How to Promote Penny Stocks

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A businessman is going over tactics with his employee.
A businessman is going over tactics with his employee. (Image: shironosov/iStock/Getty Images)

Promoters play a vital role in the volatile and high-risk penny stock market. For thousands of small companies getting little coverage in the traditional financial media, paid promotion is the only way to attract investor attention and dollars. There are some legalities involved, however. You have the right to say what you want about a company, as long as it's not false or misleading, or libelous, and as long as you're not attempting to profit from inside information. "Front-running," or buying in anticipation of a price run-up on your own promotion, can also bring attention from the regulatory authorities.

Build a Website

Create a website designed to offer information on stocks and stock trading. If you have some experience as an investor, you can sell the site as an advisory and give tips on trading techniques and alerts on hot stocks. A website can also be purely informational, giving current market prices, price charts, various stats and financial reports that are either furnished by the company or publicly available information. The Securities and Exchange Commission website, for example, is a gold mine of financial information on public companies of all sizes in the U.S.

Network

Research small companies that are going to the penny stock market to raise funds. This involves networking and legwork, which is most easily accomplished close to home. Search the SEC site and other databases to identify small companies that have registered their securities. Scan the local business pages. A Google search may also turn up the names, or better yet an index or list, of local publicly traded small companies. Meanwhile, have a look at your competition on StockPromotions.com, which is a one-stop source for information on current activity, and compensation, of the leading penny stock promoters.

Get Some Clients

Contact small companies that may be in the market for your services as a promoter. Many penny stock companies budget for this purpose and use agencies or individuals to tout their cheap shares through websites and e-mail newsletters. Submit a sample of your work and prepare to negotiate your rates. You may also offer to prepare your coverage on spec -- submit your copy as an offer; if the company accepts it, you then sign a contract to present it on your site.

Building Your List

Develop an e-mail list from your ever-expanding network of contacts. These are people who've contacted your website for information, or who have agreed to receive regular e-mail updates from your site. Building an e-mail list can also be usefully farmed out to professional list managers, who organize their lists by a wide variety of parameters such as income level, ZIP code and profession. The wider your e-mail network, the more people who are receiving your updates and alerts, and the more value you have to companies in the market for promotion. Always give your e-mail contacts an option to decline any further communications, and don't rent their info to spammers.

Pump That Stock!

Get behind the stock you're being paid to promote, once you've got a client. Cover it in an e-mail newsletter, or run a banner headline alert on your site. Join Internet stock forums such as Investors Hub and get the news out to penny-stock traders in search of a hot tip. Set up a Facebook page and a Twitter account to create some social media buzz; pull together a video on the company and post it to YouTube. While you're building interest in the company, you're also developing recognition for your own brand.

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