After the demise of American Family Publishers along with the Publishers Clearing House 26-state, $34 million settlement, direct marketers dropped sweepstakes faster than you could say, “Abandon ship!” Federal legislation enacted in April 2000, the Deceptive Mail Prevention and Enforcement Act, was considered so restrictive that many thought it sounded the death knell for sweepstakes-based subscription promotions.
In addition to the huge losses of subs from AFP and PCH, such leading magazine publishers as Time Inc. and Reader’s Digest have backed off sweepstakes promotions to the extent that sweepstakes play a negligible or nonexistent role in their marketing. Since 1995, the number of subs sold with sweepstakes has dropped by more than 60 million subscriptions per year.
Though the golden era of sweepstakes may be over, there are indications that sweeps are still alive and kicking despite the tough new laws. According to Paul Goldman, executive vice president of Manhasset, NY, promotional agency Marden-Kane, as the economy comes back, sweepstakes promotions are returning as well. He is seeing an uptick in business.
“What’s come out of the investigations is that marketers doing mass mailings can’t imply that a recipient has won, is a finalist or is part of a special group,” Goldman said. “The wording must be more forthright, and recipients must be informed that they have an equal chance of winning whether they purchase an item or not. In addition, there must be full disclosure about the specifics of the prizes and their retail value. If marketers adhere to the new requirements, they won’t run into problems.”
Also, marketers mailing into New York and Florida must post a surety bond for prizes exceeding $5,000 at the start of a promotion, in case of default. This requirement, though on the books for some time, is more strictly enforced now.
Some states, including Florida and Texas, require cumbersome direct mail disclosures or do not permit certain types of sweepstakes at all. Marketers may wish to suppress their mailings in these states. Another requirement necessitates that sweepstakes marketers disclose an opt-out address or toll-free number for anyone requesting removal from their sweepstakes mailing.
Running sweepstakes costs at least $10,000 plus prizes. Though this expense is significant, it is not so high as to bar most major magazines.
“Today we’re seeing a lot more programs with Internet components,” Goldman said. “Despite these stringent regulations, and the considerable expense, there is room for publishers to go in and try it.”
According to Charles Teller, executive vice president of list broker ParadyszMatera, the number of subscription marketers mailing sweeps has dropped precipitously.
In 2003, ParadyszMatera tracked sweepstakes or single-winner contests from Family Circle, Fly Fishing in Salt Waters, Harper’s Bazaar, Instinct magazine, Progressive Farmer and Saveur. Of course, this represents a small fraction compared with the number of promotions in sweepstakes’ heyday.
“The paucity of sweepstakes in the mail today can spell opportunity for judicious publishers who can find a way to make the numbers work,” Teller said.
One opportunity could be a cooperative sweepstakes, a turnkey program that lets publishers test sweeps at minimal cost and offer substantial prizes at significant savings. Typically, administrative services including official rules, state registrations, copy review, winner selection, affidavits and tax forms, and prize fulfillment are included in the price.
Co-op sweeps are available with prize structures as high as $1 million as well as sweepstakes with smaller prizes. There is a lot of flexibility in the prize choices marketers can promote, from cash to cars to travel and everything in between. This lets vertical titles create a prize structure that appeals to their target audiences and reinforces editorial content. Something that’s appeared more recently are online-only cooperative sweepstakes programs that publishers can tap. If publishers are looking to promote only online, this could be a good option.
Marla Altberg, president of Ventura Associates, a leading independent judging organization based in New York City, says publishers large and small, from Gruner + Jahr to Sussex, have benefited from using a cooperative sweepstakes. Clients also find it helpful that they can fashion a unique, targeted prize structure, thereby customizing the creative to their readership.
Ventura runs two successful co-op sweepstakes yearly: the Super Million Dollar Sweepstakes and the $100,000 Dream Come True Sweepstakes. Publishers can get in for as little as $10,000, including prizes.
Ventura says a major multi-title New York publisher is testing back into sweeps with three titles in the mail right now. A sports-oriented publication also is in the mail, testing a sweeps and a fast 50. This tells us marketers no longer fear sweeps, and the negative press is history. Most are doing small sweeps with targeted prizes.
Sweepstakes are among the most versatile promotions for a marketer. If your audience is receptive to sweeps, they can be used to increase direct mail response, improve insert card results, raise single-copy sales, enhance renewals and bills, sell gift subscriptions, sell subscriptions online or improve any promotion you undertake.
If a sweepstakes renaissance is in the making, it is in the early stages. But the legal issues are not insurmountable, and the lack of magazines promoting with sweepstakes could mean better response for those who do.
We’ve seen sweepstakes produce net response rates that are more than double the response of the non-sweepstakes packages they compete against. Sweepstakes clearly can be worth the additional cost and effort, so don’t write them off just yet.