esr@iheds.UUCP (Eileen Rieback) (12/30/85)
Well, it's the time of year again when our mailboxes bulge with those Sweepstakes entries from magazine and book clearinghouses. One company is advertising a 10 million dollar grand prize! My question is this: How can a clearinghouse afford to give away prizes of such magnitude?? I am assuming several things in asking this question: 1. They are required by law to actually award the advertised prizes. 2. Since they are not the publishers themselves, but rather the "middleman" or distributor of the materials, they cannot expect to make more than a dollar or two on a $25 subscription. 3. An entrant does not have to subscribe to anything in order to enter, and subsequently win the Sweepstakes. (Or so we are lead to believe, anyway.) If these assumptions are true, then it doesn't seem possible that an advertising blitz such as this, complete with prime time TV commercials, could possibly generate enough revenue to even pay for the sweepstakes prizes, let alone to make a profit. Even if 10 million people send in their entry forms, how many of them will also subscribe to a magazine, since it is not a prerequisite to winning?? I personally would rather deal directly with a magazine publisher for a subscription, to avoid the possible problems with going through a middleman. Can that many millions of people feel otherwise and be spurred on to subscribe just because of the lure of the glossy mailings and big prizes??? Does anyone have an actual figures on the costs and revenues generated by an advertising gimmick such as this? As for me, I will not even bother to submit my sweepstakes entry, even though I don't have to subscribe to anything. With my luck, the only thing I stand to win for my 22 cent investment is the dubious honor of having my name placed on 100 new junk mailing lists! (Well now, maybe THAT'S how they generate all the revenue ......) E. Rieback
ran@ho95e.UUCP (RANeinast) (12/31/85)
> Well, it's the time of year again when our mailboxes bulge with those > Sweepstakes entries from magazine and book clearinghouses. One company > is advertising a 10 million dollar grand prize! My question is this: > How can a clearinghouse afford to give away prizes of such magnitude?? Helfino. > . > . > . > > As for me, I will not even bother to submit my sweepstakes entry, even > though I don't have to subscribe to anything. With my luck, the only thing > I stand to win for my 22 cent investment is the dubious honor of > having my name placed on 100 new junk mailing lists! (Well now, maybe > THAT'S how they generate all the revenue ......) > > E. Rieback A while back I figured out the payback on these sweepstakes, based on the odds of winning that are included in the sweepstakes. Sure, they're free, but you still have to pay the 22 cents for a stamp. On average, you can expect to get back about 5 cents for every dollar you spend entering. Compare this to the approximately 45 cents on the dollar that most state lotteries pay, and the generally even higher payoffs associated with Las Vegas or Atlantic City. -- ". . . and shun the frumious Bandersnatch." Robert Neinast (ihnp4!ho95c!ran) AT&T-Bell Labs
rcook@uiucuxc.CSO.UIUC.EDU (12/31/85)
Well, here is my experience with these "things".
I had always sent in my AFP, PCH, etc. sweepstakes, hoping to be just like the
Knutzens (typically family that seems to always win the big pot).
I had never sent my entry with a subscription sticker until last year, when I
wanted Rolling Stone mag.
Well, up until last year, I received no word from the sweeps.
Last year (when I subscribed), I hit the jackpot....I was considered a
"1st level winner" or some such garbage if I sent in a few bucks for
processing my 2nd entry....Well, as you can guess, that was the end of my
sweepstakes days.....It's gotta be a joke.
Thats why I play...........Lotto----It's worth a million.
