That’s how marketers should plan their chance promotions.

Everybody loves a winner – except perhaps the promotion sponsor who has to award the prize.

That is the paradox facing marketers whenever they put together a sweepstakes, contest, game, or other promotional giveaway: The object is to attract as many entrants as possible without ultimately gaining more – or bigger – winners than anticipated. Staging a million-dollar hole-in-one contest can generate great p.r. for the brand, but is the brand financially prepared for the unlikely event that a contestant actually makes the shot?

If not, one big winner or too many little ones can make the brand a big loser.

Obviously, marketers want to avoid such blunders while still getting the most bang for their promotional buck. Prudent planning and a solid understanding of the mechanics of chance promotions can eliminate much of the inherent risk, but sometimes that’s not enough. Just as individuals and families, no matter how responsibly they behave, add another layer of protection against costly occurrences with auto and health insurance, marketers can protect their promotions against potential disasters.

“From a contest-design standpoint, simple steps such as limiting the maximum number of winners and the mechanism to deal with that will cater to unforeseen elements,” says Bob Hamman, whose company, Dallas-based SCA Promotions, specializes in risk management, including guaranteed payment of prizes from $5,000 to $1 billion. “But to assume that you can anticipate each and every thing that might occur is a pretty bold step.”

SCA was founded by Hamman in 1986. Over the past 14 years, the company has covered more than $11 billion in prizes and paid out more than $65 million in claims for packaged goods makers, sports teams, media organizations, Internet companies, and other entities. After scrutinizing a promotion and figuring out the odds, SCA can secure coverage for prize pay-outs through high-limit risk partners or a commercial re-insurer such as AIG, Swiss Re, or Lloyd’s of London.

“Sponsors of a promotion can decide to take their chances themselves or pay a fee to a third-party vendor like SCA and be done with it,” says Hamman, explaining the basics of the business. “The advantage of taking the chances yourself is that, if you run the contest a large number of times, there’s a pretty strong expectancy that it’s a more economical route to go. The advantage of paying a third party is that you know exactly what it’s going to cost.”

Rolling the Dice Prize risks can arise in different ways. There are the fairly straightforward promotions with contingent prizes, which by definition may or may not be won. Examples include the hole-in-one contest, a half-court shot by a fan at a basketball game, or selection of the one key out of 1,000 that will start a new car. Marketers either gamble that the golf ball, basketball, or key will miss, or pay a proportional premium over and above their operating budget to cover the “what if?” factor.

There are also human factors to consider. Somewhere along the line, from the program’s inception to its execution, mistakes can be made. Maybe it’s an oversight in the design, a typographical error in the rules, or a mistake in the seeding of game pieces. Hamman recalls a “hardware mistake” in which a car dealer running a find-the-right-key promotion cut corners on the quality of the treasure chest that had to be unlocked. The result was that dozens more than the few intended keys opened the lock, and the poor dealer was forced to give away 170 cars.

So the unexpected does happen on occasion, although it can often be avoided without a great deal of due diligence. And even if something slips by, there’s a chance that a winner won’t be found. With that bullet successfully dodged, the marketer hopefully learns a lesson that attention to every detail is paramount when formulating a promotion.

“It’s far better to have a good design up front rather than a sound mechanism to fix the blame afterward,” Hamman asserts. “Avoid the mistakes and you have a much clearer path.”

Depending on the design of a promotion, the risk of a prize being won can be controlled. However, marketers never want to eliminate risk altogether and have no winner, or they’ll weaken public interest and counteract one of the basic principles of promotion.

In that same vein, some marketers choose to increase the risks of winners by actually improving their chances – thereby increasing the promotional exposure for the brand. For example, contestants in last year’s 1-800 Call ATT basketball shoot-offs held during the NBA Finals were allowed to “train” beforehand with coaches or former NBA players. The risk of the contestant making the shot went up, but so did the odds of the program’s p.r. success – which can make an insurance policy against awarding the prize a worthwhile investment.

There’s also peace of mind in guaranteeing that all the physical components of a promotion are in order, as the cheap car keys case demonstrates. A guarantor will supply a target template for skill contests such as tossing a football, baseball, or hockey puck through a target.

“Suppose that by some chance you order a target of your own, and it’s the wrong size,” Hamman states. “Then maybe the ball or puck gets stuck and can’t get through. That wouldn’t be very good p.r. It’s just another in the series of details that need to be coordinated. And the more moving parts there are, the more chances of something going wrong.”

Even in cases where liability has been assumed, there are other factors that must be addressed. There are legal snafus and security breaches that can alter the number of winners and prizes. Games and contests conducted on the Internet carry particular perils, too. (For more information on those topics, read the related articles in this supplement.)

Promotion managers have varying degrees of experience in dealing with prize risk. So the decision to rely on a third party can be relative. In cases where control is tight and the pay-outs are within budget, there is generally no need. In those million-dollar games, however, marketers may do well to buy a little peace of mind.

Just in case that winner turns out to be a ringer.

These days, good games weave their play into product use.

