Contest marketing seeks to give shoppers a positive retailer-related experience, create an affinity for the products a retailer sells, and collect information about shoppers that may help with future sales-oriented marketing campaigns.

The idea of giving away hundreds of dollars worth of merchandise and advertising may seem like an expensive proposition for small and middle-sized online merchants. But contest marketing can be an effective approach to acquiring loyal customers. What's more, some product vendors will support contest marketing with free products to use as prizes or even advertising co-op dollars to promote the contest.

As with any marketing campaign, not all forms of contest marketing are equally effective. Here are three examples.

Website-Based Giveaway

Perhaps the most basic variety of contest marketing involves placing a form on a merchant's website and supporting that form with email, pay-per-click, and other types of marketing.

The keys to success include having a significant prize, communicating about that prize, rewarding shoppers for entering — even if they don't win — collecting valuable customer information, and repeating this type of campaign often enough that some loyal shoppers will begin to look forward to these offers.

As an example, an online seller of western-related products gave away a pair of cowboy boots during a contest that ran from March 21 through April 4, 2012. The boots were valued at $199.99 retail and were part of a new line from the vendor, thus making them a prize worth winning.

The contest was announced using the retailer's social media presence on Facebook, Google+, Twitter, and Pinterest. Also, two emails related to the contest were sent to a list of nearly 40,000 subscribers.

The contest form collected basic information about entrants and enrolled those entrants into the retailer's email subscriber list.

Although entries were limited to one per valid email address, the retailer offered a bonus entry for joining a text-messaging list.

Entrants into the contest each received a $20 off coupon to purchase the boots — even if they did not win. In the end, many pairs of the boots were sold using this coupon, more than 3,000 shoppers entered the contest, and more than 2,400 signed up to receive text messages.

The retailer makes these sorts of contests an almost monthly event. In fact, a new contest starts May 1, 2012. This time entrants will receive a bonus entry for emailing friends about the contest or Liking the retailer on Facebook.