A contest can draw attention to your business and give you a list of people who want your product or service.

A recent Exact Target study showed that the number one reason people will ‘Like’ a Facebook Page is to be notified of special offers and promotions. With that in mind, it’s a good idea to run a contest on your Facebook Page.

Contests offer a range of benefits: they give people a reason to connect with you, make your Page more fun, and gains more exposure for your brand and site. They also give you an opportunity to collect the emails of the people who entered the contest, and nurture them down the sales funnel.

Different types of businesses can benefit from Facebook contests. For example, if you’re a consultant, you can offer a consulting package that people may not know about. If you’re a florist, you could offer a “Fresh Flowers for a Month” package to get your community thinking about treating themselves to flowers every week. If you’re a Web designer, you could give away a free website redesign to prompt others to use your services. When people enter your contest, you automaticallyhave a list of potential customers.

You can choose to run a true contest, in which some kind of vote determines the winner (or the winner could be judged by you), or a sweepstakes where the winner is chosen at random.

There are different ways to set up the contest. For instance, you can organize it around a picture. Someone can upload a picture that is judged by your community. Nikon ran a photo contest on Facebook and whoever attracted the most ‘Likes’ on their photo, won a new Nikon camera. Another example might be a writing contest: one coaching professional had people write a short statement about why they wanted to come to her weekend retreat. She judged the entries herself and the winner was entitled to a free registration to her retreat.

Sweepstakes are also common on Facebook. The barrier to entry is low because people typically just have to enter their name and e-mail address and ‘Like’ the Page. As no judging is involved, the winner is chosen at random. If you use a third-party application such as Wildfire to run your sweepstakes, the application will assist you in selecting a random winner.

Whether you use a contest or a sweepstakes will depend on your goals. Typically, contests are better for engaging your current community and sweepstakes are better for growing your community. If you use the Wildfire application to administer your contest or sweepstakes, you can also choose to give away coupons.

Contests : A contest will increase your community involvement by having users vote and may drive more of the entrants’ friends to your Page, as users ask their friends to vote for them. But if the entry requirements are too involved, you may not get the turnout you had hoped for.

Sweepstakes : A sweepstakes is better for growing your Facebook community or e-mail list. The requirements for entering the sweepstakes are typically entering a name and e-mail address and possibly ‘Liking’ the Page, which is very easy for most people to do. You will get more entries but possibly not as many people sharing it with their friends.

You should definitely understand Facebook’s promotion guidelines before starting your contest. While you may see others violating the terms, Facebook does state that it can remove materials relating to promotion or even disable your Page or account. So it pays to follow the rules! Start by reading them over at: http://www.facebook.com/promotions_guidelines.php

You can use a third-party application designed to administer contests (such as Wildfire, North Social, Woobox, and others), or you can program an application yourself to collect entries, though this is more involved.

Basically, you cannot collect entries, conduct a drawing, or notify winners through Facebook directly. The notifications have to be done through a different tab on your Facebook Page.

For example, you cannot:
• Put a post on your Wall that says “Everyone who responds to this post is entered to win xyz.”
• Have people upload a photo to your Wall to be entered in a contest.
• Announce the winner of your contest with a post on your Wall.
• Have anyone who ‘Likes’ your Page be automatically entered in a drawing (you can have this be a condition of entry, but it cannot be the only way that someone enters the contest). Third-party applications make running a contest on Facebook a snap. They are designed to comply with Facebook’s rules, they collect the e-mail addresses and many include analytics to keep track of views, entries, and other statistics.
• Wildfire
• North Social
• Strutta
• Woobox
• ShortStack

Photo and video contests can be fun and get more engagement but may not get as many entries. Many of the photo and video contest applications make it very easy for someone who enters the contest to share it with their friends so they can get votes, thus driving a lot of traffic to your Facebook Page. One of the biggest problems with hosting a Facebook contest is that you may get people who just want to try and get the freebie (especially if it’s something good!), who aren’t interested in connecting with you later. Make sure that these people can easily unsubscribe from your list. Be very clear when people sign up that they will receive follow-up emails from you. Some people will mark your email as spam if they are not expecting it, and you don’t want your email account to be flagged multiple times for spamming. If that happens, your account could be shut down. The horror after all that hard work!