Will You Pay for What You Want?

By: Tom Allinder
June 24, 2008

The second question I am always asked by companies that are looking for investor relations services is: “How much is it going to cost me?”

Every publicly traded company wants the same thing: Increasing price, liquidity and good volume on their stock and a good shareholder base and following. Many company officials have had the same experience over and over again and have decided that the blame lays with the promoters and investor relations entities. The company pays for an IR effort and gets seemingly nothing in return. There are plenty of times that this does happen but most of the time it is because the company is only “putting a little in”…



The old saying goes: You get what you pay for. It is true in every respect, with most things, most of the time. If you purchase a cheap program, don’t expect earth shaking results. Most programs work like this: If you put a little in, you get a little out; if you put a lot in, you get a lot out.

It’s Not Just Money, its TIME

For whatever reasons, big third party shareholders and company management expect to achieve a higher stock price, good volume and an audience in a few days or at most, a couple of weeks. It takes more time than that. Companies must be willing to invest money as well as time to achieve results in the marketplace.

I was reading some sales statistics recently and the publication said that a prospective buyer would have to see an advertisement 3-7 times before buying the item. It’s no different with the investment community. Investors want to see sustained performance from a company on the business side before they will buy the stock. Investors of OTCBB and Pink Sheet stocks are far more sophisticated than they were just a couple of years ago. We certainly don’t have millions of investors and traders that were around in 1998 through the early 2000s. Dumb money is no longer available.

There are Two Basic Groups of Traders/Investors

Traders and investors that buy and sell OTCBB stocks have gone back to basics. There are still a lot of momentum players that trade stocks over a matter of minutes or hours but there is another larger group of players out there. Few that I have spoken to in the IR business seem to understand this group of investors though. These are people that look for real companies with a history real news, revenues and profitability or progression toward profitability. Many of these people LOOK AT STOCK CHARTS before buying a stock. There is a huge group of these technical analysts; there are a lot more of them out there than people realize. They don’t buy stories; they buy good companies with good chart formations. Many of these traders/investors have significant amounts of money in their trading accounts. Wouldn’t it make sense to target these people?

Pay for What You Really Want

Instead of paying for what they really want, most company officials look to bargain for services. They will go from IR entity to entity like a butterfly looking for the magic bullet. The reality is that most will never find the magic bullet because they are seemingly more concerned about cost than they are results. Many companies simply don’t want to pay for what they want and settle for what they get. They do it over and over with the same mediocre results. As I have mentioned before in a previous blog; if you keep doing what you have been doing you will continue to get what you always got…

A low cost program will seldom if ever create the results companies are looking for. An IR entity does not have the time to build an audience in a month let alone a week or two. A good program is one that has a duration of 6 months or more and is done without a lot of noise and fanfare. A Company must have a solid plan for growth and have developments along the way for the IR Company to work with. If done right, after a couple of months, the stock will begin to gain traction in the marketplace. The Company’s stock will begin to look tempting on the chart. As developments occur with the Company, the audience and shareholder base grows along with the stock price. Good programs are not cheap though. The cost is what holds people back from getting what they really want. But if you look at it this way; if your market cap increases from $2 million to $5 or $6 million over a 6 month period then just how expensive was the $100-500K program?

Tom Allinder
NewRiverFinGrp.com
tom@newriverfingrp.com

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