How Social Media Influencers Impact the Way Younger Generations Spend Money

Among its myriad impacts on society as a whole, social media has effectively changed the way marketers do business. Boasting a global reach, social media influencers have altered the landscape even further.

Today, influencers can help profoundly sway public opinion, just as celebrity endorsements have worked since the early days of media.

The history of celebrity endorsements in modern media is rich and complex. From Ty Cobb promoting tobacco companies in the early 1900s to the contemporary influencer culture that’s rampant on social media, famous figures have long impacted consumer spending habits. The baseball legend’s 1909 player card even featured a tobacco card on its reverse side, pictured below.

Image: Source

Do Celebrity Endorsements Really Work?

For all the purported benefits of celebrity endorsement, however, it’s important to note that the tried-and-true marketing tactic relies on the endorser’s reputation among everyday consumers.

The opinion of a beloved sports hero or favorite action star can go a long way in terms of increasing sales, while a public scandal involving a celebrity spokesperson can have the opposite effect. Consumer opinion can be fickle, and there are plenty of celebrity endorsers and social media influencers who simply miss the mark. 

Interestingly, research strongly indicates that certain celebrities are more likely to sway consumer opinion than others. In 2016, Johannes Knoll and Jörg Matthes, writing for the Journal of the Academy of Marketing Science, created a formula to analyze the effectiveness of celebrity endorsements in a variety of settings.

They reviewed celebrity endorsements for everything from political campaigns and health communication to brand and product marketing, and beyond. 

Following extensive research, Knoll and Matthes determined that the greatest success rates in terms of consumer retention occurred when male actors endorsed a particular product.

Yet the study also found that consumers trust quality seals and awards over celebrity endorsements in most cases, leaving the question of the true efficacy of endorsement campaigns wide open. 

Influencers are a Commanding Force in Online Marketing

Although more research is needed, influencer culture is here to stay, and its societal impact cannot be denied. Young people are especially susceptible to influencers, whether they’re looking for tonight’s dinner recommendations or even the best cities to live in.

Unfortunately, just because a social media influencer endorses a product, service, or city atmosphere, doesn’t make it the best choice for consumers. 

The bulk of followers just can’t keep up with the lavish lifestyle perpetuated by many of their favorite influencers. Further, according to a CNBC report, 49% of Millennials believe that social media causes them to spend more money than they have, which can lead to long-term financial trouble. 

In comparison, the same study determined that older consumers are much less likely to spend money on experiences promoted on social media. Only 28% of Gen Xers base their shopping choices on social media, for instance, and Boomers are even less affected, to the tune of 16%. 

Yet overspending is just the beginning when it comes to problematic financial habits among younger generations. Social media can also affect one’s perception of wealth, as influencers can make expensive products and lavish lifestyles seem obtainable to anyone when the reality is much different. 

Part of selling yourself is creating an image that audiences relate to. As such, influencers are masters at deception despite their largely benevolent intentions.

For influencers, posting photos and/or videos from aesthetically appealing locations can expand one’s online reach and attract more followers, but things aren’t always what they seem.

A popular influencer promoting a specific location may have been paid by a real estate company to do just that: Sell a product or service. In this case, the product is the location itself, even if the cost of living is much too high for the average consumer to afford.

On the positive side of real estate trends, however, influencers can also expand viewer horizons, introducing them to experiences or locations that they never considered before, but that may be a perfect fit. 

Determining Influencer Authenticity

Even the most loyal followers of Instagram, YouTube, and Twitter stars only see their favorite influencers in front of the camera, where they are selling an image.

So, how can consumers and marketing professionals alike be sure of an influencer’s true intentions, or agenda? The harsh reality is that you can never be completely sure of a stranger’s authenticity, but you can take precautions. 

For starters, remember that young consumers have been browsing social media most of their lives. Savvy young people can, therefore, spot inauthenticity a mile away, and they’re not afraid to speak their minds about the issues and topics closest to their hearts.

Gen Zers in particular are also willing to put their money where their mouths are when it comes to consumer spending habits.

As such, when searching for a social media influencer to work with, authenticity is key. Before a viewer can trust an influencer’s opinion on a product or brand, they must first and foremost trust that person.

In a virtual sea of influencers vying for attention on social media, promoting trust and viewer engagement can be a tricky balance. 

Diversity, Inclusion, and Marketing to Young People

To better connect with potential consumers of all ages, especially younger generations, marketers must thus have a keen awareness of the issues and causes that impact everyday life.

Diversity is particularly notable in this regard, and in our diverse, interconnected world, inclusive marketing has become more important than ever before. 

According to a McKinsey study, Gen Z consumers aren’t afraid to stand up for what they believe in. More than 75% of respondents said they will boycott companies with advertising campaigns they perceive as homophobic, racist, or macho.

Further, those young people will spread the word via their own social media accounts about the causes they believe in, effectively serving as influencers in their own right.

Generally speaking, individual expression is of paramount importance to younger generations, regardless of one’s race, gender identity, socioeconomic status, or other demographic. 

Indeed, Millennials and Gen Zers have led the charge towards demanding greater diversity and inclusion from retailers since at least 2019. 

For their part, numerous companies are doing their part to foster diversity and inclusion, whether or not they’re working with a social media influencer. That’s because marketers as a whole have a better understanding of just how important inclusive marketing can be to a company’s bottom line.

According to Gourmet Marketing, the fashion house Calvin Klein boasts “one of the best examples” of inclusive marketing in action. CK’s 2009 flagship campaign featured a “white-skinny model” who was eventually replaced with “a Black, LGBTQ+, plus-sized model” in 2020.

By authentically embracing inclusive marketing tactics, the company does its part to celebrate the diversity of its loyal client base, attracting new, socially conscious consumers at the same time.

Key Takeaways

By creating inclusive marketing campaigns and collaborating with authentic influencers, your company or brand is better equipped to connect with younger generations and fuel retail trends over the long term. Keep the following thoughts from the previously mentioned McKinsey report in mind as you navigate uncertain waters:

“As global connectivity soars, generational shifts could come to play a more important role in setting behavior than socioeconomic differences do.”

Although there’s evidence to suggest that consumer trust in influencers is waning, particularly among Millennials, influencer culture is here to stay. Marketers can take advantage of this trend by partnering with diverse, authentic influencers who truly stand by their opinions, as well as the products and services they promote.

Luke Smith
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