Rob Cook
UUCP: {ihnp4,pur-ee}!uiucdcs!uiucuxc!rcook
'Life is just a cocktail party on the street'
-Mick Jagger- bzs@bu-cs.UUCP (Barry Shein) (12/31/85)
Re: How do they make money on those $10M sweepstakes selling magazines? I was always under the impression that besides selling magazines or whatever, they were carefully cultivating massively valuable mailing lists. If I remember correctly by sending you something and receiving a reply (even if it's a 'no thank you') the price of your name/address goes way up in the mailing list biz. Once built up they can sell your name (and millions of others) over and over again through the year. I don't know what the per name cost is to people buying mailing lists (and I am quite sure it depends on lots of selection factors) but I believe $0.50 to $1.00 is not unusual for well gleaned lists, so a little quick multiplication and the profits start to appear. (old joke warning) Every day this guy leaves work with a wheelbarrow full of sand, every day the guard carefully searches the sand to find nothing, finally one day the guard confronts him: "Ok, I give up, what are you stealing?" "Wheelbarrows" See, they may not be in the magazine biz at all, or just barely (like, why do they only solicit subscriptions once a year?) -Barry Shein, Boston University
mkg@lzaz.UUCP (Marsh Gosnell) (12/31/85)
In article <474@iheds.UUCP>, esr@iheds.UUCP (Eileen Rieback) writes: > One company is advertising a 10 million dollar grand prize! My question is > this: How can a clearinghouse afford to give away prizes of such magnitude?? It's simple. For the large prizes, they pay them over 20 years or so. They probably buy some sort of annuity for a fraction of what the prize is worth. Most big jackpot lotteries do the same thing. In New Jersey, the big prize used to be $300,000. It's now about $2,000,000 over 20 years because of the annuity. Marsh Gosnell
danny@sftig.UUCP (L.Rosler) (01/01/86)
> Well, it's the time of year again when our mailboxes bulge with those > Sweepstakes entries from magazine and book clearinghouses. One company > is advertising a 10 million dollar grand prize! My question is this: > How can a clearinghouse afford to give away prizes of such magnitude?? > 2. Since they are not the publishers themselves, but rather the "middleman" > or distributor of the materials, they cannot expect to make more than > a dollar or two on a $25 subscription. > > If these assumptions are true, then it doesn't seem possible that an > advertising blitz such as this, complete with prime time TV commercials, > could possibly generate enough revenue to even pay for the sweepstakes > prizes, let alone to make a profit. Even if 10 million people send in > their entry forms, how many of them will also subscribe to a magazine, since > it is not a prerequisite to winning?? > Reading the fine print on the bottom of one of the prime time advertisements I discovered the "lotto" style of payoff. The $10 million is given out in $333,333 per year. The rest is reinvested by the company and they make money. They don't lose $10 million suddenly. Dan Rosler ihnp4!attunix!danny
david@sun.uucp (David DiGiacomo) (01/03/86)
In article <474@iheds.UUCP> esr@iheds.UUCP (Eileen Rieback) writes: >How can a clearinghouse afford to give away prizes of such magnitude?? > >I am assuming several things in asking this question: > ... >2. Since they are not the publishers themselves, but rather the "middleman" > or distributor of the materials, they cannot expect to make more than > a dollar or two on a $25 subscription. Wrong. The clearinghouse keeps the entire first year's subscription fee. The magazine doesn't get any money until/unless you renew. -- David DiGiacomo {decvax, dual, ihnp4, ucbvax}!sun!david Sun Microsystems, Mt. View, CA (415) 960-7495
mike@amdcad.UUCP (Mike Parker) (01/04/86)
In article <829@bu-cs.UUCP> bzs@bu-cs.UUCP (Barry Shein) writes: >Re: How do they make money on those $10M sweepstakes selling magazines? > -Barry Shein, Boston University I just saw a interesting calculation of the California Lottery situation. I don't remember the details but if you win two million dollars they only give you $100K per year for 20 years. So just for fun lets say they put the other 1.9M$ in the bank or a money market fund making say 10%. In a year when they owe you another $100K, they've made $190K in interest. You know how those $10M magazine sweepstakes always come with some bank's gearantee of "sufficient funds on deposit"? Most of those sweepstakes are also $X per year for 20 years, so "sufficient funds on deposit" is nowhere near $10M. I'm not saying they don't sell mailing lists too, but I am saying that those sweeps don't cost as much as the prizes are big. Mike
daver@hp-pcd.UUCP (daver) (01/07/86)
Now that the big magazine sellers are giving away $10,000,000 as their top prize it's interesting to note that the prizes still make up only a small part of the cost of the sweepstakes. If you look at the postage on the envelope you received, add something for the contents, printing and stuffing, multiply by the number that are sent out and then add in the cost of TV time for the ads you can see that $10 million is not such a big part of the total expense. Last time I received the entry forms I computed the expected value for the Readers Digest and Publishers Clearinghouse entry and, in both cases, the value was under $.05. Since the cost of an entry is $.22 for postage, it's not a very good bet. In fact, Readers Digest sent out $.20 worth of stamps (back when that was all it took), and your best bet was to throw out the entry form and keep the stamps. Dave Rabinowitz hplabs!hp-pcd!daver
daver@hp-pcd.UUCP (daver) (01/07/86)
> Reading the fine print on the bottom of one of the prime time > advertisements I discovered the "lotto" style of payoff. The $10 > million is given out in $333,333 per year. The rest is reinvested > by the company and they make money. They don't lose $10 million > suddenly. Using my HP-41CX with the new Advantage ROM Time-Value-of-Money routines I find that at only 8% annual interest rate an annuity which pays $333,333/year for 30 years would cost $4,052,798, a lot less than $10 million. Dave Rabinowitz hp-pcd!daver
terryl@tekcrl.UUCP () (01/10/86)
> In article <829@bu-cs.UUCP> bzs@bu-cs.UUCP (Barry Shein) writes: > >Re: How do they make money on those $10M sweepstakes selling magazines? > > -Barry Shein, Boston University > > > I just saw a interesting calculation of the California Lottery > situation. I don't remember the details but if you win two > million dollars they only give you $100K per year for 20 years. > So just for fun lets say they put the other 1.9M$ in the bank > or a money market fund making say 10%. In a year when they owe > you another $100K, they've made $190K in interest. Except for a couple of lotteries back East, that's how most of the state-run lotteries are paid off. > You know how those $10M magazine sweepstakes always come with some > bank's gearantee of "sufficient funds on deposit"? Most of those > sweepstakes are also $X per year for 20 years, so "sufficient funds > on deposit" is nowhere near $10M. I'm not saying they don't sell > mailing lists too, but I am saying that those sweeps don't cost > as much as the prizes are big. True, except for one of the $10M magazine sweepstakes, it takes 40 YEARS to pay off the $10M (another takes 30 YEARS).
