Contests and Sweepstakes

Contests and sweepstakes are an increasingly popular consumer-oriented promotion. Marketers spent nearly $2 billion on these promotions in 2001. These promotions seem to have an appeal and glamour that tools like cents-off coupons lack. Contests and sweepstakes are exciting because, as one expert has noted, many consumers have a "pot of gold at the end of the rainbow mentality" and think they can win the big prizes being offered.41 The lure of sweepstakes and promotions has also been influenced by the "instant-millionaire syndrome" that has derived from huge cash prizes given by many state lotteries in recent years. Marketers are attracted to contests and sweepstakes as a way of generating attention and interest among a large number of consumers.

There are differences between contests and sweepstakes. A contest is a promotion where consumers compete for prizes or money on the basis of skills or ability. The company determines winners by judging the entries or ascertaining which entry comes closest to some predetermined criteria (e.g., picking the winning teams and total number of points in the Super Bowl or NCAA basketball tournament). Contests usually provide a purchase incentive by requiring a proof of purchase to enter or an entry form that is available from a dealer or advertisement. Some contests require consumers to read an ad or package or visit a store display to gather information needed to enter. Marketers must be careful not to make their contests too difficult to enter, as doing so might discourage participation among key prospects in the target audience.

A sweepstakes is a promotion where winners are determined purely by chance; it cannot require a proof of purchase as a condition for entry. Entrants need only submit their names for the prize drawing. While there is often an official entry form, handwritten entries must also be permitted. One form of sweepstakes is a game, which also has a chance element or odds of winning. Scratch-off cards with instant winners are a popular promotional tool. Some games occur over a longer period and require more involvement by consumers. Promotions where consumers must collect game pieces are popular among retailers and fast-food chains as a way to build store traffic and repeat purchases.

Because they are easier to enter, sweepstakes attract more entries than contests. They are also easier and less expensive to administer, since every entry does not have to be checked or judged. Choosing the winning entry in a sweepstakes requires only the random selection of a winner from the pool of entries or generation of a number to match those held by sweepstakes entrants. Experts note that the costs of mounting a sweepstakes are also very predictable. Companies can buy insurance to indemnify them and protect against the expense of awarding a big prize. In general, sweepstakes present marketers with a fixed cost, which is a major advantage when budgeting for a promotion.

Contests and sweepstakes can get the consumer involved with a brand by making the promotion product relevant. For example, contests that ask consumers to suggest a name for a product or to submit recipes that use the brand can increase involvement levels. Nabisco developed an "Open a box, make up a snack," promotional contest for its three top cracker brands—Ritz, Triscuit, and Wheat Thins. Consumers sent in their favorite recipes, which were then made available on a dedicated website and at a tollfree number. Marketers can use contests and sweepstakes to build brand equity by connecting the prizes to the lifestyle, needs, or interests of the target audience.

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