Social Media: The Necessary Cost-Benefit Analysis

Costs and benefits of social media

Much of the power and allure of social media for small and mid-size businesses is its simultaneously attractive qualities of cost (i.e., free without using ad features) and power in the opportunity to grab the attention of customers and fans. At DataPoints, for example, we typically use social media to share insights regarding the topics of psychology and wealth, our product updates or releases, and interesting research results. There are professional benefits, too, outside of marketing. Because of the work we did in writing The Next Millionaire Next Door as well as our other research efforts, I’ve developed friendships and made new acquaintances with others in the field who share similar interests. There is an entire subculture of behavioral-finance psychologists and researchers who share a kinship through social media. I’ve also met bloggers, reporters, and fans of The Millionaire Next Door and my father’s other work through platforms like LinkedIn, Facebook, and Twitter. And of course, in my personal life, social media has allowed me to reconnect with old classmates and colleagues, and to keep up with friends all over the country. Undoubtedly there are many positive aspects to being connected that result directly from the investment of time in these social media outlets.

But that’s only the benefit side of the analysis. We must now ask: at what cost? The average American spends approximately 14 hours on social media a week, and that is most likely an under-estimate. For a small business owner, someone who wears nearly all of the hats within the company, social media marketing may be part of your overall strategy. While tracking the business value of social-media efforts is relatively straightforward (e.g., you can track traffic to your site and gauge the effectiveness of certain posts), it takes great discipline to not allow this to become the equivalent of office water cooler–subversively drawing you in to hours of scrolling through your feed, liking, tweeting, commenting, posting, thinking about what to say, following, unfriending, pinning.

Thinking about this soberly, you must come to terms with the reality that there is a potentially steep price to pay for our interconnectedness  and the benefits that may come with it. Here are a few I’m considering:

  1. It’s cognitively and emotionally draining. Constantly thinking about what you’re seeing, what you’re not doing, and/or what others are doing is taking your mental energy away from other productive activities. The research studies documenting the heavy costs of social media are piling up, including those that highlight the impact on adolescent depression and addiction-level behaviors related to its use.
  2. FOMO is distracting. If you are using social media to learn or to grow your business, or even just to keep up with friends, inevitably you’ll find yourself noticing the things you are missing out on; the things you’re not invited to or that you’re not involved in or otherwise FOMO-inducing information. Let’s be honest: it’s hard, if not impossible, to not notice. Even if you’re only using social media for your business, it takes discipline and thick skin to use the tool strictly for business intelligence without getting caught up in what your competitors or others in your industry are promoting.
  3. It’s a huge time drain. Have you noticed yourself looking for something specific in social media (e.g., a recipe or a project management hack) and becoming lost in pins and posts and you look up and 30 minutes or an hour have gone by? What could you be doing instead of looking, liking, and posting? Working on your business? Reading with your children? Working on a project around the house? Praying? Meditating? Exercising? Much like the behavior of unbridled small but voluminous spending, those 30-minute (or 60-minute) blocks really add up over a week, month, and year.
  4. What others do can influence your behaviors and decision-making. Ask yourself: how is social media helping you reach your goals? Are your health-related goals, or your financial goals being impacted by your social media use? Does social media impact your behaviors in these areas? The answer is yes, simply because we are influenced by what others do. Consider our financial behaviors specifically:

Connectedness, it seems, comes with a cost: the cost of our cognitive and emotional attention, and when we consider our financial goals, our money. We have become accustomed to new, shiny, and now. More than in the 1990s, the proliferation of technology makes us like mice in the Skinner box, constantly touching our phones to get the next pellet of news, drivel, or consumer goods. Scientists have linked activity and satisfaction from screen time with dopamine and equated its use to other addictive habits. Particularly if we are easily persuaded by either the consumption habits of others close to us (family, friends, neighbors) or others we see on social media (celebrities, politicians, professional athletes), that connectedness must be tempered with restraint to achieve economic success.

Social media could be considered a necessary evil of running a small business. Sure, some of us are more challenged by this potentially addictive outlet than others: there are psychological characteristics that distinguish those of us who are more prone to become lost in social media compared to those who can avoid being wrapped up in social posts. But if we’re not careful, we can all spend too much of our cognitive and emotional energy with these technologies. And no amount of hard work can earn back the time we waste gazing into the social media abyss.

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