How to run a legally-compliant prize draw with social media influencers
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.
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 Im 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.
Thanks for your question.
it’s great that you have some clear objectives for the competition so that we can work towards them.
The first thing you need to do (if you havent 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 isnt 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 shouldnt 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.
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.
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.
Running a prize draw for profit is becoming an increasingly popular marketing strategy among small business owners. But depending on the type of competition you hold, different legal restrictions will apply. more»