July 2003 - Revolution Magazine

PROMOTIONS MASTERCLASS: The Revolution Masterclass on Online competitions

Little appeals more to people than the idea of getting something for nothing. With that in mind it's easy to see the attraction of competitions and online promotions to consumers.

"Everyone loves a freebie," says Serena Privett, senior account manager at Conde Nast Online, which runs competitions across the company's magazine web sites Vogue.com, GQ.com, Cntraveller.com and Glamour.com.
Prizes up for grabs in competitions on these sites have ranged from crates of Rosemount wine, offered to readers on Glamour.com, to tickets to attend London fashion week with L'Oreal's Feria colours brand on Vogue.com. Elsewhere, many other brand web sites, ranging from organic chocolate firm Green & Black's to O2, have realised this appeal and in the last few years competitions offering anything from a year's supply of potatoes to the chance to join a Premiership football club squad have been run on the internet.

Incentivising people "Online promotions can cover a lot of ideas and executions," explains Mark Whitmore, founder of below-the-line agency Swordfish. "It's a communication that demands a response of some kind from the consumer. In some ways, we are incentivising people to take action. Promotions are usually aimed at driving traffic. For an e-commerce web site, a promotion can ask people to make a purchase."

But providing added value for users costs, and the brands and sites need to consider several issues if they are to make such an exercise worthwhile.
For Sarah Stone, editor of Red Magazine online, the web site for Hachette's monthly women's publication, online competitions are an important means of driving traffic to the web site. Although competitions can be themed to fit in with the different channels, the web site has a separate, dedicated area called Win!Win!Win! and at least six competitions are live at any given time. Just as the prizes may differ from one another, so the nature of the competitions can be different too. A free draw offers up one big prize to entrants. "People can enter the competition and winners are pulled out of a hat," says Whitmore. "You need a prize that is relevant to your audience, which they are not able to get easily in real life. It is important to note their perceived chance of winning, so offering them a range of prizes can give them hope of winning. Offering a big prize provides a big headline, but people do realise that they have a 14 million to one chance of winning the National Lottery jackpot. However, they think they have quite a good chance of winning something else," he adds.

Another type of promotion offered by e-commerce web sites is a gift with every purchase. Amazon has experienced some success with this idea. At Christmas it offered free postage and packing for people who spent a certain amount on an order. In the US, the promotion was so successful that it has become a permanent fixture of the site. The advantage of such a promotion is that it is highly accountable and businesses can analyse the return on investment (ROI). "It is a tactical event which tries to bring forward purchases and gives people that extra incentive," says Whitmore.

Games and viral gaming online are other types of promotion. "Users do not necessarily win a prize or get an award, but you are still incentivising users to interact with you," Whitmore points out.
Direct marketing specialist Precision Data Ventures (PDV) uses the idea of an online lottery to solve a simple problem - to gather data on people for marketing purposes. According to Nick Fuller, eCRM director at PDV, an online lottery is the best way of doing that. The company operates several on the internet, but its most high-profile is The Daily Draw, which boasts a £1 million jackpot. "We decided to set up an online lottery because it is ubiquitous and very simple for people to understand. After all, apparently 89 per cent of people have played Camelot's lottery," explains Fuller. "It is very quick and easy to play. We're not trying to get people to stay on our web site for an extended length of time. Instead of a sticky site, we call it a 'Teflon' site and it has been engineered that way."
Mining the data PVC runs ScratchandMatch.com, an online scratchcard web site, but Fuller acknowledges that the idea is not straightforward for consumers to grasp. "It is about collecting and mining the data we get from people who enter the lottery. The revenue we get comes from users allowing people to advertise to them, and they can choose to be contacted by banner advertising, email, postal direct marketing and SMS," explains Fuller.
Some 30 per cent of the Daily Draw's entrants choose to be contacted by SMS or direct mail, which is ironic as they have signed up to an internet game. However, Fuller believes the thinking behind PDV's web sites can be applied to other brands and businesses. He says PDV is currently working on a white-label version of its service with a range of partners from the banking, utility and media sectors. The idea of the service is original and Fuller hopes the site's brand will benefit from people playing the game and becoming more aware of what else the site has to offer. The partner sites will want to increase user numbers and the length of time each user spends on the site. One advantage, says Fuller, is that web site users have a realistic idea of their chance of winning a prize. The Daily Draw may have a big money jackpot, but it also offers a range of smaller prizes. A specialist supplier provides them, which incurs a cost for the business. "People are aware that their chance of winning a million pounds is very slim, so we offer a range of smaller prizes," he adds. Prizes like money-off hotel rooms are surprisingly popular with site visitors.

