Social Media Marketing Fails to Signal Product Quality New Research Reveals Why Bigger Budgets Don’t Mean Better Brands

Social media marketing has become one of the most powerful tools in modern business. Brands pour billions into platforms like Instagram, TikTok, Facebook, and X hoping that higher visibility, engagement, and buzz will convince consumers that their products are better than the competition. But new academic research suggests that this widely held belief may be deeply flawed. According to a recent study published in Information Systems Research, social media marketing does very little to help high-quality firms stand out from lower-quality rivals. Instead, it often leads to uniform strategies that blur distinctions rather than clarify them.

The study, titled Signaling Quality to Consumers The Role of Social Media Marketing, was conducted by researchers Qinquan Cui and Kenan Arifoğlu from University College London, along with Dongyuan Zhan from the University of Science and Technology of China. Their work takes a close, analytical look at how firms use social media marketing, or SMM, and whether it can function as a reliable signal of product quality in competitive markets.

Why Firms Believe Social Media Marketing Signals Quality

Traditionally, companies have relied on advertising spend as a signal. In classic economic theory, spending more on advertising was often seen as a credible indicator of quality, because lower-quality firms supposedly could not afford to match those investments. Social media changed this dynamic.

Unlike traditional advertising, social media marketing is not just about broadcasting messages. It allows consumers to actively participate by creating reviews, posting ratings, sharing opinions, and recommending products to peers. This user-generated content influences how quality is perceived. Because of this, many firms believe that higher spending on social media campaigns will not only increase awareness but also reinforce the idea that their product is superior.

However, the researchers wanted to test whether that assumption holds up when firms compete strategically with one another.

How the Researchers Studied the Problem

To analyze this, the authors used a game-theoretic framework, a mathematical method used to study situations where multiple decision-makers interact and where outcomes depend on the choices of all players involved. In this case, the players are firms with different product quality levels competing for consumers.

The study examined two main scenarios.

In the first scenario, called the benchmark case, social media marketing only increases product awareness. It helps consumers learn that a product exists, but it does not improve the accuracy of information about its quality.

In the second scenario, known as the information-revelation case, social media marketing does more. It not only increases awareness but also improves the precision of online signals such as reviews, ratings, and consumer feedback.

By comparing these two environments, the researchers could see whether social media marketing works better as a quality signal when it improves information accuracy.

What Happens When SMM Only Boosts Awareness

In the benchmark case, the findings are surprisingly blunt. Firms cannot credibly signal their product quality simply by spending different amounts on social media marketing.

The researchers identified two possible outcomes.

The first is partial pooling, where low-quality and mid-quality firms choose the same level of social media spending. High-quality firms, instead of spending more, actually spend less. They do this deliberately to avoid being imitated. If high-quality firms were to increase their spending, lower-quality firms could easily copy that strategy, making it impossible for consumers to tell the difference.

The second outcome is full pooling, where all firms, regardless of quality, spend the same amount on social media marketing. In this case, spending becomes completely uninformative as a signal of quality.

One of the most counterintuitive findings is that high-quality firms often restrict their social media spending on purpose. Rather than chasing a larger audience, they focus on maintaining a smaller but more profitable customer base. Spending more would simply invite imitation and erase any potential advantage.

When Social Media Improves Reviews and Information

The second scenario, where social media marketing improves the accuracy of reviews and consumer-generated information, might sound more promising at first. After all, better information should help high-quality firms shine. But the study finds that this environment actually makes differentiation even harder.

In this case, only full pooling or a very limited form of partial pooling can exist. High-quality firms still cannot clearly separate themselves from mid- or low-quality competitors. While improved information reduces the incentive for lower-quality firms to mimic high-quality ones, it also eliminates the ability of high-quality firms to use spending as a differentiator.

The result is an information glut. When many firms invest heavily in social media marketing, the volume of content, reviews, and messaging overwhelms consumers. Instead of clarifying quality differences, it makes the marketplace feel more uniform and commoditized.

Commoditization and the Loss of Distinction

One of the most striking conclusions of the study is that heavy social media marketing can lead to commoditization of branding and messaging. When all firms sound equally active, polished, and present online, consumers have fewer meaningful cues to judge quality.

This effect hurts everyone, but it is especially damaging to high-quality firms. They bear higher production costs but cannot effectively communicate that superiority through social media spending alone. Meanwhile, mid- and low-quality firms benefit from being able to blend in at relatively low cost.

What This Means for Businesses

The researchers are clear that social media marketing is not useless. It still plays an important role in awareness, engagement, and customer interaction. However, it is not an effective standalone tool for signaling quality in competitive markets.

For high-quality firms, the findings suggest a counterintuitive strategy. Instead of increasing social media budgets, firms may benefit from moderating their spending, being more selective, and focusing on high-value segments rather than mass exposure. Innovation, product design, pricing strategies, and customer experience may serve as stronger quality signals than social media activity alone.

For managers and marketers, the study is a reminder that more visibility does not automatically mean more credibility.

Why This Fits with Broader Marketing Theory

The study aligns with long-standing principles in signaling theory. Signals lose their power when they are cheap to imitate. Social media marketing, compared to traditional advertising, has relatively low barriers to entry. Even lower-quality firms can appear professional, active, and popular online with enough budget allocation.

Additionally, modern consumers face attention overload. With endless ads, posts, influencers, and reviews competing for attention, distinguishing genuine quality becomes increasingly difficult.

The Bigger Takeaway

This research challenges one of the most common assumptions in digital marketing. Spending more on social media does not reliably communicate that a product is better. In many cases, it does the opposite by pushing firms toward identical strategies that erase meaningful differences.

For businesses navigating crowded digital marketplaces, the lesson is clear. Social media marketing should support a broader strategy, not replace it. Quality still matters, but signaling it requires more than likes, posts, and ad spend.

Research paper reference:
https://doi.org/10.1287/isre.2023.0625