How Social Media Influences the Economy
Written by: Max Carney
Social media hasn’t been around for that long, but has made a huge impact on our lives in recent years. Not just with connecting with others, but companies connecting with consumers. It’s now very common to see companies advertising through social media, but how does this influence the economy?
First companies use sponsorships. Through this, they pay someone (usually a celebrity or influencer) to talk about their product. They then hope that the cost of this will be outweighed by the profit they make from the consumers who saw the advertisement. Companies take this risk all the time. The products range from wireless earbuds, to mobile games. “Driving sales goes hand-in-hand with brand awareness, and many sponsorship opportunities allow you to introduce consumers to your product in a way that encourages them to make a purchase,” (https://www.thebalancesmb.com). The Balance makes a great point. One of the best ways for a company to get to a consumer is through someone they know (the influencer or celebrity). The more a consumer knows an influencer, the more likely they are to buy the product, the more the demand goes up for that product.
Second, one of the oldest forms of advertising, is ads. These are a much more direct form of getting the message to the consumer. A business pays an online platform (Facebook, Instigram, Twitter) to show ads directly to possible consumers. But this marketing strategy is still quite similar to sponsorships when broken down: A company pays another party (online platform or influencer) to promote their product. They still hope that the cost is outweighed by the profit. The only difference is how the product is promoted. An ad simply shows the product, while a sponsorship has the added benefit of someone a consumer might trust to promote the product. But there is still another benefit for ads: targeted advertising. Sponsorships might be hit or miss, while ads can be targeted, based on what a consumer has interacted with on a social media platform.
Last is the target audience. With a combination of targeted advertising, and paid influencers, companies can narrow down who they think will most likely buy their product. Doing this mitigates risk, mitigating risk insures that the company will most likely turn a profit, rather than a loss. Trying to advertise to someone who wouldn't be interested in the product wouldn’t make much sense, so narrowing it down can increase the chances of a profit.
Overall, social media has made a great impact on the way companies advertise their product to consumers. With new platforms, new ways to advertise have risen. This new way of getting the word out about a product or service will stay for a very long time, as long as social media companies are around, at least.
Work Cited
Friedman, Susan. “Learn About Sponsorship and How to Use It to Improve Marketing.” ,
www.thebalancesmb.com/sponsorship-a-key-to-powerful-marketing-2295276.
“Understanding People Is Our Business.” ,
www.visualdna.com/resources/#marketing_services.
This is very interesting to see how many different ways businesses can use social media as a way to get their product known. I see a lot of social influencers posting on their instagrams or tiktok pages about a product that they are using to get their followers to use the product. This is even extremely beneficial for the social influencers because they get money after just posting a picture or video. Social media has helped businesses in many ways.
ReplyDeleteIf I'm being honest I was just thinking about this topic a couple days ago. I always see ads and influencers trying to promote different companies' products and by reading comment sections on the post, it seems like it works out pretty well. If I had a company in charge of promoting the product this would probably be my go to method. It seems like it works very well because the celebrity has an audience who trusts them and is very likely for them to follow in his or her footsteps. Overall, Max did a really nice job explaining the process that this happens and created an easy to understand blog post.
ReplyDeleteI think companies can be really wise with their decisions if they pick the correct influencers; even people I see on Tiktok or another social platform and they promote a product, typically I am automatically intrigued. For me personally, I think that is the best way for me to become interested in a product because I see a person more similar to me using something that seems like it could also benefit me. Unlike with celebrities, I just assume that the endorsement is made solely based on how the public figure will be paid.
ReplyDeleteThis blog post is super informative on the different types of advertising on social media, I feel like you could have talked a little more about how it impacts the economy itself. One question I have is, what happens if paying for an advertisement on social media doesn't go like the company planned? What happens if they don't end up making profit on it and how does it impact the company? Also, how much does the average social media advertisement cost whether it's through an ad or a sponsorship? Overall, this article really explains about the different types of social media advertisement, but I feel that you could have dove a little more deeper into how social media impacts the economy.
ReplyDeleteI thought your post was very insightful! Personally, I use social media like Instagram and TikTok and on these platforms, I've seen people, like Charli D'amelio and Noah Beck, who are popular on these platforms, and are therefore considered "influencers" because they use there fame to promote products and companies while getting paid themselves. When it was announced that TikTok was planned to get banned, I actually wondered what these influencers would do because for many of them, this was there job. TikTok is no longer getting banned so this isn't an issue anymore, but if it did get banned, I wonder what these influencers would do, and how the companies who were promoting them would be affected. Good job!
ReplyDeleteWhen thinking about social media I never have really thought about how it could be impacting our economy. Your article goes into depth about what in means to be involved as a business owner. Social media is really a great way to jump start any brand and gain attention on a larger platform. Especially when targeting certain age groups its useful to communicate in a way the younger generations will listen. Overall I think your blog was super informative and really got me thinking about how I could even be a member of an audience a certain business is trying to reach out to and make profit off of. Very important perspective, great job!
