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Updated: Mar 14, 2024

Does Social Media Make You Spend More Money?

People believe their decisions are based on rational analysis, but the reality is that many are determined by emotions that social media taps into.
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There is little doubt that the evolution of social media has impacted our spending habits. Since the beginning of consumerism, our spending habits have been largely influenced by family and friends. This is still true.

The difference is, the old form of ‘word of mouth advertising’ could only occur if we actually spoke with another human being and that human being happened to tout a particular product or service.

Today, we can effectively be reached by hundreds of friends and family members without ever exchanging a word.

Through social media outlets such as Facebook, Instagram, and Twitter, we know what our friends are eating, doing, and thinking on a daily basis. Yet, we may not have actually conversed with some of these people since high school.

Basically, the funneling of information was much slower before social media.

Today, a quick scroll through Facebook floods our unsuspecting minds with advertisements, and those delivering the advertising may not even know they are doing it. Take the following scenario for example.

If I post on Facebook, “This new Superpak battery charger for my iPhone is a life changer,” my friends will be more influenced by my post than by a paid advertisement. I am advertising a product, with or without the intent to do so.

Emotion determines most decisions

People generally believe that their decisions are based on rational analysis, but the reality is that most of our decisions are determined by emotions.  

Antonio Damasio, professor of neuroscience at the University of Southern California, believes emotion plays a central role in decision-making.  

Just for the fun of it, I decided to scroll through my Facebook newsfeed and see if I was influenced by anything in the first 50 posts.

Besides being made to feel significantly lazier than the rest of my friends (who are all apparently hiking, skiing, volunteering, or baking with their children), my newsfeed also made me want to do the following:

  • Go to Paris
  • Put hardwood floors in my bedroom
  • Vote for Bernie Sanders (even more than I wanted to yesterday)
  • Go to a Willie Nelson concert
  • Get a bob with bangs
  • Go out for sushi
  • Buy coconut oil

Propaganda: The mother of advertising

In some ways, modern advertising was the child of World War One recruitment propaganda.

As the war dragged on, morale became increasingly low and the cost, measured in resources, lives, and money, became increasingly high. In response to the fear of public unrest, the government established the National War Aims Committee in 1917.

To avoid the need to control the public by force, the government set out to influence their minds. Well, that might be a little unfair.

At the beginning, the government really just wanted to craft their pro-war messages to ‘sit better with’ the public and maybe, just maybe, persuade more young men to join.

It was also extremely important to restore the public’s support of war efforts overall.

To do so, the government began a media campaign aimed at silencing dissenting voices, emphasizing the value of working together toward a common goal, and associating the enemy with evil.

To ensure that every community was reached, the government distributed its messages via pamphlets, mobile cinemas, speakers, celebrity endorsers, and by paying freelance writers to write compelling articles in every newspaper across the country.

Advertising was born

Today, companies spend billions of dollars researching the most effective methods of getting people to buy their products or services, and just as much money crafting and delivering their messages.

They hire advertising agencies to create striking, persuasive, emotional, and targeted ads. They hire PR firms to manage the public’s perception of their products and services.

The goal: target the appropriate audience, convince the target audience that they need the product or service, discredit dissenting voices, and paint the competition in a negative light.

A study reveals that Americans spend more time on social media than any other online activity. This includes email.

Facebook alone has more than 1.2 billion active monthly users. According to Facebook CEO, Mark Zuckerberg, Americans engage with some form of digital media for an average of nine hours each day.

A little over a year ago, Facebook got itself into some pretty hot water when it was revealed that data scientists had conducted a social experiment on 689,003 Facebook users.

The experiment removed all positive posts or all negative posts from these users’ feeds to see if they could manipulate the way people feel.

In the research paper about the experiment, Adam Kramer, one of the scientists, said, “When positive expressions were reduced, people produced fewer positive posts and more negative posts; when negative expressions were reduced, the opposite pattern occurred.” Kramer also noted the findings show that Facebook can cause “massive-scale contagion via social networks.” Scary.

