Running a competition can be a great way to promote your business. People love to WIN and it can also generate publicity, engagement, ideas and customer feedback. But, what about permits, legals and compliance? Vanessa Emilio explains.
A well-designed competition can create a buzz around your business – increasing brand awareness and giving way to a stream of free publicity, through word of mouth, social media, and in some cases, even mainstream media attention.
There are lots of options! For example… run a competition for the best tip related to your services, judge the best selfie featuring your product, or offer a prize in return for participation in a research survey. You could also run a contest and ask your community to submit suggestions or ideas in return for a chance to win your products or services.
What can running a competition do for your business?
There are multiple ways a good competition can increase your business and exposure:
- Increase brand awareness
- Generate free or low-cost publicity in the form of word of mouth or social media
- Attract new visitors to your website and/or social media page
- Help build your mailing list and social media following
- Engage and build connections with customers
- Reward your customers and inspire more customer loyalty
Do I require a permit to run a competition?
Generally under Australian law, there are two main competition structures:
1. Game of Chance
This is when everyone has the same chance of winning (eg a lottery, or drawing a name from a hat). If you run a game of chance, you most likely require a state permit or license in the states you are running your competition.
2. Game of Skill
The winner is chosen against set criteria (eg a competition to create the best logo, or a 25 word or less question, with judges choosing the winner). You do not require a permit or license for this type of contest but need to ensure the winner is judged, has to answer a skill testing question or must otherwise beat other entrants.
However be aware, even if you run a game of skill, you may still require a permit depending on the value of the prize or the type of prize (alcohol for example). Make sure you check the specific state requirements which vary from state to state.
What do I need to include in my competition?
(a) Competition Terms and Conditions:
It is important that the rules of your competition are clearly set out for your participants. Your terms of entry must comply with Australian consumer protection laws and should include information about:
- Duration of the competition, closing time, and dates when prizes will be drawn
- The prize itself
- Who is eligible to participate, and how participants may enter
- How winners will be chosen
- How winners can claim the prize
- What happens if a winner does not claim their prize within a certain period of time.
(c) Winning Entries:
There are also legal requirements for advising your winning entrants. You need to:
- notify winners in writing
- post the winner on your site and anywhere you advertised your competition eg social media
- leave the winner notification up on your website and social media for 30 days
Can I make people pay or buy a product or service to participate?
Generally, you can require people to buy a product (at normal retail price) in order to enter the competition. However, you will not be able to make people pay to participate in the competition itself.
This requirement varies from one state or territory to the next as some states require entry to be free and put restrictions on such things as telephone costs that participants may incur in order to participate. Make sure you check to ensure you comply with the laws of each state and territory in which you are offering your competition.
What else do I need to comply with when running a competition?
All competitions (including games of chance as well as games of skill), must comply with Australia’s various consumer protection and privacy laws. Businesses must run competitions ethically and in a manner that is fair to consumers, or they will face stiff fines.
Some of the requirements include:
- The competition, and the surrounding promotional activity, must not be misleading or deceptive.
- The business must not make misrepresentations in relation to the competition. For example, the business should not suggest that participants have a greater chance of winning than they really do.
- The business must actually give away the prizes that it has offered and cannot substitute prizes.
- The prizes must match the description and value of the prizes that were advertised.
- The prize for winning the competition must not simply be the chance to enter another competition.
As competitions are highly regulated in Australia and laws vary between different competition structures, as well as between the different states and territories, it’s a good idea to check with each of the state requirements before you open your competition.
Get creative, get out there and start the buzz. Running a competition is a fun and great way to promote your business!