Whitmore says: "The key thing we always nail down before we start a project is what the client's objective is and what they are trying to achieve? Only then can we advise what is appropriate." He also points out that promotions are different to the marketing projects that businesses undertake, particularly for online. "Advertising and PR are about a lot of one-way communications. What we are able to do with promotions is embark on a two-way communication with consumers. We are saying to them, 'You give us something back and tell us about yourself, and we will be able to build a relationship that is longer and more meaningful'," says Whitmore. "That applies to all brands. All business is about the customer and human nature includes the desire to get more," he adds. Attractive prizes The ultimate guide in choosing the prize to be offered is to give the competition winner "something money cannot buy", says Whitmore. For instance, working with its client BBC Books, Swordfish will offer prizes of signed books. "The aim is quite simple - BBC Books wants to sell more books, either through the BBC bookshop or through third parties. It can leverage its relationship with authors to offer signed books, which may not cost the publisher, but it is an attractive prize for customers," Whitmore explains.

There are many rules and regulations that anyone running an online promotion should be aware of. Fuller suggests that anyone planning to run such a promotion online should clarify the legal and regulatory situation before doing anything else. Simon Halberstam, partner and head of e-commerce law at Sprecher Grier & Halberstam LLP and Weblaw, says that web site owners need to make sure their campaigns and promotions comply with the data protection and gaming laws of the countries in which they are being offered. For example, in order to be compliant within the EU, there are various major points for web site owners to consider, explains Halberstam. One of these is that the people to whom the initial mailing is sent must have given consent for their data to be used for the purposes of marketing such products. Consent may be regarded as having been given if the data is provided by, or with the permission of, the individuals concerned for purposes which could reasonably be taken to include promotions such as the proposed one, he adds.
Also, the company running the campaign must comply with any request by a respondent or subscriber to cease direct marketing and remove E his or her data, whether or not the request is made directly or through a national 'stop' list, he adds. Alex Chapman, solicitor at Briffa, points out that the law relating to the prize-giving element of an online or offline game is currently unclear. "What is certain is that those running the activity will want it to be deemed a 'Prize Competition' under the Lotteries and Amusements Act 1976 and not a 'lottery'. However, there is little or no legal authority or precedent in this area, and many lawyers are taking a cautious view, which is leading some businesses to believe that their proposition is illegal," he says.
Legal implications Chapman points out an alternative view, more favourable to those involved in running these activities. "Under this legislation, it is illegal to run a competition where prizes are awarded for forecasting the result of a future event, to run one where prizes are awarded for forecasting the result of a past event (if the results are not generally known), and to run a competition in which success does not depend to a substantial degree on using skill," he says. Chapman notes that it is the third of these points which most applies to online games and promotions. "The issue is whether the success of the participants depends to a 'substantial degree on the exercise of skill' by them," he adds.

At Conde Nast, Privett says that it is popular for competitions on web sites to be run in conjunction with their associated printed magazine titles. The internet can provide many advantages for publishers in that situation. "It is much more cost-efficient for the readership to enter an online competition when you consider the cost of postcards and postage. We also collect the data for the client and charge them a small fee," says Privett.

For those brands and businesses lacking such obvious cross-promotional opportunities and savings, there are other channels which they can use to promote their offers. PDV operates by promoting its prize draw on the major portals. "We have done a lot of our work with the big portals," explains Fuller. "The most obvious place for us to appear is on the gaming channel, but we find that a presence on the entertainment channel works equally well." He adds: "We really don't appeal to the gaming public as much as to people who want a five-minute break to do something different. As one of our users says, 'When I am at work, people take a break for a smoke, so this is my virtual fag break'."

For the publisher, competitions can be an important tool for driving readers of the printed titles to their requisite web sites. The Rosemount Wine promotion on Glamour.com, for example, attracted up to 10,000 entrants over a four-week period. The advantage of running a competition online is that users can be directed immediately to another web site on which the answer can be found. On Conde Nast's GQ.com web site, the link is unsubtly pointed out in capital letters, bright blue text and the word 'CLUE'. "The question often relates to something on the web site, so we make sure we have a link to the client's site as well," adds Privett. Conde Nast encourages clients to handle the delivery of all the prizes to the competition winners themselves. This is not just for simplicity's sake, but because some prizes simply cannot be put in the post.
For example, Cntraveller.com offered a six-month opportunity for users to drive a Ford car - its Fusion marque. Naturally, it was the manufacturer that needed to make sure that all of the insurance issues were covered because it is usually in the best position to ensure that they are. Must deliver This brings us to one final, important point for brands to consider when running an online competition. It's also an obvious one. The prizes must be delivered to the winners or the consumer will be given a bad impression of the web site. "We have experienced some problems with clients who haven't sent the prizes out and the winners have had to chase us. We encourage clients to handle the distribution themselves, but it is something that hurts the site if it goes wrong," warns Privett.