So, we now know that most of us spend a lot of time on social networking sites and that these sites can influence our emotions, and thus, our behaviors. But how exactly does this affect our spending and savings habits?

Connections and trust

Social media makes people feel connected to other people, even when they don’t know each other. Connections, real or perceived, typically build into a feeling of trust.

We tend to trust what the online community tell us, even if the advice comes from people we’ve never met in person. According to a study by Market Research World, when it comes to word-of-mouth recommendations, millennials trust anonymous user-generated content (51 percent) more than the advice of family and friends (49 percent).

Exposure to more products and services

We typically shop in stores that carry the things we are currently in need of. For example, if I need food for dinner, I will go to the grocery store. I won’t go to a shoe store, book store, or Pier 1 in the hopes that they’ll have what I need for dinner.

On the other hand, if I spend 30 minutes browsing social media sites, I will very likely be inundated with ads and recommendations for, and conversations about, shoes, books, and home goods, among a litany of other products and services. If any of those things interest me, a purchase may result.

The ease of at-home shopping

Most of what we discover on social media sites can be purchased online. Here’s how the process goes: Jane reads a post about a friend’s awesome new Bubble shoes. 

Jane decides she must have Bubble shoes. Jane searches Bubble shoes. Jane selects appropriate color and size of Bubble shoes. Jane inputs credit card information. Jane selects one-day shipping. Jane feels momentarily euphoric because Bubble shoes are en route.

Social media impacts big purchases

While online shopping typically consists of clothing, accessories, and gadgets, social media impacts our decisions on major purchases as well. It can even affect our creditworthiness.

The types of houses and cars we buy, and vacations we take, are all influenced by social media. Consider this data about social marketing in the automotive industry:

  • 38 percent of consumers use social media to decide what kind of car to buy
  • 23 percent of recent car buyers will talk about their buying experience on social media
  • 84 percent of people shopping for a new car have a Facebook account
  • 94 percent of millennials use the internet to gather information when shopping for a car
  • 40 percent of new car purchases over the next 10 years will be from millennials

“Social represents an important marketing frontier for the automotive industry," says Donovan Neale-May, executive director of the CMO Council.

"Senior marketers recognize its capacity to deliver actionable, real-time insights that can help drive overall marketing effectiveness. They also see its value as a dynamic channel for influencing brand preference and purchase.”

The top categories for ‘social to sale’ purchases

According to a recent white paper released by Vision Critical, the top categories for ‘social to sale’ purchases are (in this order):

  • Food and drink
  • Art
  • Beauty and fashion
  • Tech

Basically, it boils down to this: We want what other people have. We want to be beautiful, happy, healthy, and successful. When we see celebrities, friends, acquaintances, and co-workers looking fit, young, beautiful, and happy, we want that too.

These images become a brand. The shoes, the clothes, the styles, the cars, the trips, the activities.

This is nothing new

Advertising has always tapped into our emotions and influenced our purchasing behaviors. But with social media, it’s practically impossible to escape the influence.

Sometimes it’s necessary to identify a problem and work toward a solution. Although I have several hundred friends on Facebook, I only ‘follow’ about 30 people.

These are my closest friends and family members and friends who live overseas or in other states. Facebook is a wonderful way to stay connected with people I can’t see every day, but do I really need to know what my acquaintance up the road had for dinner tonight?

No. So, I have whittled my newsfeed down to include only the posts of a select few. You can do this too by selecting the Unfollow option for friends whose posts you no longer want to see in your newsfeed.

The bottom line is anything that influences our emotions has a powerful effect on our spending habits.

Social media has a strong emotional component, but it also captures our attention at the perfect time -- while we’re online and able to make purchases with a few keystrokes.

Simply being aware of this trap can help you avoid it. Tailor your social media experience to fit your needs and check in with yourself before you purchase goods or services you find online. A little social media self-check goes a long way now and then.