1. What are contests and sweepstakes?
Basically contests and sweepstakes are events that people enter in the hopes of winning a prize. The "contest" and "sweepstakes" names are typically used interchangeably with both mail-in and Internet contests and sweepstakes.
A "contest" can typically be considered as an event that involves some sort of competition. For example, a race to determine who is the fastest, photos to determine who is the prettiest, a quiz to determine who is the smartest, the best tasting pie, and so on. The winner of this contest would win a prize of some sort.
A "sweepstakes" can typically be considered as an event in which a winner is selected at random from amongst all entrants. The winner of this sweepstakes would win a prize of some sort.
2. Why do companies/organizations sponsor and run contests and sweepstakes?
The main reason, is that it's a great form of marketing and advertising for those companies and their products.
The concept of winning cash, merchandise, travel, or other prizes through a contest or sweepstakes usually attracts a lot more attention in consumers and potential consumers than normal basic product advertising. For example, if a cereal company is running and advertising a sweepstakes with a prize of $100,000 cash, it will arouse more attention and interest amongst the consumer for that company and it's products, than a typical advertisement or marketing promotion regarding their product without a contest or sweepstakes. Companies expect that this increased attention and interest in the consumer will generate increased sales.
Companies may also use the contests and sweepstakes in order to generate a database used for mailing lists from everyone that entered. With these mailing lists, the company can then subsequently send direct or personalized information and advertisements in the hopes of selling even more products and services after the contest or sweepstakes has ended.
Generally contests and sweepstakes generate a 'win-win' situation, as the company benefits through increased exposure of their product and increased sales, and the consumer benefits through the hope of winning a prize (and those that actually win, the prize itself).
3. What kinds of prizes can be won?
Prizes vary, depending on the contest or sweepstakes, the sponsor, and the prizes offered. Prizes may be merchandise prizes, cash prizes, travel prizes, shopping sprees, gift cards, cars, jewelry, toys, games... there are just so many different types of prizes, too numerous to name.
Sometimes the prize value may be:
- a token prize, with a low value... for example: winning a keychain.
- worth more than the time and effort it took to enter the contest or sweepstakes... for example: winning a TV.
- worth more than the winning entrant could reasonably afford to buy the prize item for themselves... for example: winning a trip around the world.
- life-changing... for example: winning a million dollars.
4. Contests and sweepstakes should be free
Remember that contests and sweepstakes should be free to enter. If you have to pay to enter, then it really is more of a raffle or lottery of some kind. Note, that some sports and beauty related competitions may have an entry fee, to help cover the costs of running the event, but we aren't referring to those competitions here.
Some contests and sweepstakes, may seem to be free, and they may be, sort of.
- Some require a purchase of a specific product in order to get an entry into the contest or sweepstakes, so in effect you would need to spend money in order to enter.
- Some require the completion of a survey in order to get an entry into the contest or sweepstakes (this requires additional time to enter, and to some people the saying 'time is money' comes into effect).
- Some require the participation in an online game (this requires additional time to enter, and to some people the saying 'time is money' comes into effect).
- Others require the reading of recurring and ongoing emails from various advertisers (this requires additional time to enter, and to some people the saying 'time is money' comes into effect).
You should not have to pay to collect a prize you may have won. Remember that the winner is supposed to 'win' the prize, not have to 'pay' for it, or 'pay' to receive it. Check with your local tax authorities on how any withholding taxes are to be applied to the value of the prize.
Summary of Course:
Luck 101 - Contest and Sweepstakes Basics
- Contests and sweepstakes are events run by companies and organizations, that the public enters in the hopes of winning a prize.
- Companies and organizations put on contests and sweepstakes, mainly to increase the attention and interest of the consumer in the company's products and services, in the hopes of increasing their sales.
- Prizes and value of prizes vary depending on the contest or sweepstakes, and the sponsor. Prizes can range from token prizes to life-changing prizes.
- Contests and sweepstakes should be free to enter, and should not require the winner to pay to receive their prize.
End of Course "Luck 101".
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