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The Dark Side of Online Voting Contests
In recent years, we’ve seen how the online phenomenon of 'sponsored charity voting contests' has skyrocketed. The Chase Competition, the Changemakers Competitions, Ideablob, CNN Heros…the list goes on. Sometimes, these competitions have real money on the line. Other times, they offer little more than $500 or an honorary title to the winning charity. Either way, they’ve taken off, and for good reason. Companies have learned that nonprofits are so hungry for funding that they will go to extraordinary lengths to draw votes to their cause. What better bang for your marketing dollar can you get than sponsor an online contest that a) spreads the awareness of your brand, b) associates your brand with philanthropy and social good, and c) often gives you access to the contact information of thousands upon thousands of people? If I were in corporate marketing, I’d host a competition like this every week.
Corporate marketing dollars going to impactful causes is a positive phenomenon, and one we’ll only see more of in the coming years. However, there are a few things about the way many online voting contests work that have me concerned for the efficiency of the nonprofit sector - especially the resource-strapped startup-type organizations that are most likely to be motivated by such contests.
My concerns are motivated from experience – FORGE has participated in dozens of these competitions over the years, of which we’ve won several. Each time, it takes a considerable amount of effort to notify, encourage, and thank our network for taking action on our behalf. More importantly, though, each time we ask our network to vote we use a valuable asset (the time and attention of our network) that we could have used for something else. That is, each request for a vote (whether fulfilled or not) represents an opportunity cost to the organization doing the asking.
Whether or not it makes sense for an organization to use its valuable resources to promote a contest depends on whether or not the predicted payoff of the prize money exceeds the cost of entering the contest. The predicted payoff of the contest is equal to the value of the prize money multiplied by the probability that it will won. Therefore, if I think that FORGE has a 30% chance of winning a contest that we do our best to get out the vote for, then the predicted payoff of that contest to FORGE is $1000 x .30 = $300. The cost on entering the contest is equal to the combined total of real costs (staff time, overhead, etc) + opportunity costs (the value of what staff could be doing with their time otherwise, the value of using a request of your network for another opportunity, etc).
This decision is represented by two simple equations:
If Prize Money * Probability > Real Cost + Opportunity Cost --> Promote contest, utilize resources
If Prize Money * Probability < Real Cost + Opportunity Cost --> Do not promote contest, conserve resources
These equations illustrate that for the nonprofit industry as a whole, the most efficient use of resources would dictate that only those organizations whose predicted payoff of winning is greater than their costs should invest in these contests. In other words, only organizations that have a decent chance of winning a decent sum and don’t have to spend an arm and a leg to do so should invest in these contests. If an organization doesn’t have a decent predicted payoff, promoting the contest would simply waste valuable resources that could be used more efficiently to forward their social mission.
Simple enough, right? The problem, as we all know, is that most of these contests are not set up in a way that makes it even remotely easy for nonprofit executives to judge the predicted payoff, or even the real cost, of entering the contest. As we all know, in a market setting, the lack of information is the chief enemy of efficiency. And yet, most of these contests are set up in such a way as to hide the exact information that is critical to the accurate decision making of the nonprofit parties.
The fundamental divide comes down to a basic mismatch between the incentives of the sponsoring company and what is best and most efficient for the nonprofit sector. Clearly, the sponsoring company is motivated to set up the competition in such a way that they maximize the number of total votes received (ie, the number of total brand ‘touches’ and/or individual’s contact information received). However as demonstrated above, from the social sector side where each ‘vote’ collected has both real and opportunity costs, the ideal scenario would be that as few as possible votes be cast to produce the same outcome as would be produced had the maximum number been cast. In the same way that it is a waste of resources for a 2.0 GPA student to apply to an Ivy League school, it is a waste of social resources for a organization with no chance of winning to get out the vote for an online contest.
This is not to say that online contests shouldn’t happen. I think they can be great, and FORGE has benefited from them a lot. However, we could improve the social benefit of such contests by structuring them in ways that maximize the mutual benefit for both the participating nonprofits and the sponsoring companies.