Look at Coca-Cola’s summer effort, It Could Be Your Next Coke: Coke drinkers pop the false top on a can of Classic. Winners get a note sandwiched between the two lids. And losers? Coke’s got millions of them holding open cans. That beats millions of scratch-off gamecards hitting the trashcan.

New printing and packaging tricks give marketers the tools to deliver sweepstakes and games in the can, on the computer screen – even in the shower. The technology is sophisticated enough to make sweeps intriguing but also keep participation as simple as popping the top.

At the same time, savvy marketers are taming awkward logistics to deliver account-specific or regionally targeted games with one hand, and multi-client national games with the other.

Use-activated sweeps give a brand more play value, a quality normally associated with premiums and novelty packages, not sweepstakes. Canadians got a taste of that this spring when Dunkin’ Donuts ran an over-the-cup sweeps at all 196 stores in Quebec (July promo). The chain gave out one million “Magic Coffee Rings” with cups of coffee; players slipped the heat-sensitive wrapper over the hot cup to reveal prizes.

Weaving the game into usage “helps marketers avoid `Scratch and Lose Syndrome,'” says Leonard Zuk, promotion manager at CCL Label, Rosemont, IL. “If a shopper chooses your brand because there’s a gamepiece inside, and the first thing he does is play the game and find out he’s a loser, he’s disappointed.” Any game should at least make consuming the product more fun.

CAN YOU DIG IT?

“We’ve been in the promotions business a long time. We do a lot of research on what interests consumers,” says Coca-Cola spokesperson Scott Williamson. “The [new] Discover can is a compelling promotion vehicle. It answers consumers’ desires for instant gratification and simplicity. From a brand perspective, it’s a real can of Coke, [so] it’s very experiential.”

Coke has been eyeing the technology for at least two years and has exclusive U.S. rights to it. The flip-top can immediately became a must-have when the company discovered the technology at a German manufacturer’s plant. Coke’s own packaging division designed the final version.

The May-June sweeps gave away $1 million, a walk-on role in a Universal Studios film, a recording session with a Universal artist, trips to Universal theme parks, shopping sprees, and smaller cash prizes. Momentum Marketing, St. Louis, handled.

The can is more foolproof than Coke’s ill-fated Magic Can, used in a $100 million campaign in 1990 that put actual cash prizes in 750,000 cans, along with a non-Coke liquid to give winning cans the same heft as regular ones. Some unperceptive consumers drank the strange liquid. (Physical performance aside, Magic Can’s sales performance was stellar. prize is a private concert with teen singer Sammie, with the winner picking the location, decorations, and guests. There are 500 first prizes of $50 music gift certificates. A separate mail-in offer lets kids choose one of three CDs, free with proofs of purchase. Post parent Kraft Foods is handling the promo in-house with an assist from Rhino Records, Chicago, which supplies CDs from artists including Geri Halliwell and the Moffatts.

Post is using the same talking-package technology that Miller Lite used to put sportscaster Dick Vitale’s voice in beer cans in 1998. Kellogg ran a similar sweeps in 1996, a Corn Pops Mission Impossible effort that put the movie’s theme song in winning boxes. Tropicana’s 1997 Jurassic Park: The Lost World promo boosted sales 63 percent with roaring sound effects straight from the movie lurking in 96-ounce orange juice jugs.

“I tell brand managers that it’s the `Chair on the Ceiling Effect.’ Everyone notices a talking package,” says Jim Howes, president of Riverside Technologies, Wilton, CT, and the inventor of talking packages. (He holds patents on “multi-image prize awards” and a “prize delivery system” using beverage cans and straws.) The advantage of such in-can prizes is that games catch players in the act of consuming. Howes is currently pitching beverage marketers on a multi-pack prize vial (see sidebar).

H.J. Heinz Co. puts a new squeeze on old technology for its summer sweeps, called Squeeze and Get Smothered in Prizes. Instant-win gamepieces are printed on the inside back label and can only be read once the bottle is empty. Grand prize is $20,000 in gift cards; 1,500 other prizes include MP3 players, Sam Goody music store gift certificates, and Heinz T-shirts.

The label also carries peel-off coupons for sister brands Ore-Ida and Bagel Bites as well from promotional partners Tyson, Lipton Brisk Iced Tea, Mug Root Beer, Wild Cherry Pepsi, and Slice.

Printer Promo Edge, Neenah, WI, beefed up security in its own plant and at Heinz to make sure no one filched the winning tickets, which were easily visible before bottles were filled. Game data is normally sandwiched between labels, so plant workers can’t see it while packaging runs the production line.

SCREEN GEMS

What red acetate did for 3-D glasses, it’s now doing for the Internet. Like their bricks-and-mortar brethren, dot-coms are using games to bring consumers to their sites. Web decoder gamepieces distributed offline – via FSIs, sampling packs, or hand-outs – bring players online to see if they’ve won. The device was launched about two years ago and has become quite popular over the last year.

OnMoney.com last month broke a sweeps that inserted 16 million gamepieces in Parade and other magazines as well as in national sampling packs (via Overland Park, KS-based The Sunflower Group). Players go to OnMoney.com and hold the acetate piece to a play area on their computer screen. A prize message embedded in the gamepiece is revealed by the colored background on the screen. CCL Label handles.

