How to choose the right prize for your international contest 2 March 2022 The mistakes to avoid and the factors to evaluate in choosing your prize pool Choosing the prize to win in your draw or competition is one of the most delicate aspects of a promotion. The assessment must be made taking into account many different elements: Regulatory aspects Aim of the draw or competition Target audience Available budget Consistency with your corporate image and promotional messages When organising an international prize-competition or -draw, you should bear in mind that the regulations differ from country to country. Other aspects related to the culture and customs of the country as well as practical aspects such as current taxation regimes, possible logistical complexities or the presence of high customs duties also come into play in the assessment. Cultural factors and local customs influence the tastes and desires of consumers and their perception of the value of the prize. Do not neglect this aspect! What may be considered attractive in one country may not be so in another located on a different continent. Mistakes to avoid when you choose the prize for your contest The mistake you should avoid at all costs therefore is to underestimate the differences between countries in terms of regulatory regimes, culture and logistics. To choose the right prize for a contest or for a draw/competition abroad you have to consider many different aspects: the local regulations on prize-draws and -competitions that may indicate goods that are prohibited from being offered or limiting their value; cultural, social and religious aspects of the country; taxes on prizes; any logistical difficulties and the presence of customs duties. The rules on prizes: prohibitions and limits In several countries it is forbidden to put money in the prize pool of a draw or competition but in many others it is allowed, as for example in the UK. In some countries there are special prohibitions, such as in Australia where the law does not allow cosmetic surgery to be included in the prize pool, or in Finland and Norway where live animals cannot be offered. The only prohibition that is somewhat universal is the ban on tobacco products and firearms, which are not allowed to be offered virtually anywhere. On the other hand, some countries impose limitations on the value of the prize pool or individual prizes, as is the case, for example, in China and Japan. In others, limits are placed on the total prize pool that a promoter can offer in a given time frame. In the Netherlands, for example, the law sets a maximum value of the total prize pool of €100,000 over a calendar year. Culture, history and religion can have an impact on prizes Another aspect that you should never neglect when choosing the prize pool for your international prize-draw or -competition is the culture and history of the country you’re targeting. To give an example of how these aspects influence the choice of prizes in a draw or competition, just remember the prohibition in New Zealand on the inclusion in the prize pool of any object related to the history or culture of Maori society that is more than 50 years old. From a religious point of view, however, alcohol and food produced with pork can never be included in the prize pool of a draw or competition held in the Arab Emirates. Taxes on prizes can be a problem When you choose the right prize for your contest you have to take taxs into account. There are countries where the payment of taxes on the prizes in a draw or competition is up to the winner and, in these cases, you have to make a careful assessment of the financial impact that this could have on consumers, to avoid the prize acting as a disincentive. One example is the United States: here, taxes on prizes are paid by the winners and not everyone may have the liquidity needed to meet the payment of large amounts if the prize has a high value. Logistics, bureaucracy and customs duties: we avoid surprises Organising the logistics and providing the right budget for the delivery of a physical prize is an aspect that you must consider immediately and with great care. Any bureaucratic or logistical complexities must be assessed first to avoid incurring unforeseen expenses or facing delays in the delivery of prizes that could lead to financial and image damage. Be careful also in checking the rules on customs duties, not only for the physical prizes that you will assign directly but also if you choose to offer gift cards that can be spent on e-commerce platforms. Some countries expect the payment of duty in order to be able to receive their purchases online. In conclusion, our advice when facing the choice of the ideal prize for an international prize-draw or -competition is to not take anything for granted and to accept advice from those who have expertise and experience in prize-draws or -competitions in different countries and are aware of the complexities you might have to face. Do you need advice on the right prize for your draw or competition? Contact us!
