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Sara Hawkins
Social Media Promotions and the Law: What You Need to Know
Are you thinking of using social media contests?Do you understand how the law could impact your activities?
Keep reading to learn more…
Why Legalities?
One of the best ways to grow your business is to give stuff away.
Whether your business is a small enterprise, a website or blog, or a large multinational company, hosting giveaways is sure to increase traffic, awareness and potential new readers or customers.
Sponsoring or hosting a giveaway comes with rules and regulations that many don’t know or understand.
Really, what could be so hard about telling people you’ll give away something if they sign up for your newsletter or leave a comment or like your page or follow you on social media?
Remember the days when you had to buy things to enter a giveaway—and the stuff never arrived, or if it did, it wasn’t worth a fraction of what you paid?
Research shows that more than half of all adults in the U.S. enter at least one sweepstakes every year. That’s a lot of things being given away! Used correctly, giveaways can increase quality of interaction and greatly increase your readership.
What are the three types of giveaways or promotions?
There are three types of promotions used to give things away: sweepstakes, contests and lotteries.
While they often go by many different names (giveaway, raffle, drawing), legally all promotions fit into one of these three categories.
- Sweepstakes are prize giveaways where the winners are chosen by the luck of the draw. Prizes can be almost anything you can think of, from handmade cards to an all-expense–paid trip.
- Contests choose a winner based on some merit. The winner is chosen based on some criteria such as best photo, most votes on a video, best recipe, etc.
- A lottery is a prize drawing where people must pay money to buy a chance to win. Lotteries are highly regulated and should not be run without consulting legal counsel.
Most promotions we encounter in the U.S. are sweepstakes. Periodically, we’ll find a lottery. Usually lotteries are limited to the states because they are heavily regulated and monitored and the costs associated with running a lottery are often prohibitive for most small- and medium-sized businesses.
In Canada and many European countries, however, most giveaways and promotions would be labeled as contests under U.S. law because they require a skills competition (usually a math question) to be valid. Does that always happen? No, but the laws require it.
And the winner is… (Image source: iStockPhoto)
How do I know which type of giveaway I’m doing?
There are three things the law looks at to determine if your promotion may be an illegal lottery.
Prize—who wants to enter a giveaway without a prize?
Chance—pure luck! You could get around this by having some skill or voting requirement but that is often difficult to manage or greatly limits the number of people who will enter. If you want to run a contest, you must omit this aspect.
Consideration—something of value given by entrants to the giveaway sponsor. Often it’s money, but it doesn’t have to be. Depending on what you require entrants to do, you could be pushing the envelope on this element. Each state may have its own particular definition, making it very difficult to manage.
When it comes to the online space, there are few things more valuable than followers/likers/friends (or whatever they’re called at the moment).
As such, requiring someone to “like” you or “follow” you could be construed as consideration. Even more important, asking an entrant to go to a third-party site, navigate to find a product or service and then report back to your site is even more likely to be deemed consideration, and thus places your giveaway into the classification of illegal lottery. Time is exceedingly valuable!
Don't make it all about you.
In the above giveaway, the blogger is all about “me, me, me” and there’s no way to enter without giving something of value to the blogger. While this may not get the attention of authorities, clearly there is no “free” way to enter.
Because technology is moving much faster than the laws that govern, we’re in uncharted territory with the definition of consideration.
Keep that in mind when figuring out what you’ll have people do for entry. Your best bet is to always have a means of “free” entry and then consider “optional entries.”
What laws apply to giveaways and promotions in the U.S.?
In the U.S., federal laws governing marketing promotions have been in place for decades.
Sweepstakes are the most common type of promotion and have primarily been conducted through the mail, which is where many of the laws originate (Chapter 30 of Title 39 of the U.S. Code).
This has given the Federal Trade Commission (FTC) some jurisdiction over monitoring sweepstakes promotions. However, under federal law, the U.S. Department of Justice would have ultimate authority regarding enforcement even if the FTC was not involved.
Many states also regulate sweepstakes, especially when they involve alcohol, guns or tobacco. For example, Massachusetts, Michigan and Virginia prohibit tobacco-related promotions while California, Tennessee and Utah highly regulate those involving alcohol.
In many sweepstakes or contests, you’ll likely see states excluded.
It may be due to prohibitions on items given away or the state requires posting of a bond and the sponsor does not want to pay or go through that process. Florida and New York both require a bond to be posted if the total value of all prizes given away exceeds $5,000. Rhode Island has separate rules if retail outlets are involved.
Why official rules are so important.
Every sweepstakes, contest or lottery must have “official rules” and they should be easy to find.
There are guidelines on what must be included in the official rules to avoid question should there be a challenge if an entrant doesn’t win.
