Business development · 2 October 2018

How to run a legally-compliant prize draw with social media influencers

Collecting and using personal data is a sensitive subject these days so it’s essential you comply with data protection laws

A prize draw is a great way to generate awareness of your business. Grid Law founder David Walker considers the legal context of a reader using social media influencers to promote a competition during a seasonal dip in demand.

Question

I started my company early this year and am planning a promotional prize competition, whereby one of my campervans will be up for grabs. It will be a “pay to enter” competition, and the entrants must exercise skill, knowledge and judgement to stand a chance of winning.

What I’m primarily hoping to gain from this prize competition is the sale of my camper. With us now coming into the winter it has become a more difficult to sell the van, so I believe this could be a good way to release the money that I have in the van, and also gain some exposure in the process.

Another thing I would like from this is to create a marketing database for future campaigns and finally, I would like to build a relationship with some influencers which could prove to be beneficial for all of us.

I have contacted one potential influencer – a campervan hire company in the UK – to work with me on the promotion of this competition and they are keen to do so. They are not looking for a fee from me however they have suggested bringing some of the promoters that they work with to the table and I am waiting to hear back from them as to who they are and what they would be looking for. I think the big thing for them is the mailing list and added exposure.

A few other social media influencers and bloggers that will be promoting this competition for me have requested a small fee.

I have a few concerns. The influencer has offered to host the competition on their website. While I have no issues with them getting the website traffic from the competition, do they then need to be the main promoter on the terms and conditions? If so, what does this mean for both of us? Would they have any rights over me in any way, or would they then become accountable should we fall foul of the law for any unforeseen reason?

I’m guessing you would advise these sort of deals to be written out on a formal contract and not to leave anything down to a handshake – could you also advise me on anything that would be necessary for both parties to have in place?

Thanks in advance, and also for the articles on businessadvice.co.uk  – they have been a great help for me so far.

Answer

Thanks for your question.

It’s great that you have some clear objectives for the competition so that we can work towards them.

Competition mechanics

The first thing you need to do (if you haven’t done this already) is work out the financial viability of the competition, i.e., what is the value of the campervan (or the equivalent sale price you would like to achieve), how many tickets you will need to sell and what price will they need to be to achieve this?

Also factor in other overheads and expenses you will incur while running and promoting the competition. For example, you may incur advertising costs and you have said that some of the influencers may want a fee to promote the competition on your behalf.

The number of tickets on offer should be capped so entrants know their chances of winning. Hopefully, you will sell all the tickets but you need a plan in case you don’t. For example, will you be happy to let the campervan go for whatever you can get for it, or will you offer an alternative prize if a certain threshold isn’t met?

Also, consider the possibility that the competition is an overwhelming success and you are oversubscribed. Could you run other competitions, offer additional prizes and really profit from this opportunity?

As you have quite rightly pointed out, this is a prize competition so entrants will need to exercise their skill, knowledge or judgement to be in with a chance of winning.

Whilst it’s very tempting to set an easy question to maximise the number of entries, you shouldn’t do this. If entrants don’t demonstrate “sufficient” skill, knowledge or judgement this competition could be considered to be an illegal lottery.

Have you given any thoughts to what the skill element will be?

Unfortunately, there is very little official guidance on what “sufficient” skill, knowledge or judgement is. At one end of the scale, a crossword puzzle is clearly difficult enough to satisfy the “sufficient skill, knowledge or judgement” test. At the other end, a multiple choice question or a question where you can easily Google the answer will be too easy and won’t satisfy the test.

As a rule of thumb, you need the skill element to be sufficiently difficult that a good proportion of people will either be put off from entering or, if they do enter, they will get the answer wrong.

It’s worth trying out a few options on friends and family to makes sure you set it at the correct level.

Data collection and processing

Collecting and using personal data is a sensitive subject these days and it’s essential that you comply with data protection laws such as the GDPR.

Your first step towards data protection compliance is to be clear about what data you are collecting and the purposes for which you are using it. The best way to do this is to have a privacy policy on your website.

You will need to collect personal data and use it to administer the competition and choose a winner, but you should give entrants a choice about any further use of their personal data.

Including tick boxes on the competition entry form is the best way for people to give their consent.

The “opt-in” option to consent to sharing personal data with third parties is often very generic. It can be off-putting when you don’t know who these third parties are or what they intend to do with your data.

In your case, you could be very specific. You could say that you will not share data with anyone other than the influencer (who you can name). You can say that you have a trusted relationship with them and explain what they intend to do with the data. People can then make an informed decision about whether or not to consent to this.

Remember, even after consent is given, data protection compliance is an ongoing exercise. Therefore, each time you send out any marketing messages you should include an easy option to unsubscribe.

Working with influencers and bloggers

Working with influencers and bloggers is a great way to increase awareness of your business and the competition. However, influencer marketing falls within the Advertising Standards Authority’s (ASA’s) remit so all marketing messages must comply with their rules.

As well as general compliance with the ASA’s rules, the most important point here is that the influencers and bloggers must make it clear that they have a commercial relationship with you. They should use something along the lines of “#Ad” in any social media posts about the competition or say that this is “A paid partnership with [you]”

One of the attractions of working with influencers and bloggers is that they offer an authentic voice so you won’t want to put too many restrictions on them. Although the ASA is starting to take more direct action against influencers and bloggers who contravene their rules (especially if they are famous or have a large following), ultimately you are responsible for what they say.

It’s therefore advisable to have a simple contract with them.

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Should the influencer be the main promoter of the competition?

In my opinion, no, you should be the promoter of this competition. This will mean that you can stay in control of everything but it will mean that you are taking on responsibility for legal compliance.

What is the best way to comply with the law?

Complying with the law can seem like a daunting task, but it doesn’t have to be. You just need to approach this in a methodical way to ensure that all issues are covered.

The best way to ensure compliance is to enter into contracts with everyone involved.

You will need:

  • Competition terms and conditions
  • Terms of use on your website (if you don’t already have them)
  • A privacy policy setting out details of what personal data you will collect and what use you will put it to
  • A contract with the main influencer to cover promotion of the competition and data sharing
  • A contract with the influencers and bloggers to say what they can and cannot do regarding promotion (and what fee they will earn)

If you would like me to help you with these I will happily do so. I appreciate I have given a lot of information here so if you would like to talk any of this through, please let me know.

Read other guides around promotional prize draws:

How GDPR affects your promotional prize draws and competitions
How to run a successful (and legal) international prize draw or competition
Judging a contest? How to run a competition that is GDPR and ASA compliant

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ABOUT THE EXPERT

David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry – advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights.

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