What are trade promotions?
Trade promotions are a marketing activity run by a business designed to increase brand awareness, increase consumer engagement or loyalty. Entry into a trade promotion must always be free for a consumer to enter, save for the cost of a stamp or 50 cents, if entry is via phone. Entry by purchasing goods or services at their normal retail value is also allowed.
There are many different types of trade promotions, however they will generally all fall within one of three general categories – either a game of chance, game of skill or gift with purchase. Each of these types of trade promotions have different legal requirements and depending on where and how you want to run your trade promotion, it may be subject to other rules and regulations (for example, if you want to run a promotion on Facebook, you need to be aware of Facebook’s promotion guidelines).
Game of chance
A game of chance is where a winner is selected at random. This could be by way of a draw or an instant win. For example, buy a bottle of water and go online to enter the draw, or buy a bottle of water and peel off the promotional sticker on it to see if you win a prize.
Depending on the location, mechanic and the total value of the prize pool, a game of chance may require a permit in some States and Territories.
Games of skill
A game of skill is where a winner is determined based on their skill. Often these types of promotions appear in the form of answering questions, for example “tell us in 25 words or less what a game of skill is,” or answering the most questions correctly in a quiz.
The important point to note is that all elements of a game of skill promotion must not involve any form of chance. For example, if you had a quiz where the person with the most correct answers is the winner and found that two people had an equal number of correct answers, you could not flip a coin to determine that winner. You would need to add in another skill element to determine the clear winner.
A game of skill won’t require any permits in any states or territories in Australia, making them relatively easy and fast to get off the ground.
Gift with purchase
A gift with purchase is where a business offers a gift with the purchase of a product. For example, where you might buy a t-shirt and with that shirt, you receive a keyring.
There are some circumstances where a permit may be required for a gift with purchase and so it’s always best to check this, depending on how you want to structure your gift with purchase.
Terms and conditions
Terms and conditions are an important element of every trade promotion, whether you are required to obtain a permit or not. This is because promoters are required to comply with the various state and territory regulations, and also the Australian Consumer Law.
Generally, terms and conditions should always include:
- promotion specifics such as:
- start and finish time;
- the draw time and location;
- prize information and value;
- promoter details;
- permit information;
- winner notification information;
- liability clauses to protect the promoter and prize providers;
- privacy provisions to state what you will do with any personal information you collect;
- any prize specific conditions, such as terms associated with attending events or flights; and
- winner or participant conduct provisions.
Permits
In Australia, trade promotions are regulated at a State/Territory level. This means that depending on the type of promotion you run, you may be subject to different requirements (including the need for a permit).
“Permits?” you say? That’s right – some trade promotions may require a permit in some States/Territories.
As we said above, games of skill don’t require a permit. However, games of chance and some gifts with purchase promotions may require you to get a permit.
Below is a general guide of when and where you may need one:
| State/Territory | Is a permit required for a game of chance? | Is a permit required for a gift with purchase? |
| Vic | No. | No. |
| NSW | No permit is required, however you are required to hold an “authority” and lodge each set of terms and conditions with the regulator. | If you have a total gift pool over the value of $10,000 and it is likely that gift stocks will not meet demand (unless the promotion is running in physical stores only) or if gifts differ in type or value and the promoter will randomly award gifts, you may require a permit. |
| SA | If your promotion is an instant win promotion, you’ll always need a permit in SA. However, if it is a draw promotion, you’ll only need a permit if your total prize pool is over the value of $5,000 | If the total gift pool is over $5,000 and gifts differ in type or value and/or the promoter will randomly award gifts, you will require a permit. |
| ACT | You will require a permit for any promotion with a total prize pool over the value of $3,000. | Only if the total gift pool is over $3,000 and gifts differ in type or value and the promoter will randomly award gifts. |
| WA | You don’t need a permit in WA for any promotions. However, you must lodge the terms and conditions of you promotion with the regulator if it is conducted by audio, visual or electronic media. | No. |
| NT | If you have a permit in any other state or territory, you won’t be required to get a permit in NT. However, if you don’t and the total prize pool value is over $5,000, you’ll require a permit in NT. | No. |
| Qld | No. | No. |
| Tas | No. | No. |
Permits generally have a cost attached to them, depending on the total prize (or gift) pool of your trade promotion, and you will always be required to lodge a final version of your terms and conditions with your permit application.
If you do need to make amendments to your terms and conditions after they’ve been lodged with a regulator, you can do this. However, you may be subject to additional lodging fees.
Trade promotions are not raffles
It is important to note that trade promotions are not raffles.
While entry into a trade promotion must be free, a raffle is where tickets are purchased for the chance to win the prizes offered in the raffle. They are usually conducted to raise funds for non-profit organisations such as charities and community groups.
Need some assistance?
Wondering where to from here? Our Commercial Team can provide you with all the guidance you need to get your trade promotion up and running.
