How promotional sweepstakes work

Recently on WalletPop, I discussed how the fine print in marketing contests can be disturbingly tricky for a customer who thinks that they've won a prize with no strings attached. But offering giveaways can also be problematic for the business owner as well. In fact, it can happen to any entrepreneur. It happened, for instance, to Goober Pyle in Mayberry, North Carolina.

On April 10, 1967, an episode of The Andy Griffith Show aired, entitled "Goober's Contest." Goober, who was Gomer Pyle's cousin, decides that he needs more business at his service station (I guess at this point, he had bought it from the previous owner, Wally; I'm a fan of the show, but I don't have every episode memorized in the order it appeared... yet). Anyway, Goober comes up with an idea for a contest, in which he gives out prizes of money for $10 or less. Unfortunately, an error at the printer that Goober hired caused one of the coupons to be worth $200. Floyd, the barber, got that ticket and wanted Goober to pony up and hijinks ensue.

If only Goober had had promotional insurance. He could have avoided a mess that almost cost him more than $200. It almost cost him a dear friendship.
(No, seriously -- fiction or not, it's a great episode about business and very poignant, not just from the acting, but because Howard McNear, the actor who played Floyd, made his last appearance on the show in this episode due to his having a stroke that hampered his mobility and diction.)

In my last post on promotions, I wondered aloud what would have happened had I gone into a car dealership and somehow won the prizes that they were offering. I decided that the dealership would likely pony up the cash. Tom Barlow, one of my fellow bloggers, however, later pointed out to me that the dealership probably wouldn't paid a dime. A company like Odds on Promotions would have. They specialize in designing promotions and more importantly, promotional insurance.

As they note on their own web site, Odds on Promotions, since they opened in 1991, has worked on 50,000 events and has paid out $8 million in claims.

But even they have their own underwriter.

So the lesson that entrepreneurs should learn from promotional companies and The Andy Griffith Show is pretty clear. If you're planning to put on a contest, good for you. It can definitely attract customers and help gain more attention for your business. But do it carefully. Hire professionals if you can to stage your sweepstakes, and by all means, especially if the prizes are high stakes, get promotional insurance first. Don't be a Goober.

Geoff Williams is a business journalist, a fan of The Andy Griffith Show and the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).
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