Here are my two basic recommendations for all sponsored voting competitions:
- All contests should have leaderboards
A lack of leaderboards (or other ways to compare your organization’s standing to that of others in the competition) is the primary problem that makes efficient decision making about resource use difficult, if not impossible. For example, in the recent Chase competition where there were no leaderboards (though at least you were able to know your vote count), countless organizations wasted countless resources on a cause they couldn’t win. Others, like FORGE, didn’t enter or entered late because they made the erroneous assumption that they wouldn’t be able to win. Both of these types of inefficiency would have been solved if there were a clear leaderboard of the top vote getters that nonprofits could use to judge their probabilities of running a successful get-out-the-vote campaign.
Leaderboards and dynamic vote counts have another benefit: they make an organization's job of getting out the vote infinitely easier. I can't tell you how much stronger it is to say "We need 50 more votes to take the lead!" than it is to say "Vote for FORGE! We're awesome!" In the end, companies may end up getting more votes overall because the incentive to vote when there is real feedback and real competition is so much higher.**
Most contests that hide the vote counts or don't disply dynamic leaderboards use the justification that they want voters to consider each organization carefully and then vote for whichever they think is best, without being swayed by the probability that that organization will or won’t win. While in theory its great to imagine people browsing carefully through online contests, weighing their options, and then ultimately voting for the best cause, I’ve never seen it actually work this way. With the possible exception of a contest promoted by the likes of CNN,** almost all voters come because they’ve been asked by a specific organization and are only interested in voting for that specific organization. Forcing them to vote for other organizations at the same time usually just results in them grazing the list for the titles that seem least likely to win so as to relieve competition from the charity they came to vote for (sorry, Changemakers, that’s just how it works!).
- All contests should aim to balance the social value of the prize money and the marketing value to the sponsor
A year or two ago, FORGE was in an online voting contest that awarded the winner $1000 in prize money. The contest required all voters to enter their email address, which the company immediately began using to spam everyone who was generous enough to cast their vote. The contest must have generated at least 10,000 votes – ie, 10,000 leads for the company that sponsored it. Despite a large ‘get out the vote’ effort with our constituents, FORGE and 11 other finalists didn’t win the $1000 prize money. None of us have any idea how much we lost by, and we all used up a valuable resource of a request to our network to perform an action. In total, resources worth much more than $1000 were invested into the competition, creating a net loss for the social sector. Looking back, not only was the predicted payoff for FORGE lower than our costs of promoting the contest, but the social value of the contest was lower than the social resources used! As a sector, we need to be aware of when contests are, essentially, scammy.
Alright, this was the diatribe result of me not being able to fall asleep tonight. Going to try again…
Kjerstin
**The *only* exception I can think of to the "always have a leaderboard" rule would be contests that have such massive traction and marketing that no matter the network of any one nonprofit, they won’t be able to sway the vote. The truth is that very few people go around looking for random contests to vote in, so these examples are few and far between – perhaps the CNN Heroes is one of them? In this case, the most efficient thing to do would be to tell the nonprofits not to bother trying to get out the vote because it will be decided upon by the public at large.
Great post on online contests
As the winner of four online competitions with Atlas Corps (AGC'08, Ideablob, AGC'09 and Chase) I know the upside of online competitions (about $175,000 for Atlas Corps and the vast majority of our fundraising since we began in '07). However, I completely agree with your post.
There are significant upsides to competitions that you did not fully account for, such as getting your volunteers excited about the organization, increased media attention, etc. But the downsides are often overlooked or misunderstood. Furthermore each competition is not created equal. One of the great things about America's Giving Challenge is that even if you lose, you have hopefully raised lots of money. With IdeaBlob you do all this work to get votes and if you don't win, there is not much to show for it.
If I spent more time on it, I am sure I could add to your recommendation list for contests, but I think you articulated very well too of the most important issues for those organizing contests should think about and the basic equation that nonprofits need to work through before jumping in.
Online contests are only going to increase in 2010. While I think this empowers supporters and volunteers of nonprofits, those organizing the contests need to give a lot of thought to how to maximize their impact and empower the sector rather than distract the sector from doing much needed work to address social needs.
Scott Beale
Founder & CEO
Atlas Corps
http://www.atlascorps.org