SWEEPSTAKES 101

Have you ever considered developing a promotional sweepstakes, contest or game for your brand, but thought it seemed too complicated? Maybe you have a client who recently approached you about developing one and you’re feeling apprehensive, or just need a refresher on the process.In this article, we’ll break down the basic steps of developing your own legal promotion and empower you to broaden the scope of your business opportunities.

Before we begin, it’s important to define the difference between a legal promotion and an illegal lottery. There are three possible elements to consider when structuring a promotion: prize, chance and consideration.

“Standard Lottery Rule”: Prize + Chance + Consideration = Lottery
To define these elements a bit further:

  • Prize: Anything of value the sponsor awards in a promotion. For example goods/services with a monetary value or items of intrinsic value.
  • Chance: A process beyond the participant’s direct control determines the outcome. A few examples of chance are a random sweepstakes drawing or an instant win/collect and win game; ultimately luck is the deciding factor.
  • Consideration: Anything that requires a participant to expend a monetary amount or significant effort to participate. For example the purchase of a product, multiple store or internet visits, correctly answering trivia questions, downloading a file, or attendance at sales presentations.

If all three of the above elements are present in your proposed promotional plan, then one of the elements will need to be neutralized to run a legal promotion versus an illegal lottery according to state and Federal laws.

Now that we’ve defined the three elements, we can differentiate between the types of promotions that are available:

Sweepstakes

A sweepstakes is a random drawing. This is what most people think of when talking about a promotion, but a sweepstakes is actually a specific type of promotional marketing tool. In order for a sweepstakes to be deemed legal, “consideration” needs to be eliminated from the mix, leaving prize and chance.

A sweepstakes allows all participants to enter without a purchase (“NO PURCHASE NECESSARY.”). If there is a purchase requirement, an Alternate Means of Entry (“AMOE”) that doesn’t involve a purchase requirement must be made available to participants. This free method must be clearly and conspicuously disclosed to all participants. All participants must have the same opportunity to win the same prizes from the promotion therefore chance determines the outcome of the winner. Some examples of AMOE include forms that must be filled out either by hand and mailed in, or filled out and submitted online.

Promotional Games

Similar to a sweepstakes, in order for a game to be deemed legal “consideration” needs to be eliminated from the mix, leaving prize and chance.

A game generally has game pieces that are distributed into the market for play, offering a tangible item for the consumer to take with them. A few game examples include: instant win, collect and win, match and win, or peel and win.

The main differentiation between a game and a sweepstakes is that in a game, odds can generally be determined prior to the promotion launch based on a set number of game pieces being produced/prizes being distributed into the market. An exception to this would be an online instant win game, the odds would then be based on eligible entries received and the time in which they were received versus a defined set of odds since number of participants can’t be clearly defined. An AMOE must be available for participants if there is a purchase requirement for the promotion so consideration isn’t brought back into the mix.

Contest/Skills Contest

In order for a contest to be deemed legal “chance” needs to be eliminated from the mix, leaving prize and consideration.

Since a contest eliminates chance, a purchase may be required for participation (excluding AZ, NJ, ND, TN, and VT; these states do not allow contests to be run that require a payment for entry). There is no clearly defined definition of skill, but a good guideline is that a contest cannot be so difficult that it is impossible to win.

A few legal contest examples include: photography/recipe/essay contests. Some illegal contest examples include: guessing the number of jelly beans in a jar, spotting a mystery shopper, or accumulating the most proofs of purchase since this brings “chance” back into the mix.

It’s important to note that skill must determine and control the final results of winner selection for a contest. If there is a tie at the end of the program, a random drawing cannot be conducted because that would bring chance back into the equation. Means of determining the outcome in tie breakers must be defined in the official rules prior to the promotion running.

Now, onto the planning… If you are like some of our current clients, you would begin by taking one or more of the following planning steps.

Planning Step 1: Develop appropriate marketing goals. Some examples include:

  • Contemporize the brand
  • Generate a sales lift
  • Gain incremental off-shelf opportunities at retail
  • Increase traffic to a website
  • Gather consumer information for future marketing initiatives
  • Support a new product launch

Step 2: Take the following into consideration:

  • Determine brand personality
  • Target audience
  • Marketing goals
  • Competitor audit
  • Timing
    • Holiday opportunities
    • Major events
    • Product selling cycle
  • Budgets
    • Concept development
    • Creative development
    • Prize pool
    • Advertising
    • Production elements (game pieces, tear pads, POP displays, etc.)
    • Program administration and fulfillment

Step 3: Develop marketing strategies to reach your stated goal

Step 4: Concept Development/Program Outline. Some types of programs to consider include:

  • Sweepstakes
  • Contests
  • Instant Win
  • Advergame
  • Collect ‘n Win
  • Trivia
  • User Generated Content
  • Loyalty Programs

Step 5: Design creative elements

Step 6: Hire MRI to administer your program… it’s often a good idea to hire MRI at the outset of the program to assist with any questions you may have along the way. Here are some of the components MRI will handle so you can focus on the big picture of your promotion:

  • Advise with game mechanics
  • Legal – Rules development
  • Fulfillment – Winner notification and verification
  • Sweepstakes drawings
  • Micro-site development and hosting
  • Prize procurement
  • Game piece production
  • POP/POS production and management

Step 7: Enjoy the fruits of your labor! Planning a promotion can seem like a tedious process. But with the proper planning and proven vendor partners, it can be a wonderfully rewarding experience for both the consumer and the brand. If you’d like more information about promotion execution, contact your MRI representative today!

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