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Risk management 101- consumer promotions

Other than ensuring that you obtain competition permits to authorise a chance-based competition, you then need to ensure you consider key risks. A failure to manage and mitigate risk in any promotion or consumer interaction can be disastrous.

The terms and conditions you develop for your competition must be adhered to at all times. Terms and conditions mitigate many of the risks associated with competitions by clearly setting out how someone can enter, the prizes on offer and how winners will be contacted. If you follow the terms and conditions to the letter you will avoid many of the common pitfalls. You should ensure that any onerous conditions are clear in your terms and conditions, including any limitations on taking the prize. The prize itself should be described carefully to avoid any future disagreement.

A failure to award the prize on offer may be a breach of the terms and conditions, the competition permit conditions and the Australian Consumer Law. It is very important to be transparent and act in accordance with your obligations.

Once you conduct the draw you should be careful to check that the winner complied with the terms and conditions (ensuring before the draw that only valid entries were included).

When communicating with the winner be careful to confirm their identity and to note limitations with the prize and any information that the winner must give you.

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Permitz work with chance-based competitions every day so are well placed to assist you in identifying and managing any risks.

Premium SMS competitions- earn revenue from entries

Premium SMS is one way to raise some revenue from your next competition. For each entry that you receive you will get a proportion of the revenue received by the telcos. Revenue can be used to off-set or exceed the cost of the permits and prizes. Revenue could also be donated to a charity of your choice.

Premium SMS is often used in national voting competitions including those on national TV networks. There are specific requirements about how you advertise a Premium SMS competition, which Permitz can help you with. Entry to a premium SMS competition cannot exceed 55 cents.

The success of your competition will depend on a number of factors. Premium SMS can be used as the sole entry mechanic or in combination with others. We can provide you with code to be embedded on your website or Facebook entry page so that all entries are collated in one list. We can then also conduct a competition draw.

Permitz are able to provide you with a low cost Premium SMS number, manage the back- end and send you a cheque for revenue realised from the promotion at the conclusion. Permitz are able to offer one of the most competitive rates available (probably the most competitive) for setting up a Premium SMS competition. If you are interested contact us today using the form below.

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Frequently asked questions about competitions and competition permits

Do I need competition permits?

Competition permits are usually required to conduct chance-based competitions. There can be significant penalties imposed on your organisation by the regulatory bodies if you fail to obtain competition permits when required.

A competition that is based on skill does not involve an element of chance in determining the winners. Chance based competitions are usually more difficult to set up but do attract more entries (as they are easier to enter). An example of a skill based competition is one which asks entrants to submit an answer in 25 words or less. Winners must be selected based on the criteria set out in the competition terms and conditions.

Is it difficult to set up a competition?

Unfortunately, it can be difficult to draft compliant terms and conditions and apply for competition permits in each state. Each state has different requirements under their respective gaming regulations. The reason is obviously to ensure that only legitimate competitions are run and that entry is free and all entrants are given a fair chance of winning.

We set out some of the requirements below. If you are setting up your own competition, we suggest you read the relevant regulations and guidelines produced by the State Gaming agencies. Some of the rules that State Gaming agencies apply are not published anywhere and you may only find out about them when your application for a permit is rejected.

What should I look out for?

If you are drafting your own terms and conditions be careful to fully set out how and when people can enter, what the prizes are and their value, how the winners will be determined and how you will notify the winners. You must ensure that you set out any conditions you want to impose in relation to how to enter, and in relation to the prizes themselves. It is important to be clear to avoid confusion and complaints.

You should be careful to consider how many times you want people to enter your competition. If you only want entrants to enter once, be sure to set this out in your terms and conditions. If you fail to limit the number of entries you may end up with some people entering hundreds or thousands of times! This could, or could not, be what you want. You should consider noting that use of ‘scripting software to enter is prohibited.’

Your main responsibility is to be fair and to abide by your terms and conditions. If you are going to be running a number of competitions over time, you should consider implementing policies and procedures to ensure that your company complies with the applicable regulations. Contact us to assist you in setting this up in compliance with the principles in Australian Standard AS 3806-2006.

What do I need to know when setting up a skill based competition?

While you do not need permits to conduct a skill-based competition you need to ensure that you comply with all other requirements such as those in the Privacy Act.

If your competition is open to NSW residents, you should review the NSW Department of Fair Trading’s site on Special Offers and Competitions. Requirements include that you supply the prizes that you offer and that you disclose special terms and conditions that must be met before someone can claim a prize.

What prize(s) should I give away?

The competition prize being given away will directly influence the number of entries you receive. The type of business or product you are promoting should help you determine which prize to giveaway. Giving away your own products or services as a prize can give you a good source of demographic data and potential future marketing contacts within entrants.