While the majority of people will never read the official rules, without them the sponsor highly increases the risk of liability.
Place a link to the rules where it's easy to find.
Having a link to the rules in an easy to find and conspicuous place not only helps people find them, it also encourages people to read them.
Official rules must always include:
- “No purchase necessary.”
- The alternative method of free participation.
- Geographic area of the sweepstakes and/or who is eligible to participate in the sweepstakes.
- Opening date and scheduled termination date of the sweepstakes.
- Complete name and address of the sponsor and promoter of the contest.
- Number of prizes, the accurate description of each prize, the retail value of each prize and the odds of winning each type of prize.
- Whether all prizes offered will be awarded and how the prizes will be awarded.
- Manner of selection of winners and when a determination of winners will be made.
- Where and when a list of winners can be obtained.
Of course there are other disclosures that should be made such as signing of releases, restrictions and misdirected entries. But if you hit the minimum, there is some compliance and protection.
One other aspect of the official rules is that once they are posted and published, they must be followed exactly.
They cannot be changed except under unusual and extreme circumstances. For example, if you were giving away a trip to Japan in the weeks after the earthquake, you could have changed the prize to another destination. But, as you see, we’re talking very unique circumstances.
Giving Away Expensive Things
Most giveaways have pretty minimal value—an eBook, $25 for an online store, a free product. But if the value of your prize is $600 or more, keep in mind that you will need to take an extra step (possibly several!). You didn’t think the IRS would just let you do your own thing, did you?
If the prize winner is subject to U.S. taxes, a Form 1099 will be required in January of the following year.
This means you will need to collect not only the name and address of the winner but also his/her social security number. Even more reason to maintain a high level of professionalism because asking people for this type of information carries with it great responsibility.
Hosting giveaways can help grow your business or your blog. If you thought this article was helpful, please share it.
What are your thoughts? Have you done giveaways in the past? How will this information help you? Please share your comments in the box below.
All photos from iStockPhoto.
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The U.S. government paid Amazon big bucks to build a private cloud, but some question how private it really is. And can any enterprise buy one?
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Amazon GovCloud lurches toward private vs. public cloud
The U.S. government paid Amazon big bucks to build a private cloud, but some question how private it really is. And can any enterprise buy one?
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Kane Russell
How to Combine QR Codes With the Power of Facebook
Are you looking to leverage the popularity of QR (Quick Response) codes with the wide-spread adoption of Facebook?Over the past several months, QR codes have inserted themselves squarely into digital media conversation (even appearing on late-night TV).
In this article, I’ll unpack how to get your QR codes to go viral on Facebook.
I’ll start by walking you through the process and an example campaign, and conclude with an analytical discussion examining five need-to-know success factors.
Setting Up a Viral QR Code Campaign
Step #1: Generating the QR code
For the uninitiated, QR codes provide a means to open a URL on a mobile phone.
However, a closer look reveals that most QR code generators provide functionality for executing a host of mobile phone actions, including creating a calendar event, sending an SMS or providing contact information.
Like all things viral, choose a QR code type based on what you think people will want to share.
For the purposes of our example campaign, we used scan-to-SMS. Once generated, keep in mind that saving the QR code in a user-friendly format (e.g., jpeg or png) will be useful when integrating with other applications.
QR codes can execute various phone actions. Scanning the above QR code sends an SMS with message "smexaminer" to phone number 44144.
Step #2: Customizing your Facebook post
The next step is to upload your QR code to a server that can communicate with the Facebook Share API.
Something you share on Facebook contains four components (see graphic below). All of these components are fully customizable for a viral QR code campaign.
A Facebook share has four customizable components: image (1), title (2), source (3) and description (4).
Some important points to keep in mind when customizing these elements:
- Image: This is where you will put your QR code. It should be sufficiently large for people to scan easily.
- Title: This is your headline. Crucial for grabbing attention in crowded Facebook feeds.
- Source: A brand running a campaign should host the QR code on a URL that provides context for the campaign (for those scanning our example campaign, you’ll see a URL connecting to a generic “wmclientservices.com”).
- Description: A great place to provide valuable and pertinent information about your campaign.
Step #3: Taking your campaign live
Once integrated, Facebook provides you with a campaign-specific Facebook share URL.
Use a URL shortener to make it more viral-friendly (trackable and easy to share). To ensure maximum uptake, test your code with multiple QR code readers before deploying into the wild.
Speaking of uptake, here’s the flow for our example campaign (with select screenshots below):
- Users will see an ad for socialmediaexaminer.com with a QR code.
- Users then scan the QR code and send the SMS.
- They will receive two links, one to socialmediaexaminer.com and the second to share on Facebook.
