As more and more companies launch their promotions online, one of the most common concerns is when to involve an outside agency. While each company’s needs are different, here are some rules of thumb:
Does your inhouse legal counsel know promotional law? A common mistake is thinking that your inhouse counsel or the attorneys that represent your company are experts in all things legal. While your lawyers may be fine legal experts in the areas of copyright or contract law, they may not follow the changing laws of promotional marketing – especially laws that pertain to online promotions. If promotional law is not your legal counsel’s primary focus, you’re better off with someone who is focused on the changing laws.
Does your company have insurance/protection against mistakes? For smaller, more aggressive start-up companies, third-party indemnification is a primary reason to go with an outside promotional marketing agency. Sure, the Fortune 500 doesn’t mind indemnification either, but a poorly executed promotion can not only create bad press for an aspiring start-up, it could ultimately result in fines, lawsuits or worse.
If your promotion has all three elements of prize, chance and consideration, then you’ve just created an illegal lottery, which is punishable by fines and even imprisonment.
Third-party indemnification takes pressure off you and your company. An outside agency can be called upon to guide you so that potential problems can be solved before the promotion launches.
Does your company have a promotional marketing expert? This can be anyone who has worked for a top promotion agency in a previous job or was the promotion manager for another company. Among other things, your promotions expert should know the basics:
• When and how to file and register the promotion with the proper states.
• The difference between a sweepstakes, contest and an instant-win game.
• Which promotional tactics work best for the current marketing objective.
To keep your expert sharp, make sure he has the proper resources. The Promotional Marketing Association, for example, is a great resource of contacts and information.
Plan on having your expert attend at least one or two promotions-related events each year to stay on top of changes in the promotional marketing field.
Do you know where to buy prizes and how to get them to the winners? If you answered “yes” to having a promotional marketing expert, then chances are he will know were to buy prizes and how to get those prizes fulfilled.
However, if you’re trying to do this on your own without an expert, this is another area where an outside firm can be extremely helpful.
Promotional agencies work with numerous clients, and you’d be surprised just how many complementary online companies are going after the same target market. You may not have a relationship with a complementary company, but a promotion agency may be able to get some or all of your prizes for free or in exchange for media exposure. Agencies also are likely to have better price breaks from fulfillment centers based on their volumes.
Will your accounting department remember to issue 1099s to prize winners? Your company is personally responsible for issuing a 1099 tax form to any consumer you issue a prize to worth more than $600. Now, this is not difficult, but who will remind your accountant that he needs to do this while he is sending out employee W-2 forms? Most promotion agencies will handle this service for your company as part of their fee.
Do you have the additional bandwidth necessary for a successful promotion? If you’ve answered “yes” to all or most of the questions above, then the only other issue to consider is your internal resources. Sure your creative team can handle the project, but can they do it given the current time frame?
You may have no doubt that your programmers are competent enough to set up a database to capture demographic information and integrate it into your current Web site – but is that what is most important for them to be doing right now?
Promotion agencies who have been conceptualizing and developing online promotions for the last few years also have the advantage of knowing what works – both from a marketing and a technical standpoint. An outside agency’s perspective may be just what your next promotion needs.
When am I okay not contacting a promotional marketing agency? When you have all the necessary components inhouse. These components include:
• Legal expertise.
• Insurance/protection against mistakes.
• Working knowledge of promotions.
• Customer support.
• Prize acquisition and fulfillment services.
• The bandwidth to handle the additional creative and technical aspects of the promotion.