You've probably been aware of the word "sweepstakes" since seeing Publisher's Clearinghouse advertisements on TV as a kid. But what exactly is a "sweepstakes"?

A sweepstakes is a game of chance. Businesses use these to promote a product and help sell merchandise. Sweepstakes fall under the marketing budget of most companies. The company gives away something, cash, a vacation, a popular electronic device, for free in exchange for either signing up to win or purchasing one of their products.

Mailing lists are quite valuable to companies so most sweepstakes are designed to help companies build a mailing list. For example, an airline company might offer a free trip to Paris valued at $5,000. In order to be eligible to win this trip, you must sign up for the sweepstakes and provide information such as an email address and perhaps even a physical address. The airline company can use this information to send you offers through the mail that could entice you to become a customer. They're basically willing to bet that the value created from the people they are able to reach through their new email list will exceed the $5,000 trip to Paris they are giving away in exchange.

Not all companies seek to create a mailing list through their sweepstakes program. Some sweepstakes are just to help build brand awareness. For example, a potato chip company might hold a sweepstakes where they give away a $2,500 American Express gift card. What's in it for them? Well, all of the people who read about the sweepstakes will remember that it was XYZ Potato Chips who gave away that huge gift card. Next time they're in the store, maybe they'll be more inclined to reach for XYZ chips instead of ABC chips. It's as simple as that.

There's really nothing to fear when it comes to entering sweepstakes. As long as you're aware that entering sweepstakes will probably lead to receiving promotional offers in the mail, then go ahead and sign up for that nice vacation or cash giveaway. Hey, someone's gotta win, right?!