What exactly is a giveaway business?
As the name suggests these giveaway businesses host enticing raffles. Often, donating a small portion of the funds to a charity. It’s simple to enter. You purchase as many entries as you want via a website.
In this guide, I’ll be focussing on the car niche. Firstly, I love cars which is how I discovered the business model in the first place. Secondly, they seem to be popping up more frequently making this easier to analyze with some degree of accuracy.
These giveaways are particularly enticing to the car community because the cars aren’t easily accessible. One of the prizes up for grabs is a 1967 Mustang Shelby GT500 named ‘The Eleanor’. This is especially rare because it’s the same model featured in Gone in 60 Seconds. To top it off the same business is giving away the world’s fastest Nissan R34 GTR in a future giveaway.
Unless you have a spare $500k you probably won’t be able to get your hands on either of these cars.
Which players are in the market?
This is the first business I came across and by far the most popular. They have 130k Facebook likes and 110k Instagram followers. The business is run by Adrian, a car enthusiast from Melbourne. They’re currency giving away both the 1967 Mustang Shelby GT500 and the world's fastest Nissan R34 GTR. If you decide to become a member you’ll gain access to even more prizes. A guaranteed portion of sales is donated to the Make a Wish Foundation (a children's charity).
This is fairly similar to LMCT+. They’re currently promoting a 2009 Nissan Skyline R35 GT-R. Although, they still run other promotions on various electronics and holidays. The Road and Beyond have 7k Facebook likes and 2k Instagram followers. The charitable partner is a men's mental health awareness charity called Beyond Blue.
Top Blokes Foundation is slightly different from the businesses above. This is a legitimate registered charity. Top Blokes Foundation is on a mission to transform young male health. They actively run support programs for males aged between 10-24 years old. According to their website, they’ve been doing so for almost 10 years. They have 10k Facebook likes and 4k Instagram followers. Currently, they’re giving away a 1965 Ford Mustang Fastback.
So how exactly do these businesses operate?
It’s important to be certified and compliant with your local government's regulations. There are many rules and regulations (in Australia anyway) that ensure only registered organizations conduct high ticket giveaways. They also cover how you draw and announce the winners. This is likely to be the biggest barrier to entry.
Networking seems to be a key factor and differentiator. LMCT+ boasts over 400 partners in the automotive industry. No doubt allowing them to reliably source some of the most desired cars in the world. Partner brands also benefit from free advertising and publicity.
The rarer the car the more successful the giveaway. It would be hard for anyone to justify spending $30 (minimum) on a ticket for a car they don’t even like. I wouldn’t hesitate for a second to spend over $30 on the chance to win my dream car (i.e. the world’s fastest Nissan R34 GTR). I try to use the good causes behind them to justify my decision.
From here it’s a matter of leveraging social media, sales copy, and highly optimized funnels.
Leveraging social media & sales-funnels
Leveraging social media marketing is the easiest way to scale. Here are some ads for the businesses we covered above.
Super effective, right?
Who wouldn't want to see flames popping from the exhaust of your dream car? The ads are clearly attention-grabbing. However, the sales funnel is where the real money is to be made.
LMCT+ & The Road and Beyond are both using ClickFunnels according to BuiltWith. Making it extremely effective to upsell or down-sell customers in the funnel. If you haven’t heard of ClickFunnels I recommend reading Dot Com Secrets by Russell Brunson.
You can see one of the LMCT+ funnels for the Mustang giveaway below:
The funnel starts with awareness (usually an ad) and moves to an attractive front-end offer. After the first purchase has been made another highly attractive offer is presented. A down-sell offer could also be presented before a user churns.
An optimized sales funnel is so profitable because the front-end offer can be so attractive. It does a great job at getting more customers into the funnel and the profit is usually made on the ‘one-time offers' in the backend. This increases the average order value.
A basic comparison of a stands sales process and an optimized sales funnel is below:
How to apply the giveaway model to other niches?
This is all pretty interesting but it’s unlikely you’ll be able to compete in the car niche. Even if you love cars, it’s going to be a slog. It’s not a suitable side project.
However, it could make sense in other niches where the items aren’t so hard to obtain but still highly desirable.
My criteria would look something like this:
- Is the niche obsessive?
- Reddit communities?
- Instagram fan pages?
- Facebook fan pages?
- Is the value of the item greater than $10k?
- Would the community be able to access the product easily?
- Is the product considered custom/rare or is it generic?
- Would brands/partners benefit?
- Are there obvious causes or charities the community cares about?
- Is anyone else already doing this?
- If the answer is yes it’s a good sign, if it's no then you’ll need to test
Any niche with an obsessive audience is a good place to start. An obvious one that comes to mind for me is the cycling niche. Being a cyclist myself I know how obsessive the community can be. Anything expensive, aesthetic, and eccentric is often highly desired.
Take a look at the Reddit communities below related to cycling:
It’s safe to assume there’s a market here if r/bikeporn has 95k subscribers. Either way, it’s a perfect place to validate the idea. I’ve written a separate guide on how I would validate this risk-free using Reddit, Gumroad, and a basic Carrd landing page.
Assuming you've validated the idea, you have the required licenses, and some early adopters it should be easier to convince other businesses to work with you. You'll be sourcing and promoting their products!
A basic process I would follow to get this started:
- Cold outreach to the small businesses in your niche (easier in your local area)
- Develop a criteria for which businesses you want to work with
- Build an attractive cold email outlining the direct benefits to the business
- Hire someone from Fiverr to build the leads & cold email outreach for you
- Negotiate to pay a percentage of the product upfront until you have enough entries to cover the total cost
- Hire a photographer/videographer to create awesome content
- Partner with all the obsessive niche Instagram pages, Facebook groups and subreddits
- Start running paid ads
Where to from here?
By now you’re probably thinking of all the ways you can test and scale this model. However, I challenge you to go a step further and build a genuine foundation or support real causes you care about.
There aren’t many ways to profitably support great causes, this is definitely one of the few.