Sweepstakes and Contests: Built Differently
“Sweepstakes” and “contests” are oftentimes incorrectly used interchangeably. It’s a fair mistake to make, though. Not too many people really care to differentiate between the two when there’s a prize at the end of it all, anyway. However, as the promotion administrator, understanding the difference between a contest and sweepstakes is crucial, even coming with legal ramifications that can cripple any brand.
Prior to diving into the ins and outs of marketing promotions, having a foundational understanding of a “legal lottery” is critical. Lotteries are a centuries-old promotional tactic that feature three essential elements: a prize, an element of chance, and some sort of consideration.
Prize + Chance + Consideration = Legal Lottery
The easiest of the three elements to define, the prize. This is simply the promise of some sort of reward in exchange for participating in a promotion. Prizes can be awarded in a number of ways: as a cash prize, time spent with a celebrity, a physical gift, a vacation.. You name it!
The element of chance is also a significant factor to consider when strategizing a marketing promotion. Here, a winner must be selected at random. No one applicant or participant should have an advantage over any of the other participants when determining a winner.
There are two types of “consideration” at play when planning a marketing promotion. The first is a monetary consideration, meaning participants must pay for the chance to win. Any payment or entry fee required to participate is technically a “consideration.”
Similarly, non-monetary considerations are relevant when a task is considered the barrier to entry, AND that task would benefit the promotion facilitator in some way. For example, a non-monetary consideration would be requiring an entrant to create a new logo for a brand in order to participate in a promotion.
When all three elements, prize, chance, and consideration, are included in a marketing promotion, it is known as a “lottery.” Currently, only the federal or state government can facilitate a lottery with all three essential elements. Anyone else looking to run a promotion (including your brand), must eliminate one of the three. A common way around this that you’ve surely seen in practice is claiming “no purchase necessary to win” when announcing a promotion. This tactic clearly eliminates the element of consideration since it removes the monetary barrier to participate. Removing either chance or the prize will also suffice in ensuring your promotion remains legal (although, it probably won’t be a very well-received promotion if you remove the prize).
Understanding the Difference Between a Sweepstakes and Contest
By definition, a “sweepstakes” is a random drawing. The winner(s) of the sweepstakes must have been selected entirely by chance, with no particular advantage over any of the other applicants. Since chance is a critical element of sweepstakes, and we know a promotion won’t be very successful without a prize, that means that in order to run a legal sweepstakes, consideration must be eliminated.
You can remove the element of consideration in a number of ways. One of the more popular methods, which you probably see all the time, is allowing consumers to enter a promotion without needing to make a valid purchase. This is referred to as an Alternate Means of Entry (AMOE). If you’d still like to encourage sales, you can consider a purchase a valid form of entry into a sweepstakes, if you include an AMOE in your program’s official rules.
There are plenty of different ways to implement an AMOE in order to run a legal sweepstakes. When including an AMOE, be as clear as possible about the parameters of what constitutes a valid entry, and the information entrants must send with their submissions. For help determining what that information should be in order to reach your business goals, contact one of our promotional experts to devise a purpose-driven promotion today.
Below are just a few means of incorporating AMOEs in your sweepstakes:
- Mail- Typically a postcard with entrant information like name, address, phone number, and email address. This method requires quite a bit of effort from entrants relative to something more instantaneous like a text or OCR scan, so beware that submissions may be a bit lower here, depending on the campaign you run.
- Email- Provide entrants with a dedicated email address for their submissions. While more convenient and accessible than sending a submission in the mail, requiring entrants to participate in a sweepstakes via email still requires effort. Some entrants may be discouraged from submitting.
- Online Entry Form- A more convenient method of gathering information, have your target audience interact with a lead generating web form in order to enter your sweepstakes.
When offering a digital AMOE, keep in mind, some folks love sweepstakes. We mean really love sweepstakes. Commonly known as “sweepers,” they search the web and its many niche communities for sweepstakes to enter using an AMOE, avoiding purchasing and, in some cases, interacting with your brand altogether. While not necessarily a problem or deal-breaker for your program, consider implementing different legal, digital limitations, setting up a system for monitoring suspicious activity, or working closely with a promotional expert to help determine the best AMOE method to help protect your brand’s program.
“Contests” require skill to win. Participants must expend some sort of effort, for example, an essay contest or a photo competition, in order to win. While there is no clear or legal definition of what constitutes “skill,” a general rule of thumb to follow is that your contest should not be too difficult that it is impossible to win.
Because a certain level of consideration (in this case, effort) is necessary in order to enter a contest, and you must have a prize at the end, then chance must be eliminated in order to run a legal contest. Simply put, whoever wins your contest should win based on clearly defined rules and criteria.
Deciding Whether Your Brand Should Run a Sweepstakes or Contest
As with all marketing promotions, a strategic contest or sweepstakes can have astronomical returns for your brand. Sweepstakes and contests require different methods of entry, ask entrants to engage with your brand in different ways and frankly, have different implications and ROI for your brand. In order to choose which to run, you must first identify your promotion’s purpose.
Do you want to encourage sales? Increase engagement? Are you looking to generate as many leads as you possibly can, or would you rather generate more mid to high-level intent leads? These are just a few of the questions you should ask yourself prior to running a sweepstakes or contest. For even more guidance on whether your brand should run a contest or a sweepstakes, check out our tips.
In general, running a contest will result in higher engagement with higher intent leads. Because of the amount of effort extended in order to win a contest, the barrier to entry is quite high. It’s simply more difficult and time-consuming to enter a contest than it is to enter a sweepstakes. Depending on your promotion’s purpose, you may want to discourage low-intent entrants, in which case a contest may be more effective.
However, just because a sweepstakes, in general, generates more leads than a contest, this does not imply that they lack value. Rather, with such a large number of people participating just because they can, plenty of them will not be your target audience, but plenty of them will be.
In general, contests will generate a higher percentage of high-intent leads than a sweepstakes will.
Growing Your Customer Database
Sweepstakes, on the other hand, have the advantage when it comes to generating a massive amount of leads. The easier it is to enter a sweepstakes, the more people who will enter. At the conclusion of the sweepstakes, you should have a long list of basic information about new leads and from there, the possibilities are endless. Grow your consumer database quickly with an effective sweepstakes, and then focus on offering added value to your target audience to build a stronger connection to your brand.
Contests are also great tools for acquiring user-generated content. For example, running a photo contest arms you with plenty of new photos to use in creating your own content or sharing on social media. Set some specific parameters around what type of picture qualifies in order to get the specific content you’d like to use.
Running Your Next Sweepstakes or Contest
Our promotional marketing experts, with over 26 years of experience facilitating sweepstakes, contests, loyalty programs, and more, are happy to guide you through the ideation process, all the way through to execution and results.
We’ve been trusted to run marketing promotions from some of the largest CPG, QSR, and Financial Services companies in the world. Check out some of our award-winning promotional marketing campaigns.
Whether you’re ready to run your next promotional campaign or are just looking for some guidance, contact one of our experts today.