Big-bucks sweepstakes promos: Who wins? Big gain may be as elusive for a sponsor as for most of the people who enter

Shuffled in with your electric bill and sundry junk mail, a fat manila envelope catches your eye. ``YOU MAY HAVE JUST WON $10,000,000.00!!!'' it screams in huge red letters. Once primarily mailbox stuffers, ``chance-of-a-lifetime'' sweepstakes entry blanks now dot everything from cranberry juice bottles to deodorant boxes. This week, Airborne Express jumped into the game with a $1 million prize; this marks the express-mail industry's first plunge into sweepstakes.

In recent years ``sweeps'' have also drawn a following of blue-chip companies which has lent new respect to this marketing strategy: household names such as McDonald's, IBM, and Kodak. Even the venerable Times (London), now under the ownership of press baron Rupert Murdoch, is experimenting with this tactic.

``Consistently, over the last five years, the number of sweeps has increased 15 to 20 percent per year,'' says Thomas Conlon, president of D. L Blair, the largest sweepstakes agency in the United States.

Sweepstakes have significant drawbacks and a fair share of naysayers. But by and large, marketers rank the big payoffs as one of the most cost-effective means of getting customers to notice and try a product.

Airborne's gambit offers a textbook case of the sweepstakes strategy. The Seattle-based firm is the Avis of the express-mail business (you know, No. 2 and trying harder). So Airborne is launching its sweeps by sending out a million fat manila envelopes and dousing the airwaves with $8 million in television advertising. The purpose is to wean customers away from the top dog, Federal Express.

When people think express mail, they automatically think Federal Express, explains Kent Freudenberger, Airborne's executive vice-president for marketing. To shake customers from the Federal mind-set, Airborne has tried dropping the price, but that ``met with only marginal success.''

Mr. Freudenberger says, ``When you get into a situation where service is at a parity, then you have to have a nonproduct reason for people to switch.''

The idea is to break buying habits. Rajeev Batra, an assistant professor of marketing at Columbia Business School, says: ``Consumers set up routine buying patterns. Along comes a promotion, and they try the product. Then the next time they are in a decisionmaking mode, they have two choices to consider and may try the new product again.''

While there is little doubt that sweepstakes are more widely used now, it is not necessarily a phenomenon spurred entirely by marketers.

According to Mr. Conlon of D. L. Blair, ``Sweeps were not a basic builder of customer acceptance until about six or seven years ago. But that changed with the confluence of two separate events: First, the high level of inflation made people focus attention on their money to a degree they never had before, and second, because of the broad use of lotteries by states and the increased media attention given to winners.''

With inflation having receded, the popularity of sweeps should be ebbing, Conlon says. But his firm surveys customers every six months, and he hasn't yet seen signs of waning interest.

``It all ties back into this `me generation,' '' one marketing professor theorizes. ``Lotteries, sweepstakes, are another opportunity to get something for me.'' Another says that the come-on ``appeals to the consumer's sense of gamesmanship or gambling.'' Another just calls it ``one of those marketing fads, an art nobody knows much about.''

Maybe so. Sweeps, however, are very successful at getting customers to try a product.

``Sweeps outpull [other mailings] by a ratio of 2 or 3 to 1 versus a control [non-sweepstake] package,'' says Michael J. Kelly, vice-president of sales at American Family Publishers. AFP just completed one of its two annual major publishers' sweepstakes mailings.

Indeed, the veterans of sweeps are the magazine publishers. In the late '50s, Reader's Digest was among the first to use sweeps as a circulation builder. But for almost a decade, AFP and companies such as Publisher's Clearing House have provided a limited number of magazine and newspaper publishers access to more potential subscribers than they could otherwise afford to reach. An AFP mailing may land in as many as 80 percent of the mailboxes in the US.

John B. Klingel, a Palo Alto, Calif., direct-mail consultant to some 60 publications, agrees that sweeps pull in subscribers like no other mailing.

