Top five rookie blunders in running competitions

8 October 2014

Competitions can be highly effective for promoting your brand or business, whether it be to encourage consumers to try your brand for the first time or to enhance customer loyalty. Competitions can also provide valuable insight into consumer behaviour and help build your marketing database.

In a crowded market place, companies are cutting through with increasingly creative competitions. We’ve advised on promotions involving dropping a car out of a plane to win cash, and carving out prizes from a 3 metre ice cube using spoons!

But even with very basic promotions, we see companies make simple and avoidable errors that can turn competitions into flops or even bring them to a halt.

Here are our top five rookie blunders and tips to avoid them.

1. Not getting permits when you should

For starters, any game involving a random draw or any other element of chance requires permits in some states and territories.

Common mistakes include:

  • Conducting a game of skill but including a chance element in the tiebreaker. E.g. if two entrants burst the same number of balloons in one minute, and you then include a coin-toss to break the tie. This element of chance means the promotion needs permits.
  • Offering a limited number of free gifts. E.g. you include a voucher for a free gift with every product sold and ask consumers to mail it in to claim a gift, but you cap the total number of free gifts. This is classed as a game of chance in some states and territories because when the consumer mails the voucher, they don’t know if they will receive a gift or not as the gift stocks may be exhausted.

2. Overcomplicating the promotion

A promotion can become complicated if it involves:

  • multiple ways of entering;
  • multiple products that can be purchased to enter;
  • multiple different entry periods;
  • a series of steps a consumer must follow to qualify; or
  • different prize pools for different classes of entrant.

If it’s complicated it’s more likely that consumers will enter incorrectly, so you may end up with a bunch of ineligible entries or worse, people not bothering to enter because it’s “all too hard”.

The required “legal copy” on the advertising material will also get complicated, particularly for promotions that require permits in which case there are specific mandatory inclusions. So your artwork could get cluttered with “legals” and the explanation of how to enter.

If possible keep the entry mechanic simple, e.g. purchase a product and go online to fill in an entry form.

3. Not allowing enough time to obtain permits

If your promotion involves chance, bear in mind that gaming authorities can take up to 20 business days to issue a permit. And where a promotion requires a permit, it is illegal to advertise the promotion before the permit is issued.

When planning timings for game of chance promotions, bear in mind that you need permits before you can print any promotional artwork (e.g. point of sale advertising materials or promotional packaging) as you must include the permit number. If you don’t have time to obtain permits, consider changing the promotion to a game of skill so permits aren’t required.

4. Not including a “proof of purchase” requirement

Often we see promotions where an entrant has entered multiple times and the promoter wants to disqualify that entrant due to suspected fraudulent behaviour. If the terms and conditions don’t specify that entries can be verified in some way (e.g. “retain your original receipt so we can verify each entry”) it may be difficult to disqualify an entrant. Even if you don’t have the resources to check the validity of all entries, consider including wording in the terms and conditions to say the promoter may request proof of purchase.

5. Giving away event tickets without approval from the event organiser

If you conduct a promotion where the prize is tickets to an event such as a sports match or a concert, it is vital to check the promoter has permission to give away the tickets.

Event organisers generally have sponsorship arrangements they wish to protect. Therefore, tickets are generally sold (to anyone other than a sponsor) subject to restrictions on giving them away as prizes. If you don’t get the event organiser’s permission to give the tickets away there’s a risk the event organiser will cancel the tickets you bought.

Be especially careful if you source tickets through a third party sporting events company – our experience is they may give broad assurances at first but when it comes to the crunch, they are sometimes unable to obtain the necessary permission from the event organiser.

Also be careful in your advertising not to imply that you sponsor an event if that’s not the case.

We see the above errors all the time – don’t fall into the same traps!

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.

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