
You don’t even have to talk, make a review, or post about a certain product. A “like” or “follow” is by itself powerful enough to sway consumers into buying a product. How? Through social proof – a form of collective digital approval. When a business has a good number of followers on Social Media, we immediately assume that they’re reputable. And why wouldn’t we?
The likes and follows that brands and companies accumulate in social media are collective approval of their existence and to some extent credibility. The more followers or likes these companies have, the more at ease we become in doing business with them – even if their products cost more than similar brands.
It’s good for businesses, but we can’t say the same for consumers.
Shopping and paying made easier
Mark Zuckerberg has made it easy to sign up for apps, especially shopping apps, with just a click of a button. Nowadays you can just sign in to Shopee or Lazada with your Facebook account and you’re all set to spend your savings. This won’t necessarily affect our shopping habits, but it takes us a step closer to the doors of our favorite online shopping destinations.
Features like “swipe up” or “link in bio” and affiliate links have made it easier for both brands and influencers to engage their followers into buying their services or products. It’s a genius trick that made shopping around easier for consumers. It eliminated the simple but tedious requirement for consumers to open a new browser, type a website, search for a product, and pay. In a way, Social Media has managed to automate shopping.
“Swipe Up” is actually called a “Conversion Tool” by online marketers, designed to make a customer’s buying journey easier.
Yes, we can blame Mark Zuckerberg all we want for selling our information to advertisers in exchange for free access to Instagram and Facebook. But, we can’t say we aren’t faultless either.
Many of us treat social media as a journal of the best and most interesting parts of our lives – or so we think. We share everything from food, OOTDs, vacation, pets, movies, down to the least interesting photos of the sky just to paint an image that we are living our best lives. While the last line isn’t necessarily true, the whole habit we’ve grown to develop using social media has become the biggest tool that perpetuates social pressure.
The carefully curated content that we see here doesn’t necessarily sell us products, but rather flaunt lifestyle options that cost us money. They don’t have to be paid ads, they could easily come from your friend’s vacation post or viral content that promotes certain spending ideas.
It’s those things that we see on our feeds that subconsciously make us decide what we decide nowadays (like where to eat, that new bubble tea craze, what new phone to buy, or to go on vacation), and they don’t have to be from big brands with the money to spend on ads.
With all these being said, we’re not saying that social media is entirely bad. The point that we would like to drive home is to not let it consume us. These entities are here to stay and the least that we could do is to learn how to manage our expectations.
While there is no shortage of content detrimental to our overall well-being in Social Media, it’s also a treasure trove of people, information, support groups, and pages that can be beneficial to you and your finances. You can find great money-saving tips and advice by following people who advocate financial education like iMoney Philippines. So, if you’re all about making conscious financial decisions, for starters, give us a like and follow to keep your money habits in check.