But who deducts taxes from these amounts? How are giveaways organised in general from a legal and tax point of view, and why are brands increasingly refusing to participate in them? We've secretly found the answers to these questions through a little investigation based on interviews with layers.
What is a giveaway?
Giveaways are a quick way to attract new followers to your Instagram profile. Influencers (less often brands or companies) give away expensive gifts: large sums, Apple smartphones, cars, etc. To participate, all you need to do is subscribe to a specially created contest account and to the profiles of the advertisers sponsoring the giveaway.
As a rule, the organiser of the giveaway is not the blogger themselves, but third-party specialists.
What does the Instagram loop giveaway scheme look like?
- The organiser comes to the Instagram blogger. They choose the concept of the draw and negotiate the fee for the giveaway.
- Then the organiser looks for sponsors. They can be celebrities, brands, or small bloggers looking to build an audience who are willing to pay money for it. Participation can cost a sponsor from tens to hundreds of thousands of rubles – it all depends on the size of the giveaway.
- When sponsors are found, active promotion of the draw begins. In posts and stories, the blogger encourages subscribers to try their luck in the competition.
- After subscribers become participants in the giveaway, sponsors get new subscribers, the blogger gets money, and the lucky participants get valuable prizes.
Who earns on giveaways, and how much?
Bloggers themselves can earn about 20-30% of the sum of all placements and monetization of giveaways, as calculated by the creative agency Triko. But if they act as organisers (that is, they carry out "personalised" giveaways), then their earnings often exceed 80% of the total amount.
What are giveaways fraught with for sponsors?
Often for an advertiser, a giveaway is a surefire way to end up paying out to ditch an account. The massive influx of followers and the following wave of unfollows (more on this below) lead to the Instagram algorithms deciding that something is wrong with the account and drastically limiting the reach. As a result, not only new, but also old loyal subscribers do not see the blogger's posts.
How prizes are given to dummy winners of giveaways
No one ever seems to win a huge Instagram giveaway. The main task of the organiser at every stage is to get as many followers as they can and prevent massive unfollowing.
To reduce the rate of unfollowing, sometimes they go for tricks. For example, immediately after the end of the draw, the account is blocked for about a day. Then the giveaway members cannot find it in order to unsubscribe immediately. Another option is to announce another rally next.
How the law regulates the Instagram giveaway
Although giveaways are not directly regulated by law, the party that publicly announced the payment of money or the issuance of an award is obliged to fulfil the promise if the winner performed the necessary actions within the time limit established by the rules.
Judicial practice suggests that giveaways are most often interpreted as advertising services.
What other difficulties may arise in court?
If a blogger decides to "merge", then it will be difficult to prove that it was they who announced the competition – the Instagram account is not tied to a specific person.
Since a citizen is not identified by passport data, the courts are unlikely to accept the plaintiff's arguments that the account belongs to a specific person, unless the defendant himself denies the fact of posting a post / story.
If the prize is not given to the winner, it is extremely difficult to dispute.
About Instagram sanctions, or how giveaways kill your account
Instagram is categorically against giveaways and prevents them in every possible way from being held: it blocks contest pages, imposes restrictions on the number of simultaneous subscriptions, and blocks contest posts. There were cases when Instagram blocked the accounts of bloggers who conducted giveaways.
If you go to any page of a past giveaway, you will see the following picture:
Due to bans, the transparency of participation in giveaways for followers is lost:
- The blogger uploads the contest video and indicates the page that you need to follow – the participants go to the page and subscribe to all sponsors;
- Instagram deletes the contest page;
- The blogger asks participants to follow a new page for the contest (constantly changing the contest pages in the description of the contest post);
- Instagram deletes the new contest page.
And so in a circle….
As a result, by the time of the broadcast, only the last of 3–10 contest pages remains, which participates in the contest. All the rest, to which the first participants subscribed, simply do not participate in the competition.
How to get tons of followers in a legal way, without giveaways
You can get a lot of great, dedicated followers, who will really like your content without any prize. This will take more time and a little more effort, but much less money, than participating in someone's illegal scheme.
Just let your followers know that you’re here. It’s easy to look at their pages' activity – if they open your account and like it – they will stay there forever.
Use a professional and automatic tool for this: Instagram promo – it will perform actions from your account even when you sleep. You can set it up once, and the followers will come to your account and follow you all the time.
The number of followers and likes doesn’t matter if you run an Instagram account for business. Millions of Instagram users are looking for your goods – they can become your loyal consumers if they find you. Instagram bots aim to help you detect and attract future clients through AI targeting and develop long-lasting relationships through engagement. If they follow accounts similar to yours, they will pay attention to your Instagram and convert.
Sell products on Instagram to the interested audience, maximising your ROI.
How to use Instagram promo
This is a really cool feature to use as you can basically get your competitor’s followers right from their followers list. You can get them directly from their latest comments and their stories. This is a really handy feature for those who need to get extra relevant and hot clients.
Instagram promotion tool is great to gain followers. After you signed in and set up your profile in the Inflact system do the following on the Instagram promo bot.
- Choose hashtags for reaching the right people.
- Choose locations you need to reach
- Choose competitor accounts to get their followers.
Choosing competitors’ accounts is a crucial step for setting up your promotion well. We advise you to use a special Profile Analyzer tool to find competitors’ accounts with the biggest engagement and the most active audience for you to target.