- When the second link is clicked, Facebook’s share prompt automatically opens.
- Users can personalize the message and share.
- The QR code is automatically posted to users’ Facebook wall and news feed.
- Friends can scan the QR code within Facebook to share with their friends.
After the QR code is scanned and the SMS sent, this is the link delivered to share on Facebook (#3).
After the share link is clicked (or tapped), users can personalize and post to their Facebook wall (#5).
Once posted, others can scan the QR code within Facebook to share to their wall (#7).
The benefit of taking this viral approach to QR codes is easy to imagine: 10,000 people scanning and sharing the original ad equates to (from Facebook stats: 10K x 130 friends) 1.3 million additional pairs of eyes—and that’s before those Facebook users start sharing with their friends, and those friends with their friends, and on and on.
Five Need-to-Know Success Factors
Alas, if only it were that easy. Like everything in social media marketing, the process (sending a tweet, creating a Facebook page) is much easier than the actual execution (doing it well). Viral QR codes are no different.
Here are five factors that bridge the gap between success and failure:
#1: QR code reach
A commonly cited figure is that smartphone market share will reach 50% by the end of 2011. In a different light, that’s a minimum of 150 million people who won’t be able to scan a QR code through the end of 2011.
Maybe you’ve noticed, but our example campaign snuck in an alternative call to action that achieves the same result as someone scanning the QR code.
Alternative call to action included in the Facebook share.
As you can guess, this was intentional. Include an alternative call to action (SMS, for example, is accessible by 99% of phones) to considerably increases the potential of your viral QR code campaign without much additional effort.
#2: Incentives
Let’s say we were to take the above campaign live. At heart, its value proposition is, “Check out our website. It has great content we want you to share with your Facebook friends.”
Now let’s add a couple of phrases. “Check out our website for the chance to win a million dollars. It has great content we will reward you to share with your Facebook friends.”
I’d be willing to bet my winnings that more people will participate in the second campaign than the first due to better incentives. Though often overlooked in technology marketing, incentives shouldn’t be a surprise given that they turn up all the time.
What I think happens is that marketers mistake engagement resulting from “Wow, this is cool technology,” with engagement from people genuinely moved to action by a campaign. Social media marketing, like marketing in general (and maybe even more so), is a two-way street.
#3: QR code design
QR codes grab people’s attention due to their curious design. But assuming QR codes continue turning up in more and more places, the design’s intrigue may start losing its ability to captivate people amidst everything else bombarding them.
That’s why it’s important to make your QR codes unique. By customizing various features of your QR code, you can bring a sense of personality that will increase brand identity and engagement.
Customized QR code linking to a downloadable QR code eBook.
#4: Customer lifetime value
Customer lifetime value is simple to understand. Every marketer in the world would rather have a customer who spends $50 every day for the next two weeks than a customer who spends $100 today.
However, whether it’s due to the idea of purchasing television spots or just the word “campaign” itself, marketers have a tendency to adopt a one-off mentality when it comes to tools like QR codes.
The problem is that QR codes at heart are an interactive medium. Failing to develop lifelong, instead of one-time, customers is a missed opportunity.
Luckily, there are a number of ways to achieve this end, the most important being opting someone in to a subscription list. Two viral QR code examples:
- Using a mobile application service provider, you can enhance your scan-to-SMS campaign with an opt-in that captures the mobile phone number.
- For scan-to-URL QR codes, you can use a mobile landing page to add subscribers to a database.
#5: CRM
QR codes are made up of three different types of data. The first—scans—accounts for the number of times a person successfully uses a QR code reader.
The second—phone operations—describes what a user does after scanning (e.g., clicks, downloads, page views). The third—user data—describes the people actually doing the scanning and phone operations (e.g., phone type used, age, gender).
I’ve seen far too many QR code campaigns that solely focus on scans. That’s great for predicting the future of your QR code campaigns, but you miss a key opportunity to gather knowledge of how and what type of people interact with your brand.
Viral QR codes, given their ability to get in front of more people, make it even more mandatory to learn as much as you can about your customers in order to inform your future marketing decisions.
To quote Henry Luce, “Business, more than any other occupation, is a continual dealing with the future.” A QR code campaign that fails to address the entirety of data available misses this point entirely.
More than anything, viral QR codes demonstrate a simple truth. Success in mobile and social marketing requires a database strategy. Not a channel strategy. The reason being that a database strategy is customer-centric, which affords significantly more value creation opportunities. Developing this mindset and working with people who share this mentality will ensure that you see maximum value from your QR code campaigns.
And as a mobile and social CRM aficionado, I’d love to hear what other ways you use to enhance QR codes with a cross-channel approach.
What do you think? Please post your thoughts or comments in the box below.
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