What Do Companies Get Out of Running Sweepstakes?

Have you ever wondered what companies try to accomplish when they give away prizes in contests and sweepstakes?

Giveaways aren't a form of charity, and companies don't run them for selfless reasons. Rather, they are a win-win situation for sweepers and companies. Sweepstakes help companies be more profitable, while consumers have the fun and excitement of entering and winning.

Understanding what companies have to gain by running sweepstakes and contests has many advantages. For one, it makes it more clear why legitimate companies honestly give away prizes. Those prizes aren't a waste of money, they are legitimate marketing expenses which help boost their profits.

Understanding companies' motivations in running sweepstakes also lets you determine how much you want to assist them in reaching their goals.

For example, if you're entering a sweepstakes promoting a product you might enjoy, why not sign up for newsletters, which could deliver interesting information to you, while helping companies justify the costs of running giveaways and encourage them to continue giving away the fantastic prizes that we all want to win!

Sweepstakes and Contests Create "Buzz" about Products

Sweepstakes are an important marketing tool for many companies.
Sweepstakes help many companies achieve their marketing goals. Plus, they're fun!. Image (c) Muharrem Aner / E+ / Getty Images

Word-of-mouth marketing is becoming more powerful than ever, since people can tell friends about things that capture their interest instantly through emails, blogs, Facebook, Twitter, and newsletters.

Contests and sweepstakes encourage people to talk about a company, and its products and services. You might tell your friends about a giveaway you entered, or you might be excited about a product you won, encouraging your family to buy one for themselves.

Some sweepstakes also use a refer-a-friend option to award bonus entries, encouraging buzz explicitly.

Sweepstakes Encourage People to Visit Websites

A great product is worthless to a company if their customers don't know it exists. Online sweepstakes give people strong motivation to visit a company's website, and many of those people will continue to explore the website after they've entered to see what the company has to offer.

Companies Use Giveaways to Build their Email List

An email marketing list is a great way for companies to strike up a dialog with you, and to be able to keep you informed about their products and services. This is why contests and sweepstakes usually include the chance to opt-in to the sponsor's mailing list, or even make subscribing a condition of entering.

Because newsletters are a valuable form of contacting potential customers, sweepstakes that are instrumental at expanding the mailing list are considered to be very successful.

Contests Generate Advertising Content at a Reasonable Cost

Creative contests, where participants submit photos, recipes, or essays about products, can oftentimes be used as advertising.

That means that, instead of paying an ad agency to produce content, sponsors can pass that money directly to their loyal customers in the form of prizes, benefiting sweepers and corporations alike.

Sweepstakes Provide Valuable Market Research

Many times, you might see some optional or required survey questions while you are filling out sweepstakes entry forms. Why?

Well, companies use giveaways as an opportunity to get some insight about how their potential customers think, go about their days, or use the company's products around the house. This can help them focus their advertising to be more effective.

Giveaways Strengthen the Relationship Between Company and Customer

Sweepstakes strengthen the company-to-consumer relationship by building a sense of fun, by entertaining people while informing them about the company's products, and by giving customers a benefit for interacting with the company in the form of fun prizes.

The chance to win creates a positive feeling toward the company in their visitors' minds, which can then carry over to a brighter attitude toward the sponsor's products.

Conclusion: Sweepstakes Only Work When Sponsors and Sweepers Work Together

Sponsors hold sweepstakes and contests because prize promotions are an effective way of helping them make more profit. As soon as sweepstakes stop being profitable, companies will stop offering them. That is why it is so important to be a courteous sweeper and encourage companies to continue to hold more prize giveaways.

At the same time, sweepers have rights, too. Participating in contests doesn't obligate you to be deluged with spam or to make a purchase.

By learning how to protect yourself from unwanted marketing mail and recognizing the signs of a sweepstakes scam, you can make sure that companies aren't taking advantage of you while you enter sweeps.