Publishers Clearing House

Publishers Clearing House

Type	Private
Industry	Publishing
Founded	1953
Headquarters	Port Washington, New York, United States
Key people	Robin B. Smith, Chairman Andrew Goldberg, President and CEO Deborah Holland, Executive Vice President H.W. Low, Senior Vice President Todd Sloane, Senior Vice President/Creative John Princiotta, Senior Vice President/Marketing Craig Anderson, Senior Vice President/Operations Rick Busch, Senior Vice President/CFO Christopher L. Irving, Assistant Vice President, Consumer & Legal Affairs
Revenue	US $700 Million (2010)
Net income	US $? Million (2006)
Employees	420 (2006)
Website	pch.com

Publishers Clearing House (PCH) is an American multi-channel direct-marketing company that offers discounted magazine subscriptions and household merchandise to consumers with the chance to enter to win one of many ongoing sweepstakes. As a direct-marketing firm, it has no retail offices; its operations are concentrated in several physical offices, including its world headquarters in Port Washington, New York. It reaches consumers through direct-mail offers and online communications supported by its web site.

A limited-liability company, it is staffed by 400 employees and headquartered in the same town where the company founder, Harold Mertz, started the company from his garage. The street adjoining the local post office in Port Washington, LuEsther Mertz Plaza, is named after Mertz's wife. Upon the death of Mertz and his immediate family, the company was passed to ownership by a number of charitable trusts.

History

The company was founded in 1953 by Harold and LuEsther Mertz and their daughter, Joyce Mertz-Gilmore. Mertz had worked for Look magazine and believed that magazine subscriptions could be sold in a more efficient manner by bundling them together in a single mass mailing offering the lowest introductory prices. With mailings offering consumers an array of discounted subscription offers, the company soon became the largest magazine-circulation agency in the industry.

Following on the success of the Reader's Digest sweepstakes introduced in 1963, the company launched its own sweepstakes in 1967 as a way to draw attention to the magazine deals in company mailings.

In the late 1980s, the company began awarding sweepstakes prizes in live recorded moments featuring the Prize Patrol, a team of PCH employees that travels to locations awarding prizes with balloons, champagne, flowers and a big check with cameras recording the event for commercial use.

While the company's product offerings were broadened with a wide range of merchandise and collectibles in the mid-1980s, magazines sales accounted for the majority of the company's sales until the early 2000s. Merchandise now accounts for the majority of its sales. The company obtains additional sales from renting the names of those who respond to the sweepstakes, or make a purchase, to other mail order companies.

Between 1994 and 2010, the company paid over $52 million to settle charges that its magazine promotions were misleading. It "agreed to change the ways it promotes its sweepstakes" and apologized for the "harm done in the past by its deceptive practices". The first of these settlements was with 14 states, in August 1994. In September 2010 it violated these previous agreements, and paid $3.5 million to settle contempt charges (see "Government Regulation" section below).

By 2000, its magazine and merchandise sales plummeted at least 30 percent "amid bad publicity from lawsuits now numbering 25 in which individuals and attorneys general – including New York's – alleged that it deceived consumers in its frequent mailings." This resulted in the laying off a quarter of its 800-person work force.

Online development

The company launched its first website, PCH.com in 1999, providing an online means to enter the company's sweepstakes and shop for magazine and product offerings. In July 2006, the company acquired Blingo Inc., a company-sponsored website that offers search results to marketers. Blingo was later re-branded as Search and Win.

As reported by The New York Times, late in 2008 the company expanded its traditional direct-mail and online offers to more youthful channels including Twitter and iPhone applications. According to a December 22, 2008, Times article, the objective of these new offers was to use the registration information to increase PCH’s mailing lists.

In 2009, it partnered with Arkadium to launch PCHGames.com, an ad-supported site with both display and video ads. This was followed by the acquisition of online casual-gaming sites and other online properties.

