Let’s face it, everyone loves prizes. Free trips, money, products or exclusive opportunities, what’s not to like? As the nation’s leading partner for prizing and fulfillment services, we take prize strategy and awarding very seriously. From instant win games to contests to sweepstakes prize fulfillment, the opportunities are endless for building consumer engagement. With decades of experience, Realtime Media is a go-to partner for brands looking to execute digital promotions. That said, if you’re considering running a digital promotion, don’t forget to consider options for insuring your prize offering!
What is Prize Insurance?
Prize insurance is limited to “non-guaranteed” prizes, referring to promotions that may OR may not have a winner of the grand prize. These are often called “fixed odds” promotions. Popular promotions or chances to win insured prizes include:
- Instant Win Games
- Half-Court/Full-Court Shots
- Hole-In-One Promotions
- “Pick a Number”/Ticket Promotions
A prize insurance policy is underwritten so campaign organizers can offer a large, risk-free prize for a fraction of the cost and guarantee the full prize can be funded, should there be a winner. For example, if a $10 million prize is being offered, the company running the campaign can purchase insurance for a significantly lower upfront cost, paying this as a premium on the policy. Should the prize be awarded, the prize insurance company would pay out the $10 million prize out in full to a winner. If you’re starting to wonder why you would run a sweepstakes with no winner, don’t worry – we’re going to cover that a bit when we talk about a tiered prize pool.
When insuring your prize pool, the premium is calculated by several variables including prize value, fixed odds of winning, number of entries insured, and payout method. It’s also important to note again that not every prize can be insured. Prize Tiers Make Sure There are Winners in Your Promotion
Popular promotions tactics that leverage massive prize pools and boost engagement include Sweepstakes and Instant Win Games. Both are unique and popular promotion tactics, with varying levels of complexity as to how the fixed odds are achieved. However, while the chance to win a large prize with these promotions may create initial excitement and draw attention, it could also result in a “too good to be true” feeling that discourages consumers from joining the sweepstakes or contest.
To avoid this, we recommend building other opportunities to win prizes into the program by leveraging a tiered prize structure. This means offering one big prize ($1 million) and many other smaller prizes ($100 – $1,000), since, often times, prizes are the motivating factor behind engagement within digital promotions. These smaller prizes are often connected to a separate random chance drawing, where all registrants are entered for a chance to win, and there is guaranteed to be winners selected.
To note, as a full-service fulfillment team, we specialize in:
- Prize Strategy & Procurement – helping our customers build and source a prize pool that’s right for their target audience
- Winner Administration Services – notifying winner(s) by email to verify their eligibility and status
- Warehousing & Logistics – handling details and logistics of procurement, warehousing and fulfillment of all prize elements
- Customer Care & Support – managing and fielding all questions regarding promotions, official rules, eligibility, prize shipment status and digital code redemption to save our customer’s time and maximize the consumer experience
How Are $1Million Prizes Awarded?
Prize fulfillment can serve as a valuable tactic for fostering brand visibility and driving consumer engagement. If you are considering giving away a high value prize pool but are concerned about the implications of paying out the prize, then prize insurance is something you should consider. Prize insurance gives the company peace of mind and financial security when a grand prize is at stake. It also gives broader access to the ability to run campaign with high-value prizes that will drive awareness from wide audiences of potential new customers.
If a winner is selected, it’s important to figure out how your organization wants to award the prize. There are two different options for consideration: Prize Annuity and Cash Payout. With Prize Annuity, the prize is awarded across a pre-defined period, typically 10, 20 or 40 years. With Cash Payout, the prize is awarded as a single, cash payment.
Another important consideration when awarding prizes over $600 is taxes. But don’t worry at Realtime Media, we will assist in the creation and issuance of IRS 1099 tax form filings at the conclusion of the calendar year(s) in which the prize is awarded. For more information on the legal compliance and details of prize fulfillment, check out our Product & Services Guide on Fulfillment here.
In closing, awarding and receiving prizes can be a very exciting moment for both brands and promotion participants. When constructing your campaign, make sure to consider your audience and align your strategy with prizes that would be of interest to who you are looking to engage. After the direction has been determined, Realtime Media takes care of all the details – Official Rules, Legal Compliance, Prize Fulfillment and more. To learn more about our sweepstakes offerings and prize fulfillment capabilities, click here.