Most of the time people say social media is an excellent thing for business and most of the time it’s true. You can publicise, interact with customers, get that first-hand feedback you lacked, all this is good stuff. It’s important, though, not to get too carried away and two very high profile businesses have proven the point very recently. Exhibit one has to be Apple. Apple is the most valuable technology company in the world as most readers will be aware. Its iPods weren’t the first hard disk based music players in the world but they quickly became the best selling. Its iPhones weren’t the first music phones in the world but they established smartphones in the consumer market. Later this year it hopes to do the same with TVs, if the rumour mill is to be believed. Oh, and the iPhone 5 will no doubt be pootling along sometime this year. And according to this report from V3, a respected technology blog it’s killing the market for not only Apple but for everyone else as well. People are holding off buying a new phone because all of the excitement says the iPhone 5 will be wonderful and will spur the competition like Samsung – whose sales have also been hit – into making something even better than they are now. Well, of course they will. That’s what happens with technology. But the idea that anticipation will damage current sales isn’t new. A few years ago when Twitter was new and I was working on my first social media book I spoke to someone from a satnav company. They’d experienced their developers Tweeting excitedly about functions coming up in their new devices in a few months, so understandably people reading this weren’t buying, they were waiting. This was eventually containable because it was internal staff and it was based on goodwill. Valuations The other thing that has happened recently is the Facebook flotation on Friday 18 May. It’s self-evident to say that Facebook is wholly dependent on social media hype, it’s the biggest social network. That much is almost trite. What’s really noticeable is that it launched at $38 a share, pushing its total value on Wall Street to £100bn+. This, on a total profit of $3bn, is out by a factor of ten (you get to valuations by multiplying the total profit by 3). And this is the sort of reaction that gets amplified around the social networks very quickly indeed. The share price rose very quickly to $42, walloping over $10bn on the company’s value. Then the market, no doubt aided by social networks and frank exchanges of views, decided this was overheated and the shares fell back to just over $38 again. For $10bn to appear and disappear is quite a feat, and it's something for which social media is at least partly responsible. Hype There does appear to be a tendency to talk things up through social media. This isn’t dramatically new; marketers have been talking things up through whatever medium is available to them since before most of us were born. The difference is that social media makes things mass market very quickly indeed. The first explosion of mass communication happened in the early to mid 20th century; phones, radios, televisions, suddenly people could talk to people far away and then en masse. Social media is no less substantial a change. The danger to entrepreneurs and business owners is that it enables people to talk not just to their suppliers and salespeople directly, but also to each other – so if one person decides the next iPhone is going to be worth waiting for and they’re influential enough, if a whole bunch of people start wondering why Facebook is valued so highly, they can start taking chunks out of the market. The solution is going to sound straightforward but is in fact counterintuitive to just about every marketer who ever lived. It involves not talking things up, making sure that you can deliver on every promise and issuing valuations based on sensible business projections, admitting that the next phone is just going to be another phone with no doubt a few tweaks. The sound you can now hear in the background is that of thousands of marketing and sales people fainting dead away at the thought. But if they set expectations realistically they’d at least avoid a backlash.