A fixed fee promotion is an insurance style solution to protect a brands spend on a prize competition. A popular way that this may be used is for golfing events for example. Often business or charity events, if there is a hole in one on one of the holes, someone wins £5000 for example. The prize fund is insured against so that the sponsoring brand doesn’t have to come up with the £50,000 to pay out. They would likely take out an insurance policy for £2000 (example) to protect themselves. This financial protecting concept is very popular among prize competitions and works in 2 main ways.

Say for example that a brand wants to offer a promotion where ‘everyone wins’. To have such appealing headlines, every person who plays MUST win a prize of some kind. However, the number of plays is unknown. With the total units of prizes therefore unknown, a fixed fee policy can cap the cost and protect against over redemption.

Secondly, brands can run promotional campaigns with huge headline prizes to be won. This could be ‘Win 1 of 10 Ferraris’ for example. However small the odds are of one, several or all of the prizes being won, they must legally be available as set out in the terms and conditions. Therefore, there is a risk to the brand that prizes may be won that they hadn’t budgeted for. Therefore, a fixed fee policy will cap the cost of the value of prizes won protecting the brand.