- November 19, 2012
- Posted by: Seth Heyman
- Category: Marketing & Advertising Law
An old game show whose name escapes me used to offer losing contestants a consolation prize of a year’s supply of Turtle Wax. Other contests and sweepstakes also offer a lifetime or year’s supply of one thing or another, and this begs the question: what exactly constitutes a “lifetime’s supply” of anything?
If you’re seeking an answer to this question, then look to the Federal Trade Commission’s “reasonableness test” for guidance. The FTC employs this test when considering whether a business practice is unfair, misleading, or deceptive. Basically, the test requires an examination of the practice in question from the perspective of a reasonable person of average education and intelligence. In this case, the required analysis would be whether the amount awarded would last an average individual for the time period stated.
Although general in nature, this guidance does provide a framework for determining the necessary amount to award. For example, to determine how much Turtle Wax to deliver that would be sufficient to last a lifetime, the promoter should look to how often the average person might wax their car. Once waxing per month seems reasonable. The next step would be to determine how much Turtle Wax it takes to wax the average car. Most people own a mid-size sedan, which requires a half-can of Turtle Wax for a complete waxing. Then, look to the average human life expectancy in the U.S., which is about 78 years old. Then, subtract that number by the minimum age of entry for the contest or sweepstakes in question. If geared towards adults, that number might be 18.
Stated as a formula, the analysis would look like this: C x 12/2 x L-M, where C represents one can of wax times 12 divided by 2 (the number of waxes per can), L is the life expectancy and M is the minimum age. In other words, 6 x 60 or 360 cans of Turtle Wax.
A similar analysis should be employed regardless of the prize being offered or the period of use. Calculate how much to award based on average daily or weekly consumption of the product. For instance, Starbucks defines free coffee for a year as 52 10-count packages of K-Cups.
One must also take into consideration the type of product being offered as a prize. For example, if your prize is free gasoline for a year, you’d need to take into account the size of the average gas tank (15 gallons) and the number of times the average American fills it up (every two weeks, or 104 times per year). Rather than deliver a tanker truck filled with 1,560 gallons of gas to the winner’s door, consider offering a prepaid card with enough value to cover the cost. Of course, you’d then have to determine the average price of a gallon of gas in the winner’s local area over the specified time period. Because the cost of gas fluctuates, you’d need to calculate the average cost over the preceding 12 months.
If this type of math makes your head spin, just offer a cash prize and call it a day.