The type of people you want to enter will have a big impact on your choice of prize. Consider the age, gender, income and habits of entrants you want to target. Think about what is popular in that group of potential entrants at the time you are running your competition. Tastes and trends change over time so ensure you keep up to date with the latest.

Cash, Holidays, Electrical appliances are almost always sought after. Our own research has shown that the actual dollar amount of cash given away has less of an impact on the number of entries than anticipated. We have seen little difference in the number of entries received for a $10k prize pool as opposed to a $5k prize pool.

When are permits required for competitions?

You need permits for chance-based competitions where you pick winners at random. Permits are required when your competition is open to residents of NSW, ACT, and SA, VIC and WA (for promotions with a prize pool over $5K). There are substantial penalties for not complying with relevant state legislation.

Have a look at our YouTube clip on Facebook competitions and the different requirements at www.permitzgroup.com.au

Each state has its own requirements. Even states such as QLD that do not require permits have rules that you must comply with in running a trade promotion.

How long will it take to get permits?

Different states take different lengths of time to get permits back to you. At some stages SA and VIC can take three weeks to approve permits. Ultimately it depends on their workload at the time. In SA you can pay a premium fee to have your permit assessed within 5 business days.

It will typically take Permitz Group 2 days at most to draft compliant Conditions of Entry. Once you have reviewed the Conditions of Entry, we will then submit for permits the same day.

How much do the permits cost?

The cost depends on the total prize pool you are giving away. Send an email to info@permitzgroup.com for an obligation free quote.

Do I need competition permits for an unusual promotion?

 

Your competition may be a combination of skill or chance, may involve a prize that cannot be valued, or may determine the winner on the order in which they enter.

The general rule is that you will need competition permits if your promotion involves an element of chance. If your prize cannot be valued, you will still need to work out a value for your competition permit application.

The best advice is to check if you are unsure. You can either call each of the lottery agencies or call us and we will work out if you need competition permits.

Successful promotions: various factors at play

In our last post we spoke about the importance of ensuring that the prize on offer in a competition is in proportion to the steps someone needs to take to enter, i.e. looking at a consumer promotion as a trade between the consumer and brand.

Whilst we believe this to be an important factor, there are many other significant factors influencing the success of some competitions over others. We have spoken to an academic in this field who will be bringing this topic into focus with his work. In the meantime we wanted to discuss some of the factors with relevance as we see them. Running a successful competition may be part art and part science. Indeed, the copy, the artwork itself and the way the competition is communicated are important. Here are some other factors:

Competition effectiveness imageAdvertising is one of the most important aspects of competition marketing. Ensuring that people, and more importantly the right people, hear and know about the competition.

As discussed in our last post, the complexity of entry should also be considered. If a competition has a number of steps to be followed, it may also turn time poor people away.

Whilst the above is by no means comprehensive or definitive it does bring to mind the question: “is there a formula for success?’ If you have had experience with either successful competitions or a competition that did not meet your objectives we would love to hear what you think you did right or could have done better.

 

More about us

Permitz was initially set up specifically to assist companies wanting to run competitions and to obtain competition permits.  This focus on such a niche area has allowed us to develop expertise exceeding many of our competitors, who struggle to stay up to date with regulatory changes and policy updates.

We have set about seeking to differentiate ourselves on the following basis:

1. We aim to share knowledge and help our clients achieve their objectives. 

We don’t charge to assist in the design and development of a competition or to research when a permit or licence is required. This may typically involve a discussion about when competition permits are required and about potential entry mechanics and suitable prizes.

As you can see from our postings online, we are happy to share what we know, and for no cost. See our articles on competition permit basics for more info on when a competition permit is required and the best practices when designing a competition.

Some of the more common questions we are asked are to do with timing (click on the link for further info), cost of competition permits, and when competition permits are required.

2. We have a fun and flexible workplace which is focused on enjoying work.

We have done away with unnecessary meetings, reports which nobody reads, policies which are not flexible and actively understood or creating paperwork for the sake of creating paperwork. Indeed, with staff having government, commercial and small business experience, we relish in not doing ‘business’ the way that some of our former employers did.

We are simply focused on doing work when we need to do it and on doing it professionally. This translates into flexible working hours, and locations, ensuring that employees are engaged and actively learning. We discuss work in environments we enjoy, not around a board table. This translates effectively into a company whose employees are responsive and focused on our client’s needs.

3. We care about our environment and our community. 

A company does not operate in isolation of its environment or the community from which it both draws its energy and finds its existence.

From using solar energy, to providing discounted or free work  for non-profit organisations, our small contribution or reduced negative impact is an important part of our culture and how we see ourselves.

