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How Publishers Clearing House Makes $1 Billion A Year - YouTube
Channel: Business Insider
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- You have won $125,000
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in the Publishers Clearing House giveaway.
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- Oh.
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- [Host] You go right
ahead and shed those tears.
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- [Narrator] The Publishers
Clearing House Sweepstakes
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has been around for more than 50 years.
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- I never knew there was this
much money in the whole world.
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- [Narrator] Inspiring
generations of dreamers
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with its commercials showing the iconic
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Prize Patrol delivering massive
checks to regular Americans.
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- Honest to God, Marge,
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I am not messing with you.
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- [Narrator] Today, the
company is still thriving,
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bringing in $1 billion in 2017.
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So how does Publishers Clearing
House make this much money
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when the company is known
for literally giving it away
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and paying millions
more to settle lawsuits?
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Publishers Clearing House was founded
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by Harold Mertz in 1953.
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Back then, the company only
sold magazine subscriptions
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and it became a pioneer in direct mail.
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-This check from the
Publishers Clearing House,
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it's mine.
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- [Narrator] In 1967, it
started its first sweepstakes
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as a way to entice people
to buy more subscriptions.
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- [Announcer] January 29th is coming fast.
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That's when Publishers
Clearing House announces
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the winning number for $10 million.
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- [Narrator] By the late 1980s,
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Publishers Clearing House
was a household name.
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- I think that they've nailed it
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in the way that they approach consumers.
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They show people
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that other people feel like,
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look just like them.
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It could be them.
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And they show them getting
this great big huge check
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and I think makes other
people kind of think,
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well if it happened to them,
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it can happen to me.
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(crying)
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- The emotion and joy that people showcase
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when they're surprised and they win
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is really kind of infectious.
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- [Announcer] There's only one
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Publishers Clearing House Sweepstakes.
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- [Narrator] The marketing campaign worked
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thanks to its exciting TV commercials
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and signature manila envelopes
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that arrived in mailboxes
all over the country.
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But by the 90's,
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the company faced some trouble.
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Numerous states sued the company,
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alleging deceptive practices
that made customers
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think that the more magazines
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and other products they bought
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the better their chances
would be of winning
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the big money.
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- Smart people don't enter those things.
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- [Narrator] To be fair,
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the company has been clear for years
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that no purchase is necessary
to enter the sweepstakes,
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but apparently it wasn't clear enough
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to the states that filed
lawsuits against the company.
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The trouble came to a head in 1999
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when Congress passed an actual law
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called the Deceptive Mail Prevention
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and Enforcement Act to better regulate
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Publishers Clearing House
and companies like it.
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- You've just won our forever prize.
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(screaming)
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- [Narrator] But that
didn't deter millions
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of Americans from coming back
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to Publishers Clearing House.
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The company currently has approximately
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15 million registered users
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and that's largely due to the
company's pivot to digital.
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In addition to magazines,
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the website has thousands of items
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of merchandise for sale.
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- They're a really big
digital business now.
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They're still a mail order company.
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You can sign up and get stuff delivered
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to your home left and right,
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but they have daily prizes all the time.
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You can sign up for these sweepstakes.
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- [Narrator] Another one of
the company's biggest assets
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is its customer's data.
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- They've got a large customer base
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that's really willing to give their data.
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They've got people's
names, addresses, ages.
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People are very comfortable.
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It's very direct and open,
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and they're able to target
them with advertising.
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- [Narrator] When you sign up for access
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to the Publishers Clearing House website,
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it's easy to see why people
would keep coming back.
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An endless stream of
opportunities to win cash prizes.
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The High Roller Cashout.
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The $1 Million Treasure Trove.
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The Pinata Payday.
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- They refer to it as
gaming as entertainment,
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or shopping as entertainment.
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They've really mastered this idea,
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it's almost like those
scratch off lotto tickets
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you can buy in the drug store.
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They've created a digital version of that.
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- [Announcer] Welcome to Inside PCH.
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- [Narrator] The company
broadcasts live on Facebook.
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- Hello, everyone, and--
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- [Narrator] Where users can tune in
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and play along live with
even more chances to win.
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- So there's nothing to lose
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and potentially millions to gain.
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- [Narrator] Even though the company
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has successfully adapted to digital,
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Publishers Clearing House
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hasn't completely escaped controversy.
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In April of 2018,
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a class action lawsuit was
filed against the company
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alleging deceptive practices.
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In a statement Publishers
Clearing House said
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it would vigorously defend and fight
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this matter that has no basis.
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- You recognize us?
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- I sure do.
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- [Narrator] For years, the
company has settled lawsuit
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after lawsuit for tens
of millions of dollars.
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- Keep entering, you never know.
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- [Narrator] Publishers
Clearing House reveals
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the odds of winning its sweepstakes
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in the Official Rules
section of its website.
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According to Publishers Clearing House,
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the odds of winning the company's
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$1,000 a Day For Life sweepstakes
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are one in 6.2 billion.
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Compare that to the odds
of winning the highest
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Powerball jackpot of all time
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at one in 292 million.
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- You won $1 million!
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(cheering)
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- [Narrator] But one thing's for sure,
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America is gonna keep playing
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because you never know,
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it could happen to you.
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We reached out to
Publishers Clearing House
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with questions about allegations
of deceptive practices
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and how the company protects
its customer's data.
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These are the company's responses.
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"Publishers Clearing House's broad range
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"of chance-to-win opportunities
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"are always free to
play, fullY transparent,
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"and easy for consumers to understand.
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"All PCH sweepstakes
promotions carry prominent
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"and repeated no purchase necessary
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"and buying won't help you win messages.
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"We have comprehensive
data security protections
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"in place to ensure that all data provided
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"by consumers is handled
with the appropriate
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"level of care."
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