Many siteowners want to use competitions to earn revenue from their site! People who like entering competitions do shop online, but not always whilst they're entering prize draws so keep that in mind. You may need to incentivise them to buy there and then (e.g. discount codes) or make sure you're in a position to remind them about your site (e.g. collect data and email them).
Here are some ideas how you might be able to earn revenue from competitions....
1. Affiliate Marketing
We use affiliate marketing in our competitions. For example asking users to visit a site to check a price. This is a useful tool for merchant promotion, but doesn't always generate instant revenue. If you're working closely with a specific merchant you might be able to get extra commission or payment from them in exchange for your promotion. They may even donate a prize!
2. Competition Sponsorship
You could ask for payment to run a competition on behalf of a sponsor. However, note that a sponsor, or PR company may donate a prize and regard that as part or all of your "payment".
3. Data Collection & Selling
Payment for leads is popular for competitions! You run the promotion and get paid per qualified entry by the sponsor. You may have to provide the prize, so make sure you figure your costs versus entries! Alternatively you could collect data and try and sell it - not always easy! Note that many people now regard large data collection type sites as "spam".
4. Co-Registration Competitions
Some sites use co-registration to generate revenue from their prize draws. Entrants fill in their details and are then shown offers and promotions. If they sign up - you get paid. You can pick up a few co-reg deals via affiliate networks but these tend to be limited (September 2010). As an aside we'd probably not list your competiton either.
Some siteowners use adsense or similar on their competition pages to try and generate revenue. Note that you can't force or ask users to click on the ads - it's not allowed.
SMS or text competitions allow you to charge an entrant a fee to take part. However, be careful! You need to consider costs versus entry levels. Mobile operators often take a huge chunk of the payment and unless you have ITV levels of exposure you may struggle. The more expensive your SMS charge the fewer entries unless it's a really exceptional prize on offer.
It's Not Always About The £££'s
Remember that your competition can also be used to (1) promote your website and (2) build a mailing list/social following. You may not always generate revenue directly from a competition but it could be generating added value in other ways such as SEO, traffic or brand awareness.
It's also worth considering when you'd like your user to generate you revenue! If you're after sales then they're more likely to be attentive after they've entered the competition so give them a discount code on the "thanks for entering page" or email them your latest offers.
However, if entrants aren't going to buy then think about how you can make them useful to you! Give them the tools to help promote your brand and competition further across the web. For example try adding Twitter and Facebook links on your "thanks" pages.