Are you looking to boost brand awareness? Maybe you’re hoping to create some good PR with your local community or customer base. A giveaway may be a good strategy to accomplish both goals, but is it right for your business?
Giveaways are a popular marketing strategy used by businesses to grab attention and engage potential customers. By offering free products, services, or experiences, companies can create excitement and reach audiences who may not have heard of them otherwise.
However, like any marketing strategy, giveaways come with both benefits and challenges that need to be considered before launching one.
DW Creative is a Kansas City-based marketing agency that drives growth for clients by creating meaningful connections between their clients’ brands and the homeowners they serve.
By reading this article, you will learn the pros and cons of using giveaways, the different types of giveaways, and the goals they can help you achieve as part of your marketing plan.
Pros of Giveaways
1. Giveaways Can Bring New Potential Customers
One of the biggest advantages of giveaways is the ability to attract new customers. “Free” is a magical word everyone loves. By offering something valuable for free, you can generate interest from people who may not have heard of your business otherwise.
In addition, if you are giving away a product or service specific to your industry, this will generate viable leads. If you’re giving away a free furnace, entrants will likely be people who are hoping to purchase a furnace. Now, your business has a list of potential customers with a need you can meet.
2. Giveaways Can Boost Brand Awareness
Giveaways are an excellent way to get your brand noticed. When you offer something for free, people tend to talk about it, share it on social media, and spread the word. This can help increase your visibility and make more people aware of your business.
Depending on the kind of giveaway, it may also create a great PR opportunity. Is your giveaway incredibly valuable or extreme? Maybe it’s unusual enough to garner the attention of the local media, further spreading brand awareness.
3. Giveaways Can Increase Engagement with Customers
Giveaways give you the chance to engage with existing and new customers and create a buzz around your brand. When people participate, it shows interest, and you can build a relationship with those who enter.
Cons of Giveaways
1. Attracting the Wrong Audience
Giveaways may attract people who are only interested in free stuff, not customers who genuinely want to buy your products or services.
If your giveaway prize is not aligned with your business offerings, you may end up with a large group of entrants who aren’t actually interested in becoming paying customers.
For example, let’s say an HVAC service business throws a giveaway for a free trip to the Bahamas. They will attract people who want a beach vacation but may not want or need HVAC products or services. When entrants are contacted as leads, they may not be viable.
2. Legal Complications
One of the biggest challenges with giveaways is ensuring that everything is done legally.
If you’re running a giveaway, you need to follow all local and state regulations, particularly if your prize is valuable. You’ll also need to consider the legalities around the prize itself.
Additionally, you may need to consider insurance, especially for high-value or risky prizes.
The rules must be crystal clear—there can be no ambiguity about how the giveaway works.
3. Risk of Brand Dilution
While giveaways are a great way to generate excitement, there’s a risk of diluting your brand.
If you’re constantly giving things away for free, people may start to expect that from you. This can make it harder to sell your products or services at full price when customers are always waiting for the next “freebie.”
It’s important to strike a balance and use giveaways strategically to avoid cheapening your brand.
4. Cost
Businesses also have to consider the financial loss or cost of the giveaway itself. Is this a service or product you can afford to give away? Will the audience it attract compensate for the cost of the prize?
Businesses also must consider the cost of marketing to tell others about the giveaway. What kind of marketing and advertising will you do to get the word out?
In addition, are there potential legal fees to perform the giveaway?
Your giveaway budget must account for the giveaway itself, marketing, and legal fees.
Four Types of Giveaways
There are several types of giveaways, each serving different marketing purposes.
Here’s a look at the most common types of giveaways:
1. Product-Based Giveaways
These are the most straightforward. The business offers a free product to the winner.
For example, a skincare company might give away a free set of skincare products. This type of giveaway directly ties into what the business sells, so it’s more likely to attract individuals who are interested in the product.
2. Service-Based Giveaways
In a service-based giveaway, businesses offer a free service, such as a free consultation, a free session, or a free repair.
Service-based giveaways can be useful for businesses that want to showcase their expertise or build trust with potential customers.
3. Experience Giveaways
Sometimes businesses offer experiences, like a free trip or tickets to an event.