In January 2012, the company acquired mobile marketing company Liquid Wireless. Terms of the deal were not released, but it is in line with their recent increase in focus in digital and social platforms.

Government regulation

In September 2010, to settle contempt charges that it had violated one of the 2001 agreements, the company entered into a supplemental judgment with 33 states to extend the consumer protections set forth in its 2000 and 2001 multi-state settlements. A total amount of $3.5 million was paid to cover the total cost of the states' joint investigation. Specific terms of the 2010 settlement include:

• Increased outreach to customers with frequent purchases (High Activity Customers) to ensure that they understand that “no purchase necessary" means that no purchase is necessary to enter or win, a key principle of a legitimate sweepstakes
• Cease using the tactic of sending a communication from the “Board of Judges” to indicate that the recipient is close to winning
• Enhanced description of different giveaways offered in the same promotional mailing
• Additional messaging that sweepstakes winners are selected randomly
• Hire an ombudsman to review the company's solicitations on a quarterly basis.

In December 2007, it agreed to a formal letter of understanding with the Iowa Attorney General that requires the company to implement a program to identify elderly consumers at the point where their spending is just beginning to be excessive – when an Iowan age 65 or over has spent $500 or more in a calendar quarter for its products.

Between 2000 and 2001, the company signed two settlements with 48 state attorneys general, totalling $52 million, and agreed to increased regulation.

The rules put in place include:

• Not misrepresenting the chances of winning a prize
• Not requesting certain information or action from recipients which would lead them to believe they have won. This includes their whereabouts at the time the prize is awarded or their preference for events related to the awarding of the prize
• Not using a personalized simulated check to mislead a recipient into believing he/she has won or is likely to win
• Not representing that a recipient has an enhanced chance of winning a prize, is in a select group, has "never been closer" to winning or enjoys a special status in the sweepstakes and
• Not misrepresenting a sweepstakes mailing as being delivered by special delivery or that any communications are from a federal or state government or other official entity
• A provision that prohibits PCH from making any false statement, no matter how small or seemingly insignificant. In addition, the settlement puts in place strict prohibitions against misleading or deceptive statements or omissions and, for the first time, prohibits PCH from implying, by any means whatsoever, anything that it is prohibited from stating directly.
• Prohibiting PCH from discriminating between consumers who order magazine subscriptions and those who do not. From now on, PCH may only use a single entry form for the sweepstakes, to be used by all consumers whether they order products from PCH or not. In the past, customers who did not buy magazines or other products were forced to search for a small, plain entry card among the various colorful mail pieces PCH included with the contest solicitation. This practice, now ended, led consumers inevitably to conclude that those who ordered had a better chance to win than those who did not.
• Increased safeguards to protect that small minority of vulnerable PCH customers who may continue to be confused about whether buying products has any impact on their chances of winning.

Odds of winning

As posted on the company's website on September 7, 2011, the odds of winning Giveaway #1400 were 1 in 1.75 billion. This is an increase of more than 23 percent from the August 2010 odds for Giveaway #1830, of 1 in 1.21 billion.

In 2008, "The estimated odds for the $10 million drawing are 505,000,000 to one. That's equivalent to sending over 1.3 million entries every day for a year (and the sweep doesn't even run for a full year)."

In 2007, for the $10 million drawing, the it said "your odds of winning are 1 in 330 million."

Competitors

The company was a competitor of American Family Publishers (AFP), which ran similar sweepstakes. The two companies were often mistaken for each other, with Ed McMahon and Dick Clark, the spokespersons for AFP, mistaken for representatives of PCH. McMahon was never employed by PCH and never appeared in any commercial for the company. In the sixth episode of NewsRadio, "Luncheon At The Waldorf," Ed McMahon and Publishers Clearing House were discussed as if they represented the same entity.

See also

• List of New York companies

References

• "Official Rules." Publishers Clearing House website. Retrieved August 29, 2010.

External links

• pch.com, the company's official website