Foundry Law Group Blog

#BestContestEver #TopTenBestPractices

Are you thinking about running a social media contest to engage your users and help your business stand out? We’re sharing our top ten things to think about to run a successful social media contest and create a positive experience in the process.

  1. What Kind of Competition are you Running? We start by noting the difference between a Contest and a Sweepstakes. If you are running a competition where participants enter to win a prize of some value and the chance of winning is based on luck of the draw then you are likely hosting a Sweepstakes. If, on the other hand, the winner is based on some merit (such as best picture, funniest comment, etc.) then your event likely falls under the definition of a contest. Lotteries are prize awards where participants pay money to effectively buy a chance of winning. Lotteries are heavily regulated and are usually run by the government. The distinction between contests, sweepstakes and lotteries matters and how you run the competition matters because the last thing you want is to be running an illegal lottery.
  1. Do Participants have to Pay to Enter? Do not charge people to participate in your sweepstakes; most often, no purchase is required to enter the sweepstakes. Charging people to participate in your sweepstakes can lead you down the blurry line of possibly having your event be deemed a lottery in which case a whole slew of other laws will apply. However, if your event falls under the category of a contest then it is possible to charge for entry. That being said, we still recommend not charging to enter a contest.
  1. Define your Purpose and Rules. While it seems obvious that you should make the goal of your social media competition clear, it is often an overlooked part of the process. It is important to lay out rules for participating users. The top three things to clearly define are:
    • How does someone enter the competition?
    • What happens to the participant’s content once submitted?
    • How do you plan on using the content you receive for your business?
  1. Third-Party Platforms. Determine which platforms you plan to use. Don’t be afraid to use multiple platforms for fear of having to comply with several sets of rules. When you boil it down, most platforms actually have very similar rules, allowing you to maximize your visibility and strategize for your benefit.
  1. Include a Carefully Drafted Set of Rules. Now that you have a plan and the tools to start your social media event, what next? Put some Official Rules together. We recommend contacting an attorney to help you through this process. There are social media platform-specific rules on top of state and federal rules that you have to comply with when running a sweepstakes or a contest. Copying and pasting rules from a competitor’s contest or sweepstakes is not recommended – you don’t know what rights, privileges and strategic leverage they may have had to give up in order to come to a final version of their rules. Even if you do go down this path and you draft something yourself, at the very least, having it reviewed is a preventative cost to safeguard your business. You can’t guard against everything but it is good to know that your rules are drafted to specifically protect your business and minimize your exposure. Participants care about the privacy implications of content they post or submit online, so if you want them to fully participate, be transparent about your process. Make sure your rules at a minimum cover all of the following:
    • Eligibility
    • Start and End date, which should be the same across the platforms
    • A statement to the effect that no payment or purchase is required to enter
    • Detailed description of the prize(s), including retail value
    • Procedure for selecting winners, clearances, and tax information.
    • If you are running a Contest–then be sure to include the skills required to win; judging criteria; how winners are selected and tie breaker criteria.
  1. Promotion of the Competition. When promoting and advertising your sweepstakes or contest, include an abbreviated version of your official rules in conjunction with the promotion. This does not mean just a link to your full set of rules but a shorter version of the key points. For example “No purchase required, 18 years old to enter, sweepstakes ends on X,X, 2014 at 23:59:59 PST”).
  1. Intellectual Property. Yes, you have to think about IP because you may want to use peoples’ submissions as part of your business’ promotional and marketing materials at some point in the future. You may need to get releases from the participants to use their image and information. You should seek guidance from an attorney to talk through this process and prepare releases for you. As a starting point, it would be prudent to think through what your business wants to do with the content you might receive, and who owns that content upon submission.
  1. Taxes. In just about every scenario you are going to have to collect and issue some sort of tax document to the winner(s). Tax obligations arising out of prizes, winnings, gratuities and other incidentals are the responsibility of the winner, but as the contest or sweepstakes sponsor, you will issue a W-9 form as well as some sort of release relieving your business from all liability with respect to the winner’s participation in the contest or sweepstakes, and their acceptance of the prize.
  2. Notifying Winners. At the close of the contest or sweepstakes period, or at specified intervals before the close if there are multiple layers to your event, select a winner or winners to receive the prize or prizes you advertised in your marketing campaign around the social media event. Make sure that the judging process was fair, the winner is verifiable, and that prize redemption is made as easy as possible for the winner. Often times reposting or sharing the winner’s submission with a “tag” to their profile on several social media platforms will put the winner and all others on notice. However, make sure you are following tagging rules set out by each platform; if you are not directly connected with the winner on a particular platform, try becoming “friends” before tagging them.
  3. After the Close. You’ve run the contest or sweepstakes from start to finish, and you’ve made a few winners really happy by receiving valuable prizes. Now what? Collect your competition statistics and incorporate them in your business strategy moving forward. Make sure your winners’ lists are up and available for a minimum of four years from the date of the close of the contest or sweepstakes. Figure out what user-generated content you can and cannot use, and the way in which you can use it, based on the IP strategy and rules that were put into place for the purposes of the contest or sweepstakes. And learn what worked for your business and what didn’t, so you can run your next social media contest or sweepstakes with the benefit of experience!

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