If you’re opening a new store, celebrating your business’s anniversary, or introducing new products to the market, one way to drum up interest is to hold a promotion that consumers can participate in, such as sweepstakes and contests.

People seldom say decline freebies, and what better way to get them to remember your brand than by giving them a mood boost? Before you start handing out scratch cards or promising exciting prizes, however, you have to know what exactly you are getting into.

There are many stories of promotions gone wrong, and companies end up losing more than what they bargained for because of weakly-constructed mechanics. Let us start with the basics and see the difference between sweepstakes and contests.

Sweepstakes

An Instagram personality hosting a giveaway on their page is holding a form of sweepstakes. This is a type of promotion that operates on chance or pure luck. There are a few criteria for a promotion to be considered as sweepstakes, such as the following:

1. Free Entry

If you plan on holding sweepstakes, you should not ask participants to purchase a product or to pay for their tickets. You also can’t ask them to perform a talent or skill to qualify for sweepstakes. All you need to ensure is that they are legally capable of participating and that they are entering the promotion willingly.

Another consideration is the number of entries you give an individual. If they fill out a form, does that give them one or more entries? Remember that your sweepstakes cannot hinge upon ‘rewarding’ or ‘punishing’ people for their interaction with your product. Someone who buys your product should have an equal chance of winning as someone who doesn’t.

2. Chance

Sweepstakes are games of chance. You can have a random drawing, performed at a set date in front of an audience, or a computer-generated or pre-programmed winner. The difference between sweepstakes and raffles or lotteries is that in the latter, you need to purchase something or pay for a ticket to enter the promo. For sweepstakes, no purchase is necessary.

You also must make it clear to the people who join that the entries are drawn randomly. Hiring a company for your sweepstakes administration should be able to help you in this regard. They can advise you on the proper way of selecting winners for your promotion.

3. Prize

This is the incentive a person gets for joining your promotion, and it must be clearly described in your official rules. In Massachusetts, there are state and federal laws that govern prizes for sweepstakes and contests.

For instance, tobacco-related sweepstakes are prohibited in this state. Furthermore, prizes valued over $600 need special documentation from the sponsor before the prize can be given to the winner(s). You can always consult with a sweepstakes management company for other details regarding prizes.

Contests

Reality shows like American Idol are examples of contests. These are competitions or games of skill, where people who join have to perform before an audience or a panel. These people will then judge the performance of the entrants so that they can determine the winner. Other factors to think about are:

1. Consideration

Contest entrants need non-monetary consideration to qualify. Usually, these are artistic or athletic feats, such as singing, painting on-the-spot, dunking a ball, or running a race. In a contest, you can require a product purchase or an entry fee. This makes contests more appealing to brands who wish to tie their brand personality in through product purchases.

2. Skill

In a contest, winners are typically based on the level of skill they display. At the end of the contest period, the entrants should be judged according to how they meet the pre-set criteria. Participants must be aware of the criteria before they enter the contest, and there may be no ‘chance’ elements (for example, a coin toss to determine who wins a criterion) in a skill-based contest.

3. Prize

Similar to sweepstakes, prizes for contests are governed by federal and state laws. They must also be indicative of the skill level involved in producing an entry. Prizes or awards for skill-based contests should be prestigious enough for people to invest in entering.

Final Words

Contests are an excellent way to drum up business for your company. When you are devising contest rules and thinking of prizes, it is important to remember the guidelines given in this article. Know that you should also have a contest administration company to take care of the details of your promotion.

CFA Promo is a sweepstakes and contest management company in Massachusetts. We have over forty years of experience in setting up and executing sweepstakes and contest promotions for brands, and our top priority is for our clients to get legally compliant and cost effective promotions. To learn more about our services, contact us today!