What's the difference between a prize promotion, and say, a state lottery?
A prize promotion consists of three elements: prize, chance, and consideration,
which can be defined as money, time or considerable effort. The only promotion that can
award a prize, through a random or chance offering, and require payment, is a state
lottery. A sweepstakes can award a prize, through a random or chance offering, but cannot
require consideration. A contest, on the other hand, can award a prize, can require
consideration, but must replace the random or chance element with a skill requirement. To
have all three elements in a sweepstakes or contest is a violation of federal lottery
Which is better, a sweepstakes or a contest?
For sheer numbers, sweepstakes generally pull better than a contest. That's
because of the ease of entry requirements (remember the "no consideration"
element?). But maybe you want to focus your promotion on the benefits of your product by
asking your customers to take a few extra steps, such as writing an essay, submitting a
photograph, or sending in a recipe that uses your product. A contest would be a better
vehicle for this, and would elicit a smaller, but more enthusiastic response. Both
contests and sweepstakes are popular prize promotion vehicles -- we'll review your
marketing goals and objectives with you to determine which is better for you in a given
What kind of response rate might I expect to my offer?
There are so many factors that can impact a promotion's response, from the
creative presentation you use, to the list of recipients, to the actual product, to the
prizes you are offering. And that's only on the surface. A standard blind direct mail
effort may pull 2%, but a targeted circulation renewal effort may pull up to (and
sometimes beyond) 50%. The thing to remember is that prize promotions have been shown to
increase most response rates.
Why can't I just run the sweepstakes out of our office (i.e., why should I call
Media Direct USA)?
We frequently receive calls from companies who have decided to run their own
promotions, only to find out mid-stream that they have overlooked certain legal
requirements, or that they are simply not equipped to handle the administrative issues
that are part of running a sweepstakes. Legal issues are perhaps the most important reason
to use a sales promotion agency. At Media Direct USA, we are kept aware of the latest legal actions
taking place, and we design promotions to not only work within the confines of existing
laws, but to give the sponsor the maximum protection. From an administrative viewpoint,
this is our business, and we have achieved efficiencies through tight procedural review.
And let's not forget the credibility issue: the use of an independent judging organization
tells the would -- be participant that there will be no monkey business
when it comes to the drawing of winners, or the awarding of prizes.
Who uses prize promotions?
Who doesn't? Magazine and publishers, banks, packaged goods companies, health and
beauty aids manufacturers, fast food chains, and basically anyone trying to gain a
competitive advantage, and that probably includes your competition. And prize promotions
are even being used on the Internet by smart marketers looking to gain the upper hand in
this fast moving and ever-changing new medium.
I have a small company, and like the idea of running a
sweepstakes, but just the cost of buying the prizes is intimidating and prohibitive. What
options do I have?
Well, for one, there's the use of a co-operatively sponsored sweepstakes, such as
the ones created by us. For one low cost, multiple companies can participate and spread
the cost of a high visibility sweepstakes among themselves. We provide the prizes, the
rules, and all administration, including registrations, fulfilling winners lists and
submitting 1099s for major prize winners to the Internal Revenue Service. Our co-op
sweepstakes are also a wonderful opportunity to test the prize promotion waters-you get
the benefits of a proven marketing tool at a fraction of the cost.
I've heard that a sweepstakes can give me bump in my sales figures, but how does
that help me over the long term?
While a sweepstakes can give you additional sales, it can also provide you with
"lift." The whole idea of prize and premium promotions is lift: e.g., you
usually sell ten boxes of brand "x" a week. Do a prize promotion and spike up to
20. The promotion ends, and you may drop down to 15. You do another promotion and spike to
25, then drop to 20 when the promotion's over. It ties back to product quality. Get
consumers to try your brand through a promotion, and chances are they'll like it and
you'll keep them as customers.
My company has four separate divisions, all of which are interested in running a
promotion. Do we need to run four separate sweepstakes?
Not necessarily. We have found that promotions can be designed to take advantage
of a company's various divisions. These "umbrella" sweepstakes, a concept we
pioneered, allow the divisions to present a united front, and help reinforce the corporate
identity. They also allow the divisions to allocate the costs according to participation.
And by designing a flexible prize structure, each division can advertise prizes that best
appeal to their respective audiences. The net result is that all units receive the
benefits of a seemingly independent promotion, yet don't have to run totally separate
We have just put our Web site up, and are looking to get more people to come to
our site, and keep coming back (we're selling ad space to offset the cost of maintaining
the site). Could a sweepstakes help us?
Definitely. As you no doubt have heard, one of the ways to keep visitors coming
back to your site is to vary your content. By presenting new and useful information, you
have taken important steps in maintaining your Web traffic. Another method is to overlay a
sweepstakes and allow multiple entries, but to limit visitors to one entry per day. While
you must currently offer a write-in option for entries (using and maintaining an online or
email account has been construed as consideration in certain jurisdictions), allowing
multiple entries helps encourage your visitors to return often, but avoids having your
online entry box jammed.
I've heard that certain promotions need to be bonded. What's that all about?
Certain states (Florida and New York) require the posting by the promotion's
sponsor of either a surety bond or the establishing of an escrow account if the promotion
requires registration (consumer promotions offering prizes with a total value in excess of
$5,000, to residents of their states, among other requirements). This is also true of
promotions run in the province of Quebec in Canada. In the event the sponsor defaults, the
funds are payable to the state, in order to award the prizes. The key idea here is
consumer protection. Media Direct USA advises its customers on registration requirements, and
assists in the process of registering promotions, as well as in filing for the release of
the promotion once all winners have been determined and prizes awarded. Sponsors who run
promotions in violation of these state and provincial laws are subject to fines and
Can I make sure prize winners purchase my product?
Remember, while you can request that consumers make a purchase or donation, you
cannot require it in a sweepstakes. To do so is in violation of lottery laws. If you want
to require a purchase, you may run a contest, but you must lose the random or chance
element of the promotion.
What can you tell me about game promotions?
Well, for starters, they are extremely popular. As a child, you no doubt had a
box of Cracker Jack®-remember your excitement when you went to pull out that little
prize? That same excitement still helps pull consumers into fast food restaurants,
automotive supply stores, encourage them to purchase a specific brand of pet food, or
watch a certain television show. The prospect of winning something instantly is a powerful
motivator; there is no waiting until the promotion's over to find out if you have won a
prize. Of course, those prizes that go unclaimed during the run of the promotion can be
given away through a second chance drawing, essentially giving the participant multiple
opportunities to win!
Can I run a sweepstakes for kids?
Promotions aimed at children constitute one of the quickest growing segments
today. However, due to increasing privacy concerns and heightened legislative scrutiny, it
is wise to proceed with caution, especially if you want to run an online promotion. We
currently work with a number of high-profile marketers targeting this segment, and are
aware of industry recommendations and guidelines. We will work with you, or your agency,
to design a fun and exciting promotion to appeal to kids, while advising you of potential
What happens if something goes wrong with my prize promotion?
It's amazing how many things can go wrong with a promotion. The use of an
experienced promotion agency, however, can reduce that possibility-our trained
professionals know how to plan promotions to avoid those ugly incidents, those incidents
that have your boss screaming at you. And as further protection, our indemnification
policy protects you from anything we do wrong in our capacity as your promotion agency.
Be sure to submit your own questions,
by clicking here.