Thanks to Alex Chapman, solicitor at Briffa, and Simon Halberstam, partner and head of e-commerce law at Sprecher Grier & Halberstam LLP and Weblaw, as well as our panel MASTERCLASS PANEL Sarah Stone is editor of Red Magazine online (www.red magazine.co.uk) for Hachette Filipacchi (UK)'s women's title. Competitions have included a trip to the VH1 Diva Duets concert in Las Vegas, with over 2,500 entries, and an Ocean Spray prize of bikes and cranberry juice.

Nick Fuller is eCRM director of direct-marketing specialist Precision Data Ventures, which collects data via lottery sites like the Daily Draw, which offers a £1million jackpot to the winner of its free draw. PDV also runs football-themed Strikeamillion.com and Scratchandmatch.com.

Mark Whitmore is founder and managing director of Swordfish, a below-the-line marketing agency that specialises in both on- and offline promotions and competitions. Company clients include the BBC, AltaVista, Centrum, Clear Channel and Channel 4.

ADSHEL PROMO BOOSTS TRADE DATABASE BY 50 PER CENT Not all competitions are aimed at consumers. Even business-to-business promotions can benefit from offering their clients and contacts the chance to win a prize. In November 2002, outdoor advertising brand Adshel launched a promo which sought to engage the media planning and buying community by asking them to vote for their favourite creative executions. The winner, Emma Poole of Zenith Media, selected a campaign for Smirnoff Ice. Adshel's owner, Clear Channel UK, flew her and a guest to New York for three nights, providing trips to view the best modern art in the Big Apple. The creative directors of her chosen campaign, Serge Pennings and Steve Clarke from J Walter Thompson, were also awarded with a trip across the Atlantic.

Mark Whitmore, managing director of Swordfish, which ran the campaign for Clear Channel UK, says media buyers and creative directors were targeted with a call-to-action via direct mail. A mail was sent once a week for the first three weeks, which represented a mini bus shelter and featured a six-sheet creative booked by recent advertisers. Recipients were directed to a microsite to vote for their favourite creative, which they could forward to a colleague and see which creative was getting the most votes. Reminders were emailed to the target audience once a week on Friday mornings. Each week, the most popular two executions went on to the final week and all the votes were added up to find the overall winner. Weekly prizes were given relating to the creative. For Beck's Paranoid, an entrant won a mini fridge and a case of beer, for example. "Agencies rallied behind their own executions, which led to a response rate of more than 90 per cent in the final week," says Whitmore. "The promo outperformed expectations by 50 per cent and boosted the client's trade database by 50 per cent. Calls to the sales team also leapt 50 per cent during the promotional period."

TOP TIPS ON ONLINE COMPETITIONS

1. A free draw offering a big prize can be helped by smaller runner-up prizes. "You need a prize that is relevant to people and it is important to note their perception of their chance of winning," says Swordfish's Mark Whitmore.
2. Don't make the competition too complicated if the prize doesn't justify it. The number of hoops that people will jump through to enter a competition is directly proportional to their motivation for doing it.
3. If you're giving away a big prize, expect a big response and make sure you can handle it.
4. The regulatory area surrounding online promotions can be complex. Be sure of your ground before launching a new initiative.
5. If the prize is a complicated one, such as a car to drive for six months, get experts or the manufacturer to deal with its fulfilment.
6. Briffa solicitor Alex Chapman recommends that sites have competition terms and conditions, including data protection notices and privacy policy. They must ensure skill is required if charging an entry fee. Sites should not charge an entry fee for competitions where no skill is involved unless they have appropriate licences.
7. Tailor the promotion to your audience. Online free lotteries are popular because they are immediate and accessible to a range of users.
8. A prize doesn't have to be expensive to be attractive.There's something appealing about an exclusive prize or something money can't buy.
9. Promotions are not just about 'stickiness'; data collection can be more important than the time users spend taking part in the promo.
10. It is important that prizes are delivered or the brand offering them will suffer.

CHECKLIST

Questions that should be asked before offering a competition or promotion online

• What is the objective we're trying to achieve?
• Which mechanic or promotion is most likely to achieve this aim?
• Is the competition relevant to and appropriate for the brand to run?
• Is the competition easy to enter or is the user being asked to do too much?
• Who owns the data generated by the promo and have users been informed of the implications?
• Is entrance to the competition incentivised?
• How is the winner selected or decided?
• What chance does the user expect to have of winning?
• What are the legal issues and questions posed by setting up a competition online?
• What is the level of response expected and will the setup or web site be able to handle it?
• Once the competition has been completed, have the prizes been delivered?

July 01, 2003 Philip Smith