Some marketers prefer to embed messages online so they can change them daily and drive repeat traffic. Scratch-and-win games have blossomed online, and technology is upgraded constantly. St. Louis-based eIncentives revamped its eScratchers technology to permit faster loading and easier navigation. The latest version bowed in June via winamilliondollars.com.

American Express brought its techno-toys to the park last summer to launch Blue, a revolving-credit card with a smart chip. AmEx’s silver-helmeted “Blue Crews” patrolled New York City on skateboards and scooters handing out 100,000 gamepieces, then scanning them on the spot with Speakstakes, portable scanners that announce winners via voice chip. One in four cards won tickets to a Central Park concert starring Sheryl Crow (where roving photographers took digital photos to post on AmEx’s Web site).

AmEx’s agency, Momentum, bought 35 Speakstakes from Data Display, El Segundo, CA, and made custom holsters for Blue Crew reps. When winning cards were scanned, a pre-recorded message announced the prize. Gamepieces were redeemed for two concert tickets at a nearby kiosk.

Holiday Inn’s current May-through-September One Million Nights Free sweeps delivers 165 million gamepieces via Val-Pak and Carol Wright direct mailers and FSIs. Players hold cards up to a decoder display at the front desk of a Holiday Inn, Holiday Inn Express, or SunSpree Resort, with winners getting reimbursed for one night’s stay. (Winning cards have a sun, losers have a star.)

Parent Bass Hotels calls it one of the highest-value promotions in the hotel business, because the huge chain can afford to give away a lot of room nights. Stamford, CT-based BEN Marketing’s Atlanta office helped make the campaign turn-key for hotel clerks. “We made the cards and decoders all self-explanatory, so even a brand new clerk who’s never heard of the promotion can execute it,” says spokesperson Francie Schulwolf. “That’s important because there’s high turnover with staff.”

GOT CAPS?

Planning a national campaign for a single brand is cake compared to the undertaking of MilkPEP and Dairy Management, Inc., who collaborated this summer on the Fame Game. The national sweeps not only extended MilkPEP’s long-running Milk Mustache ad campaign, it did so with 200-plus partners. To get gamepieces on gallons, MilkPEP and agency McCracken Brooks Maier, Minneapolis, coordinated the production lines at 600 milk plants run by more than 200 processors.

“The key `aha’ was when we realized there are only six milk cap manufacturers,” says John Tieszen, senior vp-account director at McCracken Brooks Maier. The agency met with all six in March 1999 to test gamepieces (which are affixed to the caps of milk jugs) and to forecast quantities. Last summer, MilkPEP member RichFood Dairy ran a test sweeps with Ukrop’s Supermarkets in Virginia. Cap manufacturer Portola Packaging adjusted temperature and adhesive when some gamepieces came loose or curled on caps. Test runs with Land-O’ Lakes and Country Fresh double-checked the system. (It’s unusual for an agency to do such rigorous testing for a client, but MilkPEP doesn’t have the internal R&D staff that corporations like Coca-Cola and Post Cereals do.)

MilkPEP and DMI formed a Cap Task Force that held monthly teleconferences to troubleshoot problems as cap gamepieces made their way from manufacturers, through processing plants, to supermarket coolers. Processors got a detailed manual and posters explaining how to handle game caps. Some were skeptical, “because it was their plants we were involving,” Tieszen says, so MilkPEP had 20 processors test the caps. Milk PEP and agency reps toured plants to see how caps would run in real conditions.

The planning paid off. Game caps began shipping to processors May 15, and the sweeps broke May 29. Gamepiece printer Promo Edge fielded questions from processors and visited a few plants to solve problems it couldn’t address over the phone, Tieszen says. “This was the first promotion where we could really touch 200 million gallons of milk,” he adds. “It was the best way to take a great ad campaign in-store.”

On the other end of the spectrum, marketers are using short print runs to execute regional and account-specific campaigns. Rothchild Printing Group, Elmhurst, NY, uses its narrow-web press for orders ranging from 10,000 to three million gamepieces, versus 40 million to 100 million for national runs. Rothchild prints 12 to 14 colors on one pass, cutting the cost of short runs. The company began pitching marketers interested in account-specific and tailored P-O-P, and “they’ve really embraced it,” says sales manager Bob Bernstein.

New techniques bring novelty to consumers, but it’s business-as-usual for agencies executing sweeps. Shops may need to schedule extra lead-time for production, and will want to be sure all the bells and whistles work. But for the most part, planning is the same as with more traditional delivery vehicles.

Still, unproven technology is risky. Savvy marketers who see an idea they like often fund R&D for several exclusive prototypes. The onus is on suppliers to test carefully, both before unveiling a new idea and then with every subsequent version.

“Measure once, cut twice,” Zuk advises, adding that that’s how suppliers size up marketers’ willingness to try new things. “The big risk now is not thinking outside the box,” Zuk says. “Some [marketers] see new technology and the first thing they ask is, `Who else is doing it?’ Well, wouldn’t you rather be first?”

You can call it Musical Chairs on the Ceiling.