I was wondering, how effective were contests when it comes to marketing? For example, if I offer an entrance to a contest to win x amount of dollars per purchase, how effective is that type of incentive?
I have considered doing contests. And am definitely going to do some in the future. The thing about contests though is that they too have to be marketed some how. You can't just put up a contest and then people come running. The best thing about contests is it will increase the word of mouth marketing from your existing customer base. As well as give you something else to leak out into your other marketing methods, one being posting in forums or doing articles and press releases
Many of the now big sites out there have tried it. It failed miserably. I've never tried it because it is just common sense that it doesn't work. You have moochers coming in, and then leaving, never to come back. Many don't don't give much weight to online contests, so not many will click on the ad. If running a message board, they will post just to see what happens, and when the contest is over, they are gone. Many times more revenue goes out the door for these contests than what is being brought in. The idea is to make money, not give it away. But, try it anyway. Experiment.
I guess it also depends on the prize you are giving away, if its related to your niche you have a higher chance that your visitors will stay