How genuine are people’s recommendations on social media? We need to ask this question because most of us are influenced by what we see online. The problem is that unsuspecting consumers often believe that those posting content and offering recommendations are genuine when they’re not.
This raises an ethical question, and is the reason why the United States Federal Trade Commission now requires celebrities, including the Kardashians, to make it clear when their posts are sponsored.
Social media is a great advertising platform because it gives companies access to millions of daily users. Many companies now identify so-called “social media influencers” and pay them to promote a product or service to their fan base.
Advertisers know, from psychology and marketing research, that people buy products or services when the spokesperson is seen as familiar, similar and credible to the consumer. Social media influencers are all of these things, with the added bonus of seeming more authentic than traditional advertisements.
Social media influencers use familiarity to attract and persuade their followers. Psychology studies have found that the more we are exposed to someone, the more we come to like them.
This means that people who post regularly will be more liked than those who do not. A quick glance at some of the biggest UAE social media influencers confirms this.
Another strategy that social media influencers use is similarity. We tend to like people who share our demographics – age, education level, ethnocultural background, socioeconomic status – as well as our attitudes, interests and values. This means that we tend to be drawn to social media personalities who we view as similar to us.
As a result, many social media influencers are followed by a relatively homogeneous group of people. For example, beauty bloggers have many more female than male followers. Similarly, mommy bloggers have many more parent than non-parent followers.
Credibility is the third factor that social media influencers use to attract and persuade people. People are more likely to buy a product or service if it is being sold or advertised by a celebrity or industry insider. You are more likely, for instance, to buy beauty products that are endorsed by Beyonce than a random person with no beauty expertise.
On social media, credibility is constructed. Social media influencers might not have any real credentials or experience, but they have huge numbers of people who care about what they think and listen to what they say. Their large following adds to this idea of credibility –if so many people follow them, then they must know what they are talking about.
A recent survey found that about 70 per cent of people in the UAE bought something that was recommended on social media. Companies know this, which is why many big names regularly reach out to social media influencers.
The issue is transparency. The UAE might want to consider implementing some regulations so that consumers know when they are looking at an ad. Until then, a smart consumer is a sceptical one.
Dr Sarah Rasmi is a social psychologist and professor at United Arab Emirates University
On Twitter: @DrSarahRasmi
Fifa Club World Cup:
When: December 6-16
Where: Games to take place at Zayed Sports City in Abu Dhabi and Hazza bin Zayed Stadium in Al Ain
Defending champions: Real Madrid
Avatar: Fire and Ash
Director: James Cameron
Starring: Sam Worthington, Sigourney Weaver, Zoe Saldana
Rating: 4.5/5
The%20Beekeeper
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First Person
Richard Flanagan
Chatto & Windus
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TECH%20SPECS%3A%20APPLE%20IPHONE%2014%20PLUS
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MATCH INFO
Uefa Nations League
League A, Group 4
Spain v England, 10.45pm (UAE)
The President's Cake
Director: Hasan Hadi
Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem
Rating: 4/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
Have you been targeted?
Tuan Phan of SimplyFI.org lists five signs you have been mis-sold to:
1. Your pension fund has been placed inside an offshore insurance wrapper with a hefty upfront commission.
2. The money has been transferred into a structured note. These products have high upfront, recurring commission and should never be in a pension account.
3. You have also been sold investment funds with an upfront initial charge of around 5 per cent. ETFs, for example, have no upfront charges.
4. The adviser charges a 1 per cent charge for managing your assets. They are being paid for doing nothing. They have already claimed massive amounts in hidden upfront commission.
5. Total annual management cost for your pension account is 2 per cent or more, including platform, underlying fund and advice charges.