Giving something away is often seen as a good marketing tactic, and indeed it can be if you’re using it as an opportunity to raise your profile or build your database, for example. After all, who hasn’t put their business card into a glass bowl at an exhibition in the hope of winning an iPad?!
However, many companies I speak to are unaware that there are certain rules they need to follow, and that there are differences between competitions and prize draws.
- A competition requires some element of skill to enter – for example, answer a question, or complete a puzzle to qualify to enter. This entry process must present a barrier to success, so that a significant number of people entering would not succeed. If there isn’t sufficient skill involved, it shouldn’t be classed as a competition.
- A prize draw requires no skill, just luck, and must be free to enter.
- A lottery is a prize draw where entrants are required to pay.
Legally, a competition and a free prize draw don’t come under the scope of the Gambling Act 2005, but lotteries do. So if you plan to sell tickets for something where the outcome is a matter of chance, you are running a lottery. Lotteries are regulated and require a licence, this means if you are a commercial organisation running the lottery for the purposes of your own promotion you’ll probably be on the wrong side of the law.
But for most marketing purposes the idea is to glean data and give something away without requiring anyone to pay anything. In these instances it’s still important to be clear about whether it’s a competition or a draw, and use the correct terminology to avoid any confusion.
Terms and Conditions
You also need to have clear terms and conditions (Ts&Cs) which should include:
- who’s running the draw or competition – the Promoter
- how people can enter
- what they are required to do to participate
- how long the draw/competition is open
- if there are any limits on participation
- what the prizes are, and if alternative prizes are available
- how a winner will be chosen, and what happens if they don’t claim their prize
- how to find out who won, and whether winners will be used in publicity
- what happens to the data of those who participate
- the right to cancel the draw or competition
- the laws of which country will rule in the case of any disputes.
You need to think through all the possibilities thoroughly before you launch your draw or competition, and make sure everyone involved in running the competition is aware that Ts&Cs exist and what they say. Entrants to need to know that there are Ts&Cs, and where they can read them.
Another thing to consider is data. If consumers are giving their data to enter the competition (eg, email address), don’t assume that you can use that data for marketing purposes. You need to make it clear when you gather the data that this is your intention, so people have the opportunity to decline.
If you’re running a competition on a social media channel, you need to be aware that these channels also have their own regulations for running competitions. For example, Facebook’s rules stipulate that competition entrants can be required to “Like” a post and “Follow” the organisation, but must not be asked to “Share” a post in order to enter. Twitter guidelines deter promoters from encouraging multiple tweets of the same thing or encouraging users to create multiple accounts.
For further information on the topics covered in this blog post, I recommend the following sources: