Tuesday, December 6, 2016

How Building A Social Media Following & A Shareholder Base Have Similar Functions

Working in the penny stock investor relations field has shed light on a few things.

  1. Most micro cap & penny stock public companies hiring investor relations firms are looking for increased liquidity and an active shareholder base that increases the average volume of the stock (just another way to say increased liquidity)
  2. While many penny stock & micro cap companies are building awareness in the public markets about their company they are also seeking to close a round of financing (either through a direct investment via a purchase of a large block of shares, a private placement (PPM) or via some sort of partnership), and 
  3. The penny stock or micro cap company's management seeks a positive return on investment (ROI) on the investor relations program (in other words they are seeking to spend less than they make or raise from the investor relations program or company awareness campaign).
Disclaimer; I promote and actively suggest to public company clients that social media and online marketing are under-utilized tools for (1) gaining investor awareness to a public company (2) increasing the volume and shareholder base of public companies (3) telling the story of a smaller public company and (4) building a base of people interested in your company and your company's stock.

Building a Social Media Following Can Accomplish Many Of The Same Things That An Investor Relations Campaign Seeks To Accomplish

So you want to increase liquidity of your stock and want investors and traders to learn about the company and then purchase the stock...right? Your story will not be told in one press release or even with one visit to a website.  Now some investor relations (IR) professionals may argue with this but the solid story telling and brand building happens over a period of time.   Collecting people on social media sites like LinkedIn, Twitter and Facebook allows you to directly communicate and update your core following on news about your company without the additional expenses traditionally found in antiquated marketing tactics.  

I've heard this line a few times in my career in penny stocks and micro cap companies:
"But the investors we are looking for are not online."
Are you kidding me!  There are 7.5 billion people in this world and half (3.5 billion) have access to the Internet.  The notion that an investor (and a sophisticated investor at that) does not have access to the Internet or is not on a social media platform is insane.  

Back to your social media following.  Why not kill two birds with one stone?  If you are a company with a solid product or service you need to target potential customer anyway.  The same way you can build your customer base online is the same way you can build a group of ready and willing buyers of your stock.  Most executives would not be surprised to understand the overlap.  Many potential customers are also potential investors in a particular micro cap company. 

Building your social media following in conjunction with a strategy to build a network of potential investors also brings down your long term investor relations costs.  Many penny stocks and mirco cap companies partake in "campaigns" or "promotion runs" that are limited to a week, a month or a quarter.  Meanwhile most investor relations professionals and penny stock executives know that investor relations and company awareness campaigns need to be a staple strategy for a company; a strategy that is implemented continuously rather than for a period of time.  

Both investor relations campaigns and social media marketing accomplish the same functions.  They both create awareness about your company.  The only difference is that most investor relations campaigns end without a captured base of perspectives.  In other words investor relations campaigns unlike social media do not keep the person(s) around after the campaign so a company may re-market or re-advertise to the person(s).  Are you taking advantage of the full power of the Internet?

Hope this was thought provoking,

-Nick Coriano

About the Author: Nicholas Coriano is a Business Consultant.  He is a graduate of The University of Connecticut Business School and the John Marshall Law School in Chicago.  He has worked at Merrill Lynch, The New York Stock Exchange and is currently a partner at Cervitude Intelligent Relations, which specializes in Investor Relations for companies valued under $1 Billion USD.

About MicroCapCompany.COM: MicroCapCompany.COM (The Blog) is a blog focused on providing articles, news and information on the micro cap sector and start-ups.  The Blog is a free service offered by Cervitude™ Investor Relations - a micro cap investor relations firm for micro cap companies and penny stocks.  If there is a particular topic you would like to see covered on The Blog, email us. If you would like to advertise on The Blog, click here. 

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