But sweeps have major drawbacks. They are an expensive ploy and generate a relatively low number of repeat subscribers. Mr. Klingel says: ``I'm pretty reluctant to get into sweeps. The only time I think about sweeps is when there's a significant rate-base problem.'' That is, when the circulation tumbles below the minimum guaranteed to advertisers.

So sweeps can be used to provide quick help with circulation problems. But observers say that customers typically sign up in hopes of winning a million bucks and not necessarily because the periodical appealed to them. And sweeps-based circulation is subject to sharp drops unless it is followed by more sweeps.

``You dig yourself into an expensive hole,'' Klingel says. ``You're constantly churning your subscriber file. Some publishers swear by sweeps, but I don't think they're growing in popularity [in this industry] at all.''

A big sales jump followed by a big dip, says Rajeev Batra at Columbia, is the basic problem with all promotions. The most successful sweeps -- for holding on to new customers -- are somehow related to the product, Mr. Batra says.

He cites a Benson & Hedges 100s cigarette sweepstakes. All prizes were awarded in increments of 100. For instance, 100 carats of diamonds. Klingel agrees that product-related sweeps are more successful and offers the example of an outdoors magazine giving away camping equipment.

Are there good marketing alternatives to sweeps?

If the aim is to induce the public to try the product, Batra ticks off several options: discount coupons, premiums (send in five box tops plus $2 and get back a towel worth $10), refunds, and free samples.

``Sweeps are by no means the best. Free samples are the best in terms of getting the customer to try the product. But it may not be the most cost effective, since you're giving away the product instead of selling it,'' Batra says.

There are also intangible costs to be considered when using sweeps. For instance, will the customer see the sweepstakes as a gimmick to buy an inferior product? Or will the company's image be tainted by sharing the limelight with a game of chance?

``Some companies aren't entirely comfortable with the connotations of gambling and gamesmanship that go with it,'' Mr. Kelly at AFP concedes. Airborne considered this and concluded: ``Lotteries have very widespread appeal and acceptance now, and we felt that people would understand this for what it is -- nothing more than encouraging people to use a high-quality service.'' Conlon at D. L. Blair contends that ``the product image is neutral to the effects of the promotion.''

Sweepstakes come in all shapes and sizes, however, and there is concern that some companies are not playing fairly. Recently, a few sponsoring instant-winner sweepstakes have reaped the publicity but no prizes were awarded, says Roger B. Tyndall, publisher of the Contest News-Letter, Fernandina Beach, Fla., which reports on sweepstakes entry rules.

``They'll send out 30 million Sunday supplement entry blanks and only one has the winning number. If no one turns in that number, no prizes are given out. It's deceptive, dishonest, but not illegal, because down in the fine print is says `unclaimed prizes will not be rewarded.'

``My theory is those young whiz kids get into the company and their only objective is to maximize profits. `How can I save myself $1 million in prizes?' But they're destroying public confidence,'' Mr. Tyndall says.

There are some marketers who may wonder if Tyndall's own readers are undermining public confidence. A byproduct of more sweeps has been the proliferation ``professional'' players. A fair number of Tyndall's 630,000 (1983 circulation) subscribers probably rank among the avid sweepstakes entrants. A few are known to go as far as running probability equations on home computers and deluging the sweeps sponsors with entries.

This raises questions such as, does the consumer know these pros are skewing the odds? A look at the winners' list published by another sweepstakes newsletter showed that at least five contestants had entered enough times to win prizes in several categories. And how cost effective are sweeps for marketing if prizes are awarded to players who enter many contests, mailing in hundreds of entry forms, regardless of the product?

Perhaps such questions are irrelevant as long as consumers continue to be tempted by those fat manila envelopes and deodorant boxes stamped with a big red dollar sign, a one, and a long string of zeros. Marketers really do not know about the long-term effects of these promotions, but sweepstakes do appear to give a company a quick boost in sales.