If you think big sweepstakes are only for major corporations, think again. You can get a lot of promotional sizzle from programs that let you share the costs of a million-dollar sweepstakes.

Savvy marketers have long known the value of sweepstakes. When used effectively, sweepstakes can dramatically increase the pull and reach of a marketing program, often by as much as 50 percent. But most companies, particularly smaller ones, lack the resources to provide the million-dollar grand prizes, new cars, and other goodies that consumers have come to expect in a sweepstakes. Larger companies, too, may feel uneasy about committing a lot of resources to an untested program. As a result, sweepstakes suppliers in recent years have come forward with solutions that address these problems. These new programs allow even smaller companies to participate in highly desirable sweepstakes programs, and they give larger companies the ability to test their own sweepstakes concept without taking the full plunge.

HOW SHARED-COST SWEEPSTAKES WORK

These programs work by spreading the cost around, either among several participating companies or through the use of insurance. In one program, in which a million-dollar grand prize is offered, the $1 million is actually the payoff from an insurance policy. Twenty participating companies buy into the program for $25,000 each and then offer millions of people the chance to win the grand prize. How does $500,000 in revenue enable the insurer to offer $1 million? Simple. The odds of someone receiving the winning number and claiming the $1 million prize are one in 100 million.

Another program from the same supplier offers a range of prizes totaling more than $100,000, everything from cars to TV sets to jewelry. Here again, several companies participate, each chipping in $9,999, and each is free to promote the program in its own way. There's a guarantee that all the prizes will be awarded, but, because entries from all the participating companies are pooled in a single drawing, the top prize winners won't necessarily be consumers who entered your presentation of the sweepstakes. Companies wishing to take part in both the $100,000 sweepstakes and the insurance-backed million-dollar sweepstakes can do so for $32,500.

BENEFITS

By leveraging the resources of several companies, participants in shared-cost sweepstakes can offer a lot of sizzle for the money. These sweepstakes are also excellent test vehicles for companies wishing to sample their market's enthusiasm for a given program. Companies can experiment with a number of different approaches, often for less than the cost of doing a single sweepstakes on their own.

THE DOWNSIDE

While the benefits of co-op sweepstakes are compelling, their structure may lead some people to be uncomfortable with them. In the first example, it's possible that no one will win the $1 million. In the second, it's possible that you could generate much enthusiasm for the sweepstakes among people who buy your product, then see most of the awards go to customers of the other participating companies.

Suppliers insist that, in addition to being legal, co-op sweepstakes fulfill the expectations that consumers hold for most sweepstakes. The odds of winning, after all, are far better than those of the typical state lottery.

TIPS FOR SUCCESS

Here are some tips for building a successful program using shared-cost sweepstakes:

• Work with a good supplier. Sweepstakes are governed by rules, both legal and practical, that set them apart from other marketing methods. The right supplier will help you sort things out.
  
  
• Design the program to fit the market. Knowing as much about your targets as you can will help you determine which prizes to offer, the theme of your promotion, and how to position the sweepstakes in the overall context of a marketing campaign.
  
  
• Keep things legal. Sweepstakes are highly regulated at both the state and federal level. Your supplier should keep abreast of these ever-changing regulations and work closely with specialized attorneys to keep you out of trouble. The basic rule is full disclosure, but you will find that how, where, and what you will disclose is determined by myriad, often arcane, regulations.

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For more information on related topics, see #6015 Promotion Guide.

Information for this article was provided by Ventura Associates, a New York City marketing agency that works in the shared-cost sweepstakes field.