This can be an exciting way to capture attention and create buzz, but the connection to the business may not be as strong unless the prize aligns with your offerings. For example, a travel agency might give away a free vacation, but if you’re a local home improvement company, a trip to the Bahamas may not help your business much.
4. Conditional Giveaways
These giveaways are based on certain conditions, such as a certain number of social media shares, customer referrals, or even weather conditions. Often, the “condition” requires a purchase with the probability of future payoff. What conditions must be met for your customers to enter the giveaway or win a prize?
For example, a company trying to grow its online following may say, “If we reach one million followers by Friday, everyone who made a purchase on Thursday will receive a free item!”
A local business may gain attention for unusual or valuable conditional giveaways. For instance, a furniture store may say, “If it snows on Tuesday, all furniture bought that day will be free!”
These types of giveaways can create a viral effect and engage your audience in creative ways, but they also have legal risks. The rules must be clear to avoid confusion, and sometimes additional insurance may be needed.
However, these giveaways are often the most legally complex. All documentation from the legal forms to receipts must be intensely considered.
Four Goals of Giveaways
A giveaway can serve various purposes, but you need to define your objective clearly to make it effective.
Before launching a giveaway, you need to decide exactly what you want to achieve. Are you focused on brand awareness, or are you hoping to drive sales or generate leads? Your goal will shape the type of giveaway you run and the rules around it.
Here are four possible goals for a business giveaway:
1. Boosting Brand Awareness
Giveaways can put your business on the map. When people hear “free,” they pay attention.
By giving something away, you create an opportunity for your business to reach a broader audience. Whether it’s through social media, email lists, or word of mouth, a giveaway can make people aware of your brand who might not have known about you before.
2. Bringing in New Customers
One of the primary reasons businesses use giveaways is to attract new customers.
If you’re offering something people are interested in, they’ll be more likely to check out your business. The goal is to introduce your products or services to a new group of people who may become future paying customers.
3. Generating New Customer Contact Info
Giveaways often require participants to provide some basic contact information, like their name and email address. This can help businesses build their customer database, which can be useful for future marketing campaigns.
4. Engaging New Leads
Giveaways can be a great way to engage potential customers and generate leads that can be nurtured into sales.
For example, if your giveaway targets a specific demographic, you can tailor your follow-up marketing efforts to convert those leads into long-term customers.
Is a Giveaway Right for My Business?
Before you run a giveaway, it’s important to ask yourself a few key questions:
- What do I want to achieve with this giveaway?
Do you want more sales, brand awareness, or customer engagement? - What’s the cost?
How much are you willing to spend on the giveaway, including marketing, legal fees, and the prize itself? - What are the rules?
Make sure the rules are clear, easy to understand, and legally compliant. - Is the giveaway right for my business?
Does the prize align with your brand and help you attract the right customers?
Next Steps Before Starting a Giveaway
Giveaways are a powerful tool to get people talking about your brand. However, like all things, there are pros and cons to giveaways.
You might consider creating a giveaway if:
- You want to attract new customers and create PR opportunities.
- You want to boost brand awareness.
- You want to increase engagement with new and existing customers.
A giveaway may not be a good fit for your business if:
- You’re worried about attracting the wrong audience.
- You want to avoid legal complications.
- You don’t want to potentially dilute the value of your product or service.
- You don’t have the budget to cover the giveaway prize, marketing, and potential legal fees.
If you’re considering a giveaway as part of your marketing strategy, talk to your marketing team or agency. Ensure you have a goal for your giveaway, the budget in place, and a clear follow-up plan to engage participants after the giveaway ends.
Working with legal counsel may be beneficial to verify the giveaway rules are clear and within local regulations.
In the end, giveaways can be a powerful tool for growing your business—but they need to be carefully planned and executed. With the right strategy, you can boost your brand, attract new customers, and create lasting relationships.
DW Creative is an agency committed to empowering homeowner-focused businesses. If you want help creating a marketing strategy, schedule a fit call with our team to see how DW Creative can help.
If you’re not ready to make a commitment or want to learn more about marketing strategy, we recommend the following articles:
- Marketing Strategy vs. Tactics
- How to Market a Home Services Business
- 5 Common Home Contractor Marketing Mistakes