Competitions are costly!

20 Sep

Yes, they sure are!

When you run a competition you may think “oh I have a nice prize to give away that will help with my marketing. I’ll be nice and start a competition that will only cost me my time and the prize and will boost my brand share and followers”. Well, you live in an idealistic world don’t you… and I did to until recently when I began to understand just how costly and involved competitions are.

Competitions are a nice way to help bring attention to your brand I think. Just make sure they are run properly.

Things you must consider when running a competition

  1. The prize
  2. Legal guidelines, terms and conditions, permits
  3. Form creation
  4. Advertising
  5. The winners


The Prize
Lets say you have $20,000 to give away as a prize. Good job to you for having such a nice budget to play with number one. Number two; well I hope you have more money than that to create the rest of the competition.

Legal guidelines, terms and conditions, permits
Unless you work in a big company you wont have a legal counsel at your disposal. You’re going to need one to create your terms and conditions and cover your brands butt if something goes wrong. There are lots of marketing consultancy firms that can create the terms and conditions and apply for permits for you.

Permits are another thing. If your competition is a random draw then you are going to need a permit in most states over a certain prize threshold. So if you are running your competition Australia wide you are up for a few thousand dollars in permit fees.

If your competition is a game of skill then you don’t need a permit if your prize is under a certain value. This can be as simple as asking entrants to answer a question that can be judged. Your terms and conditions must state the judging critera (eg: Q: If you owned a theme park what ride would you create? The answer with the most creativity and sounds fun will be judged as the winner by the panel). Games of skill mean that you may have to browse through thousands of entries to find “the best” answer.

*Please check with your legal advisor before following this guide. This guideline is a few years old and may no longer apply.

*Please check with your legal advisor before following this guide. This guideline is a few years old and may no longer apply.

Form Creation
If you are running a Facebook competition the Facebook guidelines state that you must create an application to handle entries. Thus you technically aren’t supposed to have people posting on your wall with answers. This means that you could be up for $10,000 having a professionally branded Facebook application created for your competition.

Twitter re-tweet competitions are also not as simple as they seem. To draw a winner from a follow and hit retweet style draw you need a permit as that is classed as a random draw. You will need to put a link to some terms and conditions in the tweet so people can read about it too. If you ask someone to re-tweet and then answer a skilful question such as (which one of our products is your favourite and why) then you wont need to buy a permit but you will still need to have terms and conditions made to state how you are judging the competition, how the winners will notified, when they will be drawn etc. A re-tweet competition is also a good way to build twitter followers.

If you are running an online competition you will still need to create professionally branded graphics and perhaps purchase a URL that matches the branding and so people can find it. You get the picture… more money.

Advertising
So you have put all of this money and effort into just wanting to give something away and now you need to advertise to let everyone know that you have a great competition. Gotta get that return on investment! So, add on more money to your budget to maybe run Facebook ads, flyers and other forms of advertising communication. Cross your fingers that you get lots of entries and lots of people learning more about your brand and it’s offerings.

The Winners
You want an honest person who is revved up about your brand, or in your target market to win your competition don’t you? Well, I’ve got news for you. There are people out there who are professional competition entrants. They spend their days trolling the internet looking for competitions to enter just for the thrill of winning and making some money from it potentially. It’s legal, people can do that with their time if they want. But as a marketer I get a bit upset when I see all of my hard work and budget falling into the hands of a professional. I suppose that so long as the competition mechanism drew new brand advocates to your brand then it did its job in the long term…. but you get my point.

And there you have it. As great as competitions can be for your brand, you need to make sure that you can achieve a good return on investment for their cost.
Note to self: Do as many game of skill competitions as possible with a highly valued prize….. which should advertise itself through word of mouth and lower the costs…. maybe.

This is a rough guide of how I see competitions. I may or may not have the details of permits or legal details correct so please consult your legal team and lottery officials. I am not a lawyer or a lottery official.

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3 Responses to “Competitions are costly!”

  1. Mel October 8, 2011 at 9:19 pm #

    Thanks for the insight, this is something I find very interesting, it’s amazing how many people are unaware that they need to follow terms and conditions and even guidelines when running a competition, especially on Facebook!!! I am new to the world of blogging and see many competitions run in the blogging community so I was wondering what I needed to do before just having my own competition on my blog. I doubt that many people follow any sort of rules at all, but to me, it is something that if I end up doing it, I want to do it right, you know what I mean. Do you know where I can find any info or guidelines for running a competition on a personal blog??

    • belindabel October 8, 2011 at 9:39 pm #

      Hi Mel I’m glad that you find it interesting. I think it is a topic that not many people know about. It’s hard to find information about it on the internet even. I’m not sure about where to find a summary for each of the states and how their lottery system works but ill do some digging during the week for you. Just from a quick Google search I think that you need to apply for permits with each state individually. Here is a link to the SA site http://www.olgc.sa.gov.au/default.asp?action=trade_promotion&menu=lottery. It’s not an easy thing to do and most large companies hire the services of a marketing consultancy firm to do the permits and regulations side of things for them as it is such an involved process.

    • belindabel October 13, 2011 at 10:24 pm #

      Hi Mel, I added a bit more information on Permits.

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