A stack of prizes and cash are given away each year by Australian companies via competitions. How can businesses run a competition that works for them?

Most of Australia’s largest and best-known brands give away cash and prizes every year via competitions, but there’s nothing to stop soloists getting a piece of the action, too.

Competitions can work very well to promote what it is that businesses large and small sell. Entrants can be required to purchase a product or service. Some applicants lodge multiple entries by purchasing multiple products, which can give your bottom line a boost.

When it receives an entry in a competition, a business is provided with useful information about a consumer. However, it is essential to comply with the Privacy Act, National Privacy Principles and Spam Act in storage, use and updating of, this information.

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Competitions also create a general feeling of excitement and interest in a business brand. As an alternative to discounting, competitions can be a more cost effective option in that predetermined prizes are being won as opposed to losing a percentage off an undetermined number of sales, which cannot be accounted or budgeted for in advance.

How to successfully run a competition and avoid the pitfalls

Compliance with all state based regulations on trade promotions is absolutely essential if you are running a chance-based competition. Compliance with Australian Consumer Law is also essential for all competitions, whether they are chance or skill-based.

For national competitions, where the winners are determined by an element of chance, there are a number of essential requirements. These are:

• You need terms and conditions clearly setting out how and when people enter, the prizes including their value, the number of winners, and how you will notify the winners;
• Trade promotion permits will be required from NSW and ACT (unless an exception applies) if your prize total is $5,000 or less;
• Trade promotion permits will be required from NSW, ACT (unless an exception applies), SA and VIC if your prize total is over $5,000.
• You cannot begin advertising your competition unless you have received all of the relevant permits.
• You will need to display minimum (condensed) terms along with permit numbers in all advertising of your competition; and
• You must collect entries, draw the winners and award the prizes you say you will in your terms and advertising. Records, including entries and winners, must be kept.

If you are going to run a competition, it’s essential to ensure that you comply with the relevant laws.

When conducted properly, the running of competitions can be an exciting and cost effective way to generate increased sales and further promote your company’s goods and services.

Have you run a competition? Was it a success? What were the challenges?