*MANAGING RISK: Eliminate the Negative
Managing a promotion’s risks may not be top of mind, but it should figure into every marketer’s bottom line.
Go figure! Predicting the odds that a presidential election wouldn’t be decided until weeks after ballots were cast is one for the ages. But what about considering the odds that a fan at a basketball game would actually nail a half-court shot for $1 million?
Or that a production mix-up would lead to five times as many winners as planned in an under-the-cap promotion?
Or that a coupon would wildly over-redeem?
Or that an Internet contest would really produce a $1 billion winner?
Or that your sweepstakes would run afoul of one state’s regulations?
The game of life, whether it’s played in the political or promotional arena, can be risky. Things can and do go wrong. Sometimes, it’s completely unavoidable, as when a hurricane demolishes the outdoor event you blew your budget to sponsor. Other times, it’s careless planning, like when you run a contest, fail to correctly state the rules, and wind up with 1,000 winners instead of 10. Calamities can have sinister instigators, too, such as a hacker on your Web site or a coupon counterfeiter.
The majority of promotions go off without a hitch, but recognizing the “what ifs” and being prepared for them can make sleeping at night a lot easier.
Regardless of the odds or the elements, there are proven, cost-effective ways for marketers and their agencies to avoid or mitigate the risks associated with games, contests, sweepstakes, couponing, and other promotions – or at least reduce their chances of occurring. Workable concepts and intelligent design should be a standard starting point for any program, although you really need to be familiar with the potential pitfalls before the planning process even begins.
For example, did you know that each of the 50 states, plus the District of Columbia, has its own laws and regulations governing promotions? Then there are the risks involved in the setup and implementation of a promotion, as well as those on the back end, such as the awarding of prizes.
The Internet poses a whole new set of circumstances as promotions increasingly move online, either exclusively or as a component of “bricks and clicks” campaigns. The frontier nature of the Net has presented novel opportunities for marketers, but it has also unleashed unique challenges – especially relating to security.
It’s hard enough for those in the promotion industry to deal with the creative, strategic, budgetary, and competitive aspects of the business. Yet the analysis and management of the risks – both the inherent and the unexpected ones – are essential ingredients in every program. It behooves those responsible for planning and operating promotions to acknowledge those realities and, if not deal with them directly, find experts either within their organization or at third-party service providers to do so.
The following series of articles examines the key issues surrounding risk management. We invite you to save this special section as a “Survival Guide” of sorts to use when planning and executing promotions. Odds are it might just come in handy.
