Why Run a Sweepstakes vs. Contest and Best Practices for Keeping it Legal

Posted by Alex Ditty on Sep 16, 2015 10:30:00 AM

In Planning Campaigns, Campaign Best Practices

This is a guest post from Donna DeClemente, Director of Social & Digital Media, American Sweepstakes & Promotion Company. You can read more posts written by Donna on her blog.

Why run a sweepstakes? 

Instagram_Contest_Sweeps_RulesSweepstakes can help create awareness and excitement around your brand. They can run on their own or as an overlay to an integrated marketing program, are highly measurable and can be very effective when integrated with the right incentive. An effective sweepstakes will not only offer the chance to win great prizes, but help you reach the following objectives:

  • Build and expand your database: entries capture user information
  • Drive traffic to your website, social media channels or to your physical locations
  • Keep your prize budget manageable. You set the prize pool upfront
  • Reinforce the features and benefits of your brand/products through themed sweepstakes and prize tie-ins

 

Why run a contest? 

Like sweepstakes, contests also generate buzz and awareness and are a great fit for offering a chance to win a great prize. Unlike sweepstakes where any purchase or payment is not allowed to enter, contests however can include a purchase if it’s required to create the submission. Additionally, contests are judged based on a degree of skill or uniqueness, whereas sweepstakes are games of chance. As such, you may receive fewer entries for a contest then from just a random-draw sweepstakes since you are asking people to do some work.

The most common types of contests today include user-generated content such as Photo, Video, Essay, Recipe and Design Contests. Submissions are then judged or evaluated based on the contest theme and judging criteria and in some cases open for public voting. If you run a contest that invites participants to submit a photo or video you increase the chances that they will share their submission on social media.

If your goal is to reinforce your brand or product attributes here is why contests are the better tactic:

  • Reinforce your brand attributes: your customers’ photos, videos and essays highlighting your strengths speak volumes
  • Elicit user-generated content that can then be used in your future promotions
  • Your engaged followers will help spread the word for you, especially through social channels

 

Key Legal Issues

Whether you are planning to run a sweepstakes or a contest there are rules and regulations that you must follow in order to be compliant. A promotion that contains all of these three elements: Prize, Chance (random selection) and Consideration (Purchase, Payment or Time) is an “Illegal Lottery”. The Time element is the grayest area. Most social media entry requirements do not usually require consideration. However, writing about a product or taking a photo or video of the product to enter may be consideration.

For example, if you can take a photo of yourself with the product in a store, then a purchase would not be required. But, if you’re asked to take a photo of yourself with the product (in this example shoes) and be “out and about the town” that would most likely require purchasing the shoes and therefore, consideration. There is a fine line between the two. Another example is asking participants to take a photo while taking a bite of a donut. They can’t return the donut then, so wouldn’t that require purchase? You need to ask if the consumer can effectively compete without actually purchasing the product.

The degree of effort by consumers that is being required to enter is currently a big trend in social media sweeps. Participants can earn extra entries from performing different tasks and challenges. So how much is too much time and how much can you really require? The Supreme Court did rule that watching a 30 minute show isn’t too much time, so that’s a guideline to follow. But keep in mind that while awarding bonus entries for sharing/referring may not likely to be deemed consideration, it may be against CAN/SPAM regulations.

Another thing to keep in mind is the FTC’s Endorsement and Testimonial Guidelines. They recently published a list of Q&A’s that state that when it comes to sweepstakes and contests any incentive, no matter how minimal, such as an entry into a contest or sweepstakes for making a post on social media sites, may be an endorsement. Thus it requires a disclosure. The use of the promotion title alone is not adequate, and they are encouraging including #Contest or #Sweepstakes or #Entry or a similar designation in a hashtag. The recent updated Q&A’s now states that using #sweeps is not enough and instead it should be the whole word.

A rising trend today is running a sweepstakes or contest on social media utilizing only a hashtag with no entry form. Entrants may be invited to post a tweet on Twitter or upload a photo on Twitter or Instagram utilizing the promotional hashtag. Many marketers like these types of promotions since it creates buzz and makes it easy for entrants. However, they do not collect data on the entrants since there is no entry form to fill out which can make it more difficult to contact winners.

So it all comes back to what your main objectives are for running a promotion. You need to consider what the risks may be, but also be realistic to run a successful and legally compliant promotion.