What Is Cowboy Marketing

Cowboy marketing is a slang term used to describe a situation in which a company is unaware that a marketer hired to produce legitimate opted-in email campaigns is actually using mass spam emails to promote the company's stock. This is a very unethical practice since marketers are often compensated with stock options – allowing them to capitalize on the unfounded demand they create for the stock they are promoting.

BREAKING DOWN Cowboy Marketing

Cowboy marketing occurs when the marketer values their own interest over those of its client. Smart investors should not pay attention to spam emails and/or the stocks they promote. Buying these stocks will often result in losing money because once the stock's price rises, the unscrupulous parties involved will cash out – causing shares to plummet and leaving legitimate investors with losses.

Cowboy Marketing vs. Pump and Dump

This situation is similar to the illegal scheme known as pump and dump. In a typical pump and dump, there are attempts to boost the price of a stock through false, misleading or greatly exaggerated statements recommending a stock. Traditionally done through cold calling and now on the internet, you can expect the persons behind this scheme to sell their positions after they have successfully hyped a stock to a significantly higher share price.

A pump and dump relies on communicating questionable information to spur artificial demand for a stock. Meanwhile, cowboy marketing is more geared towards generating demand through mass communication and promotion to boost interest from potential investors – enriching the rogue marketer in the process.