There are many expenses associated with contests, such as buying prizes. This gives the impression that they are "unprofitable". Actually, there are many benefits to running contests if you do it right.
The biggest advantage of running contests is that it is easy to make people talk about the contests. Once people start talking about your contests, you can get many contestants (or future customers) from word of mouth. The best way to make the public talk about your contest is to have a mind-blowing prize. This is a little too extreme, but rather than having a domestic car, if you get a Ferrari for the prize, it will be guaranteed that people will start talking about the contest. Spending the same amount of cash, getting one big prize will attract far more contestants than having many mediocre prizes.
Further, with a little brainstorming, you can get additional benefits from running contests. For example, if you have a new company logo contests, you will receive quality logo designs that match the work of professional designers. Or, if you hold a new product idea contest (i.e. new kind of pizza ideas), you will be able to hear the real voices of your customers. This is way better than guessing what customers want. Moreover, having a contest encourages use of your products (i.e. run a bodybuilding contest and you sell supplements). Not only can you sell your products, you'll also receive many testimonials about your products. Those testimonials will be very useful in future marketing campaigns.
© August, 2013