Ad Standards’ first case of misleading chance to win competitions highlights the importance of terms and conditions and why multiple smaller prizes are more effective than a single big prize.
In the Kimberley Clark Australia v Unicharm Australasia case, the Ad Standards Industry Jury upheld a complaint against a chance to win a $1 million prize campaign.
The complainant alleged that the representation “Buy BabyLove for your chance to Win $1 Million” which appeared on promotional material was misleading, as it gave the impression that all you had to do to be in with a chance to win was register and provide proof of purchase.
However, only by accessing the full terms and conditions were consumers informed that submitting an entry into the competition only provided a chance to win a further chance to win the $1 million prize.
The Industry Jury Panel found that while the promotional material made it clear that there was an element of chance involved in winning the $1 million prize, it was not made sufficiently clear to consumers that the reality was a 99% chance that no one would win the $1 million prize.
In response to the Industry Jury’s decision, the advertiser agreed to follow the guidance provided in the determination when organising future promotions, under Section 1 of the AANA Code of Ethics which highlights the advertisers’ responsibilities.
And this aligns with the ACCC regulations regarding prize giveaways and competitions, which say: “If your business gives away free items or prizes as a promotional activity, you must not mislead your audience about the items on offer or the chances of receiving these items.
“If there is a catch (for example, if people must meet certain conditions to claim a prize), you must let people know at the outset.”
Tenisha Dwyer, Ad Standards communications officer, said: “One of the greatest benefits of using the Ad Standards Industry Jury service is the ability to have a case assessed and resolved in a fraction of the time and cost required for litigation, with a clear outcome at the end of each case.”
Whereas when complaints are taken to ACCC, the penalties are more extreme.
For example, the ACCC commenced an action against glasses company Oscar Wylee, who had run a ‘buy a pair, give a pair’ promotion in 2020 that for every pair of glasses purchased, the company would donate a pair of glasses to someone in need.
However, out of 328,010 pairs of glasses sold, the company only donated 3,181 frames, without lenses, to charity.
The Federal Court found that Oscar Wylee was guilty of engaging in contravening conduct, which took advantage of the charitable nature and goodwill of customers, to induce customers to buy products.
As a result, Oscar Wylee had a penalty of $3.5 million, restraining orders, an order that Oscar Wylee publishes corrective notices, orders to review its ACL compliance program and an order to contribute to ACCC’s costs.
So competitions can be a great way to expand a brand’s customer base, but when an advertiser’s promotional material is found to mislead consumers the backlash can be catastrophic.
So how can marketers learn from this Ad Standards’ case and ensure an ethical chance-to-win competition campaign?
Corinne Heffernan, general manager, Arc (Publicis’ shopper marketing agency) said: “The traditional envelope-pick mechanic has long been around and while quite old school, can help with tight budgets.
“As a marketer, I know that these mechanics can deliver big, impactful (and factful) headlines – as a chance to win is not deceptive, as this is indeed what you win, a chance.
“As experts in consumer promotions, we know that shoppers must believe that they are in with a shot of winning, and that perceived chance of winning is critical for not only driving incremental volume, but also to the sparkle of the offer.
“For example, would the national lotto be as successful if every headline called out a 3,575,880 chance to win? It doesn’t quite have the same ring to it as ‘wouldn’t it be nice?’
“We find high frequency smaller prizes drive sales more effectively.
“Having run almost 100 promotions in the last 13 years here in Australia, I would bet that rather than a chance to win a million – offering 100 chances to win $100 would see higher entry numbers due to increased perceived chance to win.
“The 2022 IMI PromoTrack report tells us that prize pools need to achieve a balance with regards to the number versus the value of prizes without sacrificing the compelling nature of the prize.
“In the most successful promotions, we repeatedly see frequency prizing being the primary motivator when it comes to entries and a great chance of winning a smaller amount of money will typically beat a smaller chance of winning a larger amount.
“What does that tell us - bigger is not always better – a chance to win a million is actually less appealing to our shoppers than 3 chances to win $10,000.
“IMI even tells us that shoppers are 60% more likely to enter a competition to win a cheeseburger than to win a million dollars!”
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