Who makes up the core
audience of OTCBB, Pink Sheet and low priced AMEX and NASDAQ companies? Let’s define core audience first. The core audience is those individuals who are actively involved with trading or investing in micro and small cap stocks. For the most part I am directing this more at the OTCBB and Pink Sheet companies.
This core audience is the ones that are signed up for email updates from companies, IR firms, and promotional entities. They are also active in micro cap chat rooms and message boards.
Core Audience = Traders
It is my opinion that based on individual stock’s performance over the last few years in the marketplace, the core audience is largely traders. Most of them are day traders with the rest being swing traders. A swing trader is a person that will stay in a stock as long as it is rising and stays within their own personal technical guidelines. Once the stock falls below a certain level, they are out. This is exactly the sort of trader that I was for many years. Traders of any sort do not care about the company, its products or services. As in my case, they may not even know or care what the company does. Sometimes, I didn’t even know the NAME of the company.
The micro cap markets and to a great extent, the small caps are a what-have-you-done-for-me-lately, instant gratification environment. It became this way in the late 90s when the Internet bubble was forming. While many things changed since then, nothing has changed about the “investors” and traders of these stocks. Other contributing factors include a lack of trust between traders/investors and company management, promoters, IR firms and such. Today’s average trader of micro cap stocks is a cynical, doubting Thomas that doesn’t care to hear anything from the company or its promoters/IR firm unless it will pop the stock for a day or two. They don’t care about any long-term prospects. I can’t say that I blame them for their approach.
No Investors
Over the last few years, I have talked to hundreds, maybe over a thousand CEOs of micro cap companies. They all have one complaint in common: “No investors”. No matter what sort of picture they paint of their company using news releases, emails, promoters and IR firms, the response is the same: Minimal and short-lived. Often times after a one or two day pop, their stock ends up back where it started within a few days or a week.
Same Methods, but Expecting Different Results
If you keep doing what you have been doing, you will keep getting what you have been getting. One of my favorite Einstein quotes is “Repeating an action and expecting a different result is insanity”. Why am I bringing this up? Quite simply, if micro cap and small cap companies continue to market to the same group of people in the same ways and methods as they have for the last few years, they will continue to get the same results.
Investors
Public companies are built for the long haul with people that are investors. Investors are People that care what the company is doing and more than anything, People that want to be part of the process. Where are these investors? Obviously they are not on email lists. They are not actively looking for profiles of micro and small cap stocks. What they are looking for are companies that are interacting with the investment community. They are looking for a company with a buzz. The investors are looking to be part of a team; a TEAM they can TRUST. I have been saying for years now that the publicly traded companies that foster a teamwork environment with their shareholders, and are open and transparent with the investment community are those that succeed. The problem is… how do the companies FIND the investors and appeal to them?
Finding an Audience of Investors
A big misconception in the business of micro and small cap stocks is that there is a defined audience; a finite audience. This is fairly true with respect to traders but not investors. Over the course of a number of social media presentations during the last few weeks, we have pretty well established that the North American audience is about 1 million people for micro and small cap stocks. The Global audience is about 5 million. Well, there are 6.6 BILLION people on the face of the earth. Even 5 million people are a fraction of one percent of the total number of people on earth. Here are some more facts: 1.4 BILLION people on earth use the Internet. Of those, 56% were involved with social media in 2007. By the end of 2008, that number had jumped to 75% according to Forrester Research. This means the size of the social media audience is nearly a BILLION people. Why not market to some of those people? The graphic to the left clearly illustrates the size of the social media market compared with the core audience (traders) of micro and small cap companies.
Management teams will do one of two things now. Either they will partner with a firm that has expertise in social media and brand building or they will continue to do the same thing they have been doing and continue to get the same, poor results as in the recent past.
I will reiterate this again: COMPANIES ARE BUILT THROUGH INVESTORS, NOT TRADERS. Traders are valuable from the standpoint that they add liquidity to the marketplace. The idea is to reach an audience of investors which in turn, might even convert some of those traders to investors!
