socialmediocrity

That much is true. And sometimes lots of them.

But are Sweepstakes a good way to acquire fans? High profile examples might make us think a bit harder about how best to use prize draws.

Let’s consider the Chase Freedom facebook page, and a recently ended sweepstake that offered two levels of prizes. Firstly, 504 prizes of $500 each, issued through a Visa Pre Paid Card, to one winner every hour for 21 days. The prize cost of this element then is $252,000. But that is dwarfed by the Grand Prize: One lucky winner will be selected at random to $1 million.

Wow.

Total prize fund for this campaign then being $1,252,000.

The page itself, on the 28th October 2011, just a few days after the grand prize closing date, stands at 474,203 fans, or Likes. That’s approximately $2.64 per fan, even if every one of those fans was generated directly by virtue of the prize draw, based only on the cost of the prizes, and before any related marketing costs or at least the costs of planning and designing the competition have been taken into account.

Cost per fan, at least $2.64.

If there was little or no marketing spend, then it would be safe to assume most of the Fans were existing customers that heard about it through their regular notices from the bank. So the increased value to the bank will be: some slightly more engaged existing customers? Perhaps three weeks of incremental positive sentiment amongst customers and the small number of friends they may have affected?

Alternatively, if there was in any way substantial marketing promotion of the sweepstake, and let’s face it if you’re giving away $1m you may as well tell the world about it, then the actual cost  per Fan will be considerably higher than $2.64. What’s more the likelihood is you have a lot of “Fans” that are specifically motivated by prize draws, and that could get expensive to maintain their interest in you brand. They are likely to be transient, unlikley to listen to your messages other than new giveaway or prize draw opportunities, and are probably more intent in finding the next promotion than they are applying for your credit card.

So are prize draws particularly effective ways of driving new fans? Perhaps they are better used as “thank-you”s to your existing customers and fans, and by virtue of that the improved sentiment and loyalty may be a valuable property to build. But it is probably not an effective way to acquire new “fans” – who of course are still some way from being customers – and at a minimum of $2.64 and quite easily double that, it is not even a particularly cost-effective way to generate leads.