If you visit our office you will notice the natural light, the plants and the distinctive lack of paper. Whilst the dream of a ‘paperless office’ has not come about for many companies, for us paper files are a thing of the past. We have also committed to giving back, this year it will be 5% of profit to charities of our choice.

4. Enjoyment in work is from the work we do and in interacting with our clients. 

We are privileged to work with some very interesting individuals and brands. From hotels, airlines, electronic giants, to authors of children’s books. we have had a great run. Whilst we look after the more tedious aspects, i.e. competition permits, we are luck to work with interesting and experienced people who know their craft whether marketing or legal so well.

Competition permit costs set to rise 1 July 2014

Each year competition permit costs increase as each trade promotion lottery department/ authority increases the fees payable to obtain a competition permit. The cost of a competition permit will depend on the total prize pool being given away.

If you are planning to run competition which requires a competition or trade promotion permit in the first or second quarters of 2014/2015, now is the time to apply for competition permits. By submitting applications before the end of the financial year, organisations can avoid the increased competition permit application fees.

Competition permits

Competition permits are generally required for chance-based competitions. Permits would be required from NSW and the ACT if your prize pool is at or under $5,000 and from SA and VIC if your prize pool is over $5,000 or is an instant win competition.

There are a range of permit conditions which must be adhered to as set out in the permits themselves. These include the requirements to hold all entries and records of winners for a three years. This also, obviously, includes the requirement to conduct the competition in accordance with the terms and conditions and to ensure all entries have an equal chance of winning.

Any changes to the terms and conditions or structure of the competition once permits have been approved must be approved by way of a formal amendment approval from the lottery departments.

Permitz Group are able to assist with both skill and chance based competitions. We can draft terms and conditions, apply for permits on your behalf and send you the final terms with minimums for use in advertising. We can also then conduct a draw if you would like us to do so and arrange for the notification of the winners/ publication in a newspaper.

Essential elements to a successful consumer promotion

Consumer promotions or competitions are a form of trade between a consumer and a business. In exchange for the ‘chance to win a prize’ or multiple chances to win, the consumer is asked to provide their personal information, to purchase a product or service or to interact with a brand in some other way.

For a consumer promotion to be effective, the trade-off made by the consumer needs to be in proportion to what is on offer via the competition-

The most topical example of the above over the last quarter has to do with the collection, use and disclosure of personal information collected when someone enters a competition. It is fair enough to say that most consumers have an expectation that the information they provide will be used for marketing or promotional purposes.

However, if the use is too wide or the trade-off too unfair, potential entrants can be turned away. If you were asked to consent to receive unlimited marketing material from unknown third parties for a chance to win a holiday, you would be more hesitant to do so than if you were asked to simply subscribe to a newsletter (and given the opportunity to opt-out at any time).

Since the protection and understanding of use of personal information is such a relevant topic, it is now more important than ever to ensure that consumers understand how the personal information they provide will be used by the company collecting it. To do this, the intended use and disclosure should be clear on the term, in the advertising and in the Promoter’s Privacy Policy.

What is a reasonable trade-off will largely depend on the intended audience for the promotion which should tie back strongly to the actual brand and the types of customers the company is looking to attract or retain. Entry methods, prizes, ways of communicating with entrants and potential winners and advertising of the competition need to be focused on the demographics of the entrants that are sought.

Many companies go to extreme lengths to include various social media ‘likes’ follows and ‘shares’, to allow various layers of bonus entries and have a number of steps that need to be followed by an entrant to enter. These steps can overcomplicate the competition and push the balance away from a proportional trade off.

Simplicity is usually the answer.

Conducting a competition that is focused on your consumers, is proportional in what is on offer, and is communicated via advertising effectively is the right way.

Is a blanket permit right for my competition?

A blanket permit may be the answer for a company wishing to run a number of promotions over a period of time as distinct from a single trade promotion permit obtained from the various state regulators.

The two most significant benefits of having a blanket permit are: 1) they can be cheaper and 2) they allow for greater flexibility over that given by a single competition permit.

Flexibility is given as you do not need to apply for a single competition permit, specifying the dates, prizes and conditions of entry when you have a blanket. You can simply use the approved terms and make those adjustments. The permit number you have for the competition will remain the same. In NSW a ‘blanket’ competition permit will start with LTPM as opposed to LTPS.

There are a number of restrictions in running competitions under a blanket, i.e. a blanket competition permit will not work in all situations.

If you are looking at running a number of competitions over 12 months and:

  • a. Cap the value of each prize at $1,000 or less;
  • b. Give away less than $100,000 over the life of the blanket;
  • c. Give away less than $5,000 in each draw; and
  • d. Are able to keep records of each prize given away, the winners details and the promotion details.

Then a blanket permit may be the answer. Give us a call or drop us an email if you would like to learn more and discuss if a single competition permit or a blanket permit is the answer for you.