People love contests, with the twin motivators of fun and prizes. So it’s only natural that businesses use social media marketing tactics like running contests and sweepstakes to attract and engage potential customers. However, it’s crucial to be mindful of the legal considerations involved with social media contests and giveaways, so you don’t unwittingly run afoul of the law.
We’ll explain the laws surrounding social media games and contests and share tips for running social media giveaways that bring positive attention to your brand.
Before incorporating contests and sweepstakes into your marketing plan, understanding various game types is crucial:
Social media games can help increase buzz around your brand or product launch, generate sales leads and increase sales. However, business owners and marketing managers must familiarize themselves with the rules and regulations surrounding them.
Lotteries are games reserved for state governments to raise money for public initiatives like education. They’re considered a type of gambling. As such, they’re regulated heavily to help rein in gambling addictions and the devastating societal issues they cause.
For these reasons, nongovernmental entities, including private businesses, can’t hold lotteries. To avoid an illegal lottery and run a legal contest or sweepstakes, a company generally must eliminate one of the three lottery elements (prize, consideration and chance). For example, a lawful sweepstakes typically will involve a chance to win a prize but doesn’t require consideration to enter.
Many companies want to run sweepstakes for their current customers, so they give away an entry ticket with a purchase. However, since money is exchanged, there is consideration, which causes a problem. A popular way to circumvent the problem is giving people a free alternative way to enter with no purchase required.
Under most state laws, creating a free entry alternative makes the sweepstakes legal. For example, McDonald’s can give away its McDonald’s Monopoly tickets to paying customers ― consideration ― because it also offers an alternative free method to enter the sweepstakes.
Money isn’t the only form of consideration. For example, say a customer must put excessive effort into entering the sweepstakes. In this case, the work and time they put into the submission can turn into consideration and convert the sweepstakes into an illegal lottery. Time is money, after all. Make entering your sweepstakes easy to avoid running into this problem.
When it comes to contests and sweepstakes, businesses must clearly:
All of these steps (except for the awarding of prizes) must be set up when the game is initially launched and the information must be available during the contest’s entire duration.
One Florida Hooters restaurant found this out the hard way. In an effort to increase beer sales, the business ran a contest among its servers in which it promised the winner a new “Toyota.” However, on prize day, the employee was blindfolded, escorted to the restaurant parking lot and given a “toy Yoda.”
Unsurprisingly, the winner was unhappy. The worker quit and filed suit against the company to get the promised Toyota, alleging breach of contract and fraudulent misrepresentation. The server won and Hooters purchased the employee a new Toyota.
While this is an extreme example, it provides a cautionary tale demonstrating the importance of planning a contest before jumping in head-first with a giveaway.
Complicating matters more is the fact that each state has its own set of laws governing promotions and each law is different.
For example, Florida, New York and Rhode Island require sweepstakes offering prizes over a specific value to be registered. Similar laws also apply to contests, especially if a purchase is required to enter. Arizona requires the company to register the contest with the attorney general’s office, including a sworn statement that no additional fee was added to the purchase price in connection to the contest.
Moreover, the official rules of the sweepstakes or contest must fully disclose information about the prize offerings, method of entry and selection of winners. These are samples of what may be required, so a company must always check the applicable state’s laws before engaging in a promotion.
Typically, social platforms require acknowledgment that they don’t endorse, promote or administer the promotion. Specific platforms have their own rules, as well. For example:
A business that ignores the rules or fails to abide by them could find its promotion suspended or, worse, its entire social media account deactivated.
If navigating various platform-specific rules sounds arduous, especially when running a promotion online is so easy ― that’s because it is. Despite low barriers to entry, the risks are real. However, while thoroughly vetting the legality of a contest or sweepstakes may seem costly, it’s usually worth it when you reap the rewards of increased online brand awareness.
Online promotions are a digital marketing trend that shows no signs of slowing down. Consider the following social media contest best practices to make your online game successful.
Contests and sweepstakes can benefit your company in the following ways:
Before creating your game, determine which of these goals is most important. Next, focus the game on achieving that goal. Here are some examples:
To get the most relevant entries, it helps to identify your target audience. What are their demographic and psychographic characteristics? How can you best reach them and what types of messages will appeal to them? For clues, go through your customer data and website analytics.
Based on your target customer analysis, one or several social media platforms will emerge as the best place to launch and run your contest. For example, if you target older professionals, consider using LinkedIn or Facebook. If your brand targets Gen Zers or millennials, Snapchat, Instagram or TikTok may be a better choice.
Do you want to run a sweepstakes or a contest? Your goal will help inform your decision. Here are some characteristics of each to help you determine the best game for your brand:
You must also consider your budget and secondary goals. For example, a photo or video contest showing people using your product will increase sales and create user-generated content for future marketing campaigns.
Rules will help you keep the game fair for all entrants and protect you from people trying to work the system. Your rules will spell out the length of the contest or sweepstakes, its opening and closing dates and the prize award day.
The prize should be something related to your brand. It must be compelling enough to motivate people to enter the game. When it comes to sweepstakes, the prize must be impressive enough to create buzz and publicity that will increase the time your sweepstakes is actively discussed, boosting your digital marketing return on investment.
Even if you hold a social media game, be sure to promote it through other channels. Consider an email marketing campaign, influencer marketing with social media stars, in-store signage and website promotions.
Additionally, consider offering incentives for people to refer others to your game, such as discounts or additional entries. The more people who discover your game, the more consumers are likely to hear about your company and products, visit your website, follow you on social media and, ultimately, buy from you.
The announcement of your contest or sweepstakes winner should not be a private affair where you contact the winner directly. In addition to contacting the winner to let them know they won, use this fun news to increase engagement on social media platforms and your website. Send the news via email and craft a press release. If possible, capture photos and videos of the winner receiving or using the prize. This material will keep the excitement going and extend the life of your promotion.
The only way to know if your contest or sweepstakes was successful is by crunching the numbers through a marketing analysis. Did you achieve your primary and secondary goals? Did you realize other positive benefits from the game’s promotion?
In addition to key performance indicators (KPIs) like website traffic, new social followers and revenue increases, analyzing customer feedback is essential. Gather the following survey data:
These answers will help you enact changes to make your next contest or sweepstakes even more successful.
Daliah Saper contributed to this article.
B. newsletter is your digest of bite-sized news, thought & brand leadership, and entertainment. All in one email.
Our mission is to help you take your team, your business and your career to the next level. Whether you're here for product recommendations, research or career advice, we're happy you're here!