matt@oddjob.UUCP (Matt Crawford) (01/14/86)
> You know how those $10M magazine sweepstakes always come with some > bank's gearantee of "sufficient funds on deposit"? Most of those > sweepstakes are also $X per year for 20 years, so "sufficient funds > on deposit" is nowhere near $10M. Furthermore, the big swwepers like Publisher's Clearing House keep the big prizes in the pot for many mailings so the get to crow about them for a long time before they have to give them out. Next time you get one of those envelopes try to find anywhere that tells just *when* the winners will be notified! Furthermore, although it may be a couple years between the time you mail in your sweat-dampened entry and the time they decide that you should get a prize, if their notification is returned by the post office you're outta luck.
stu16@whuxl.UUCP (SMITH) (01/14/86)
What I would like to know is - does anyone out there in netland know of anyone who has ever actually won one of these sweepstakes? As of October, 1985, there were 23,445 employees at Bell Labs, and I have never heard of any of us winning. How about all you Bell System people, AT&T(generic) people and BELCORE people? Any winners? All these people combined make up a pretty comprehensive sampling of the population distribution. Let's hear from a winner!!! -- whuxl!stu16
mdf@osu-eddie.UUCP (Mark D. Freeman) (01/16/86)
I keep winning Black Stars of India from a comany called Pooles. I get a letter saying I have won a valuable prize, one of the following: 1) car, 2) TV, 3) A genuine Black Star of India. Just send this letter back and we'll send you your prize. I am now building a collection of these things, as well as some sort of jade looking gems I also keep winning from these folks. The stones are all about 3/8" in diameter, and could well be plastic for all I know. No cash, cars, or TVs yet. If Ed McMahon is on the net, please notify me of my winnings via email. :-) -- <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Mark D. Freeman Guest account at The Ohio State University StrongPoint Systems, Inc. mdf@osu-eddie.UUCP 209 Olentangy Street Mdf@Ohio-State.CSNET Columbus, OH 43202-2340 Mdf%Ohio-State@CSNET-RELAY.ARPA !cbosgd!osu-eddie!mdf I disclaim even my very existance. "This must be one of those gay-arab-biker-sushi bars!" -- Protocol <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
mom@sfmag.UUCP (M.Modig) (01/22/86)
> > You know how those $10M magazine sweepstakes always come with some > > bank's gearantee of "sufficient funds on deposit"? Most of those > > sweepstakes are also $X per year for 20 years, so "sufficient funds > > on deposit" is nowhere near $10M. > > Furthermore, the big swwepers like Publisher's Clearing House > keep the big prizes in the pot for many mailings so the get to > crow about them for a long time before they have to give them > out. Next time you get one of those envelopes try to find > anywhere that tells just *when* the winners will be notified! > Furthermore, although it may be a couple years between the time > you mail in your sweat-dampened entry and the time they decide > that you should get a prize, if their notification is returned > by the post office you're outta luck. The big giveaways have three general defects: The payoffs are given out over a long period of time (30 -40years), or they have balloon payments good only to the original winner- (e.g., $10,000/year for the first 24 years and $1,010,000 for the 25th) The copntests stretch out over a long period of time (the current Publishers Clearinghouse game will stretch over 26 months!) There are no guarantees about exactly how much will be given away-- if any. Nowhere does it say something like " all prizes will be awarded", at least, not on most of these things. One of the last sweep said, "Over $2,000,000 in prizes will be given away." They gave away a total of less than $2,100,00 in the whole promotion. All in all, it's a real scam. Mark Modig ihnp4!sfmag!mom