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5 Dos and Don’ts for Running Your Next Trade Promotion Effectively

Trade promotions (also known as competitions, sweepstakes, and contests) are a great way to “activate” your brand and drive revenues. They enhance the loyalty of existing customers and encourage new customers to try your products or services for the first time. In addition, promotions enable the collection of valuable customer information, which can be used to refine your marketing efforts and further drive sales.

While trade promotions offer many benefits, running them is no walk in the park—particularly from a legal standpoint. Not only must you develop adequate terms and conditions (T&Cs), for “games of chance” where winners are chosen at random, you must also have a permit from each state in which the promotion is offered (because certain state governments consider these a form of lottery). Making matters worse, every state has their own unique set of rules with complex and varied requirements. All of this renders the process costly, time consuming and full of hassles.

While games of skill can be highly effective, as any gambler (and modern neuroscientist) can attest, there’s nothing quite like the rush of winning a contest through chance.

Here are 5 Dos and Don’ts to help you run your next promotion effortlessly and successfully:

1. DO perform adequate due diligence to determine if you need a permit.

If your promotion contains an element of chance in determining the winner (e.g. a “barrel draw” or “instant win”), you may need a permit. Here’s what you need to know:

  1. NSW or ACT: a permit is required regardless of the total prize value.
  2. VIC: a permit is required if the total prize value is more than $5,000.
  3. SA: a permit is required if (1) the winners are determined by a draw and the total prize value is more than $5,000 OR (2) if there is an instant win element (e.g. scratch cards).
  4. NT: a permit is required if the total prize value is more than $5,000.  NOTE: you do not need a permit for NT if you already have one from another state for the same promotion.

2. DON’T be afraid to run a game of chance.

Fearful of the costs, time and effort involved in running games of chance, many marketing teams avoid them altogether (or are forced to do so by their counterparts in Legal) often opting for “games of skill”, which don’t require permits. This is a real mistake. While games of skill can be highly effective, as any gambler (and modern neuroscientist) can attest, there’s nothing quite like the rush of winning a contest through chance. Moreover, the effort customers must expend to enter a game of chance is typically significantly less than it is for entering a game of skill—and that drives better participation.

3.  DO leverage social media, but be aware of their unique challenges and implications.

Social media offer excellent platforms for conducting trade promotions. However, getting these types of competitions right requires a few key elements. First, be clear on your goal. Do you want to drive “likes” on your posts? Get a hash-tag trending? Go viral? This information is critical to building your entry mechanics effectively.

Second, leverage as many social channels as possible to optimise exposure to your promotion and increase participation and engagement. For example, requiring entrants to upload a photo with a certain hashtag to various sites can have exponential impact as customers share news of your competition within their networks.

Finally, be aware of extra rules surrounding social media trade promotions. These include making sure your promotion complies with the social media provider’s terms of use. For example, if you’re using Facebook, your T&Cs must release Facebook from any liability and acknowledge that the promotion is in no way sponsored, endorsed or administered by Facebook.

4. DON’T overlook the details.

Those who are new to trade promotions—particularly to games of chance—are often surprised by the intense degree of detail that is required when applying for state permits. Prize details are a classic source of error. Take travel and accommodation prizes, which are quite common. These require incredibly nuanced information, such as whether or not you will provide airport transfers and spending money, and the specific cities from which the trip commences. Getting this right is not only critical to minimising legal liability but to protecting your brand. A customer who learns that her “all expenses paid” trip to Hawaii actually requires a self-funded ticket from Perth to Sydney where the prize commences is likely not a happy one.

5. DO use technology.

Technology has been used to simplify complex processes across many industries for decades—and the legal profession is finally starting to catch on. At Plexus, we’ve developed a tool called the Promotion Wizard, which enables marketers to build fully-compliant T&Cs and permit applications for trade promotions on their own in about 15 minutes. The Wizard improves marketer quality of life by eliminating the hassle of trade promotions and by freeing up time for more interesting and important activities. It also enables marketing teams to run a greater number of promotions across each year, which translates into more customers, more customer data and more revenues. (If you would like to learn more contact us on 02 9002 5341 or promotions@pexus.co)

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