- 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)
