SOCIAL MEDIA

Higher spending on social media marketing may not help quality brands

By our African Marketing Confederation News Team | 2025

Study finds that firms cannot credibly signal their product quality simply through different social media marketing spending levels.

Research published in the journal Information Systems Research finds that social media marketing does little to help high-quality firms stand apart from competitors.

Instead, it often pushes companies of all quality levels toward similar spending and pricing strategies, blurring the very signals firms hope will differentiate them in digital marketplaces.

The study, titled ‘Signalling Quality to Consumers: The Role of Social Media Marketing’, is authored by Qinquan Cui and Kenan Arifoğlu of University College London, and Dongyuan Zhan of the University of Science and Technology of China.

“Firms often believe that spending more on social media marketing helps signal superior product quality,” says Cui.

“However, when we modelled this environment using a game-theoretic approach, we found that high-quality firms cannot reliably use social media marketing spending to separate themselves from mid- or low-quality competitors.”

Photo: Cottonbro Studio from Pexels

Game-theoretic approach is a way of analysing situations where multiple decision-makers (players) interact, and the outcome for each depends not only on their own choices but also on the choices of others. Game theory provides a formal mathematical framework to predict behaviour, identify optimal strategies and understand incentives in competitive or cooperative environments.

To analyse the strategic interactions in their study, the researchers studied two scenarios: a benchmark case, where social media marketing only increases product awareness; and an information-revelation case, where social media marketing also improves the precision of online reviews and other external factors.

In the benchmark case, the researchers found that firms cannot credibly signal their product quality simply through different social media marketing spending levels.

What they found was that two things can happen: first, there can be something called ‘partial pooling’, where low- and mid-quality firms choose the same level of spending, while at the same time, high-quality firms separate by spending less; second, there can be ‘full pooling’, where all firms spend the same amount.

Spending more would invite lower-quality firms to mimic them

“We discovered that higher-quality firms actually limit their social media spending to maintain a smaller but more profitable customer base,” explains Arifoğlu. “Spending more would invite lower-quality firms to mimic them, making separation impossible.”

But when social media spending plays a specific information-revelation role, meaning it makes online signals like reviews more accurate, the challenge intensifies.

The study found that only full pooling or a limited form of partial pooling can occur, and that high-quality firms find it even harder to distinguish themselves from lower-quality firms.

Therefore, when all firms spend at the same level on social media, a commoditisation of messaging and branding can happen.

“In situations where spending enhances the precision of online reviews, mid- and low-quality firms actually lose some of their incentives to pool with high-quality firms,” Zhan notes.

“But high-quality firms also cannot set themselves apart. In the end, the information glut created by spending by mid- to low-quality firms makes it more of a challenge for high-quality firms to differentiate.”

The authors conclude that social media spending may not be the most effective quality-signalling tool for firms in competitive environments. Rather, high-quality firms may benefit from moderating their spending rather than increasing it, and being more focused and innovative in their marketing to their highest-value market segments.

You can find out more about the study here.