Each year, companies spend a fortune on advertising.
In the U.S. alone, they spend more than $140 billion.
Over 75% of that amount is spent on what’s known as “brand advertising” – in other words, making us aware that their brand exists, or reminding us about it.
Think about TV ads or billboards from Nike or Calvin Klein: you can’t buy anything directly from those ads, but they help build the brand’s reputation.
Well, now there’s a new way companies are getting the word out about their brand:
If you buy their stock, they’ll pay the commissions on your stock trades.
Here’s how it works...
Social Stock Plans
This new phenomenon is called a “Social Stock Plan.”
Essentially, publicly traded companies allow investors like us to buy their shares commission-free.
A Social Stock Plan also manages dividend reinvestments, and in cases where the share price is prohibitively high (e.g., Berkshire Hathaway), it even lets us buy fractional shares.
By selling directly to customers and covering the cost of their trade, brands hope to build loyalty:
Theoretically, a customer who owns a stake in the business would be more likely to buy a company’s product again and again, and to tell other people about it.
The “social stock” movement has been building momentum lately – everyone from Kraft and Coca-Cola to Facebook and Twitter have jumped on board.
Loyalty
In fact, corporate demand for social stock programs is so strong that a new company has emerged to help facilitate the process: Loyal3.com
Most recently, Loyal3 gave investors access to the hottest IPO of the year: Alibaba (NYSE: BABA)
You can see a full list of the stocks it supports here »
Again, all trades are commission-free.
Part of a Bigger Trend
Loyal3 is an interesting company...
And we think it’s exciting that individual investors can use it to get hard-to-find IPO shares and commission-free stock trades.
But Loyal3 gets even more exciting when you think about the bigger trend at play:
Over the last 20 years, we’ve seen a gradual “democratization of finance.”
With each passing year, Wall Street’s big institutions are ceding ground.
With the rise of companies like E-Trade and TD Ameritrade, online stock trading made full-service broker dealers irrelevant...
Individuals could now trade on their own.
Bitcoin is a new digital currency – and no central banking authority is regulating it.
One day, companies like Loyal3 might take the place of investment banks during an IPO.
And equity crowdfunding is yet another example of Wall Street middlemen getting bypassed.
The thing is, when you remove the middleman, there’s one less pocket to line, so everyone else tends to make more money.
Thanks to services like E-Trade and Loyal3, and like crowdfunding platform AngelList, citizens and corporations are taking control back from Wall Street...
And generating higher returns for all.
Happy Investing!
Best Regards,
Founder
Crowdability.com
