Why Do Companies Run Giveaways?

Have you ever thought about why businesses give away prizes in contests and sweepstakes? What are their objectives, and how does giving away prizes help them achieve them?

Although some people are concerned that sweepstakes are just a ruse, legitimate businesses do give away prizes — sometimes very large ones.

How Are They Able to Afford Them?



Consider the cost of purchasing advertisements on television, radio, or, for brands that can afford it, during the Super Bowl. That’s a significant sum of money going into the pockets of television or radio networks.

Companies use giveaways to cut out the “middle man” — the TV or radio networks, newspapers, and online websites — and instead spend their money on something that goes directly to their fans.

Those prizes aren’t a squandered investment; they’re legitimate marketing expenses that help boost their profits. Meanwhile, the entrants enjoy the thrill of competing and winning. However, they must be aware of what they are giving up in exchange for the chance to win.

When you enter, for example, you are willingly participating in viewing the company’s advertising. Signing up for newsletters or following a company on Facebook may allow them to market to you in the future. You may also be asked to exchange personal information, such as your website browsing habits, in exchange for the chance to win.

To keep yourself safe, you must first understand what companies are attempting to accomplish so that you can make an informed decision about how much you want to assist them in achieving those objectives.

Reasons Why Companies Launch Giveaways Regularly


Here are some of the most popular reasons for top brands launching a giveaway, sweepstake or contest.


Giveaways and Contests Create “Buzz” about Products



People can instantly spread the word through texts, emails, social media, blogs, and other means, making word-of-mouth marketing more powerful than ever.

Contests and sweepstakes provide an opportunity for people to talk about a company and its products. For example, you could tell your friends about a giveaway they should enter, or you could be excited about a product you won and encourage your family to purchase one for themselves.

Some sweepstakes generate interest by offering entrants incentives, such as bonus entries, for referring friends or sharing the giveaway on social media. In some cases, this is even a prerequisite for admission.


Giveaways Encourage People to Visit Websites


A great product is worthless to a company if its customers are unaware of its existence. Giveaways assist businesses in attracting visitors to their websites in order for them to learn more about their products.

Online sweepstakes provide strong motivation for people to visit a company’s website, and many of those people will explore the website after entering to see what the company has to offer.

Companies can profit from this by “teasing” new entrants with content they are likely to enjoy. For example, a cooking website may include links to tasty recipes on the recipe contest confirmation page. While people are entering, a company that is giving away a game may advertise their sales on gaming PCs.


Companies Use Giveaways to Build their Newsletter List



Companies can use an email marketing list to communicate with you and keep you up to date on their products and services.

This is why most contests and sweepstakes include the option to join the sponsor’s mailing list. They might even make subscribing a requirement for entry.

Because newsletters are an effective way to reach out to potential customers, many businesses use newsletter signups to determine whether a giveaway was successful.


Contests Produce Advertising Content at a Low Cost


Contests in which participants submit photos, recipes, or essays for a chance to win are frequently used as advertising.

For the chance to win a prize, companies can ask participants to create a recipe using their products, write a jingle, or film a commercial.

That is, rather than paying an ad agency to create content, sponsors can pass the money directly to their loyal customers in the form of prizes. This benefits both sweepers and corporations.


Sweepstakes Provide Beneficial Market Research



On their sweepstakes entry forms, many giveaways include some optional or required survey questions. Why?

Companies use giveaways to learn how their potential customers think, spend their time, and use their products.

The results of the surveys can be used to improve the effectiveness of future advertisements.


Giveaways Help to Strengthen the Relationship Between the Company and the Customer


Sweepstakes improve the business-to-consumer relationship by simply being entertaining. They entertain people while informing them about the company’s products, providing customers with an incentive to interact with the company.

The opportunity to win fosters a positive attitude toward the company in the minds of their visitors, which then translates into a more favorable attitude toward the sponsor’s products.

Final Thoughts


Sweepstakes only work when sponsors and entrants collaborate. Sweepstakes and contests are held by sponsors because prize promotions help them make more money. Companies will discontinue offering sweepstakes as soon as they cease to be profitable. That is why it is critical to be a courteous sweeper in order to encourage businesses to continue holding prize giveaways.

Sweepers, on the other hand, have rights. Participating in a contest does not obligate you to receive spam or make a purchase.

You can protect yourself from unwanted marketing mail and recognize the signs of a sweepstakes scam by learning how to protect yourself from unwanted marketing mail and recognizing the signs of a sweepstakes scam.