ReplyDeleteGreat job on this Blog, I thought this blog was very informational and insightful about how social media has an influence on the economy. This topic is very relevant to our generation because on all social media sites you see ads. Personally I see most of mine on instagram and youtube because those are the social media programs I use the most. One example that I can relate to is on youtube that some content creators advertise companies that sponsor them about clothing or a game on the app store. Great job on your blog!
ReplyDeleteI found it interesting that you took the perspective of a company who is trying to advertise something. I liked that you were able to use that perspective and go through each of the ways a company might want to advertise. Social media is a great help to those who want to advertise a product or start up a company because it is a great way to spread the word. I know this pretty well because my brother has been using this strategy for something he has been doing for about a year now. When he started using social media, more and more people started contacting him. So, it is definitely facinating to see the uses that social media can have financially.
ReplyDeleteIt was very helpful of you to talk about how social media is impacted in different ways. I think you could focus on the impact of social media on the economy a little bit more because that is a tough topic. I also wonder how covid has impacted social media as its harder to be an influencer when you can’t communicate in person with other people. Really good job on your blog!
ReplyDeleteThis was a very helpful blog post! It's crazy that there so much that goes into social media that it can make us purchase stuff. It effects the economy hardcore and that crazy. Good job!
ReplyDeleteI thought this blog was very informational and I learned on how social media impacts the economy. Social media is a great way to get peoples businesses more exposure to the market that they are in because there are insightful tools right in the platform to target select audience that is interested in the product. Great blog!
ReplyDeleteIt's crazy to think how much of an impact social media has on our spending. Whether its an influencer doing a brand deal or just an add. I know i've definitely caved and bought products off of social media and some of the stuff worked out really well and some not so much. Nice job!
ReplyDeleteI've seen so many ads of products and have seriously considered buying those products. People often times look to celebrities and other public figures for advice on different products. Although expensive, companies can greatly benefit from celebrities endorsing their products. I think that it can show how easily people are persuaded. These celebrities have no formal knowledge on these products they're endorsing. Take the Kardashians and the tea that they are constantly posting about. They don't have a degree in medicine, dietitian, nutrition, etc, yet people still will take their word on it even though they don't really know the consequences. It is a smart move for companies but buyers need to be more careful and still do their own research.
ReplyDeleteI'm so happy you decided to make a post about this. I never realized just how much of a risk is involved in these types of advertisements, but that's where the opportunity cost is very high for companies. They risk losing money by paying for sponsorships and not receiving a return of higher sales. I am still partially looking for how this impacts the economy, but I guess it's because supply and demand is being affected by these advertisements.
ReplyDeleteInteresting, I guess this shows the wealth of many social media followers who are influenced into buying extremely elastic goods.I would be curious to learn more about the privatization rights in target advertising, when do companies cross the line? I also wonder if target advertising feeds into discrimination and stereotypes?
ReplyDeleteI found it interesting how you connected ads as being some sort of sponsorship. I also agree that influencers have a big affect on the economy and the demand of certain goods. You can see this occurring often on instagram and other forms of social media. I like how you incorporated a picture to further explain your thinking.
ReplyDeleteIt’s incredible how social media has influenced the way we live. I don’t know too much about the history of economics, but I do know that the speed that news travels at today through social media has a large impact on the economy and the stock market. Social media gives many people access to information, social groups, and it gives them a voice that is often translated into the economy. For example, as you mentioned with influencers, they use their voice on social media to promote products. Also, the change in advertising due to social media is scary to think about, especially how social media companies collect information on their users to promote micro advertising.
ReplyDeleteI see ads on social media all the time for businesses to promote various goods and services. This can be a big way for these companies to get many people exposed to that company. Also, a certain audience can be targeted as many people on certain social media platforms such as snapchat and instagram are kids. They are kids that are elementary to college age. So companies who appeal to kids and students can really use advertising on social media to their advantage. On the other hand, more parents use facebook so if a company wants to really get something out to parents specifically, facebook is a great option for them to advertise on. I agree that social media is a great way to advertise and this method of advertising is here to stay.
ReplyDeleteI agree, it's also crazy how Social Media affects how we think, because for many people it's all the news that they get. So people may act differently based on how they think other people act, which changes what people spend their money on. For example, during Covid, seeing people hang out with others on social media may cause them to do the same, which would cause the economy to go up because people are spending more money. It's crazy how much social media influences what we do and how it changes how companies advertise.
ReplyDeleteI enjoyed reading this post especially since it correlates to many teenagers nowadays. Social Media has really taken a turn with advertisements since they target certain people based on their internet searches and who they follow as well. This was a very informative blog and you did a very good job.
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