| Type | Private |
|---|---|
| Industry | Publishing |
| Founded | 1953 |
| Headquarters | Port Washington, New York, U.S. |
| 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 | www.pch.com |
Publishers Clearing House (PCH) is a 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.
Publishers Clearing House is a limited liability company staffed by 400 employees and is headquartered in Port Washington, Long Island, NY, 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 Mr. Mertz's wife. Upon passing of Mertz and his immediate family, the company was passed to ownership by a number of charitable trusts.
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Publishers Clearing House 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 famous Reader's Digest sweepstakes introduced in 1963, Publishers Clearing House 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 Publishers Clearing House sales.
Between 1994 and 2010, Publishers Clearing House has paid over $52 million to settle allegations 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.[1] The most recent was in September 2010, when it paid $3.5 million to settle contempt charges for violating a previous agreement (See "Government Regulation" section, below).
By 2000 PCH’s 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.
The company launched its first website, PCH.com in 1999, providing an online means to enter the Publishers Clearing House sweepstakes and shop for magazine and product offerings. In July 2006, “Publishers Clearing House acquired Blingo Inc., a company sponsored website that offers search results to marketers. Blingo was later re-branded as Search and Win.[2]
As reported by the New York Times, late in 2008 PCH expanded its traditional direct mail and online offers to more youthful channels such as Twitter and iPhone application. According to the New York Times article of December 22, the objective of these new offers was to use the registration information to increase PCH’s mailing lists. ”[3]
In 2009 Publishers Clearing House partnered with Arkadium to launch PCHGames.com, an ad supported site with both display and video ads.[4] This was followed by the acquisition of online casual gaming sites and other online properties.
As stated on the PCH website in the sweepstakes facts section, the odds of winning Giveaway #1400, are 1 in 1.75 billion (see: http://prism.pch.com/Rules/Rules.aspx?Cid=MQA1AA==)
The Prize Patrol is the team from Publishers Clearing House that knocks on the door of a recent entrant of the company's sweepstakes and surprises them with the news that they have won a large cash prize.
The Prize Patrol was founded in 1988 by Todd Sloane and Dave Sayer, two employees of Publishers Clearing House who worked in the company's advertising department.
Prior to the creation of the Prize Patrol, Publishers Clearing House winners of major prizes were notified by phone, and then later brought to New York to film scripted television commercials. In 1988, the northern New Jersey location of the company's first Ten Million Dollar winner provided a opportunity for Dave Sayer to notify the winner -- Barbara Armellino -- with the news that she had won the sweepstakes. No cameras were present for this notification, but after hearing about the reaction from Mrs. Armellino, Todd Sloane proposed the idea of videotaping the next reaction.
To test the videotaped notification concept out, in August 1988, Sloane traveled to Austin, TX with a camcorder, while another PCH employee knocked on the door of John Yancy to inform him that he was the newest million dollar winner in the Publishers Clearing House Sweepstakes. Sloane's camcorder rolled as Yancy and his wife Julie screamed and hugged each other upon hearing the good news. After reviewing the videotaped footage of this winning moment, Sloane recognized the emotions captured would make for compelling television advertising.
Based on the initial experiment, Sloane and Sayer traveled across the country for a series of winner notifications of prizes ranging from $10,000.00 to $10,000,000.00 and the Prize Patrol was born. After test marketing the "real winning moments" campaign in December 1988, a new national TV campaign featuring numerous "winning moments" was rolled out in July 1989. Since this time, the Prize Patrol winning moments have become a national advertising icon and the surprise winner notifications have been a staple of the company's advertising for nearly 20 years. The Prize Patrol has also been parodied on late night television shows such as Saturday Night Live and The Tonight Show and referenced in numerous network sitcoms.
The surprise prize award has transformed from a winning moment shot with a home video camcorder, to a live television commercial that has at times been aired on Super Bowl Sunday. The Prize Patrol team has even appeared as "themselves" in sitcoms such as Cheers and feature films (Let's Go To Prison), and has been profiled and interviewed on news magazine programs (including Dateline NBC, 48 Hours, Joan Lunden) and talk shows (Oprah, The Today Show, CBS This Morning).
In August 2000, Publishers Clearing House, without admitting any wrongdoing, agreed to an $18 million settlement with 23 states. A key part of the settlement included refunds for any consumer who spent at least $2,500 in purchases in any year between 1997-1999. The agreement required inclusion of a "Sweepstakes Facts Box" that will clearly disclose important information such as odds of winning, together with all major prizes, values, quantities and end date for the sweepstakes and important disclaimers which tell consumers that "Buying Won't Help You Win," and "You Have Not Yet Won." The agreement also stipulated that PCH must maintain a "Do Not Contact" list for consumers who do not want to receive future sweepstakes offers, and that the company would be prohibited from:[5]
Publisher’s Clearing House cited cost of litigation for the reason for a settlement according to PCH Senior Vice President Bill Low, “We believe our mailings have always been clear to our many customers”… “Nevertheless prolonged litigation is very expensive. We needed to resolve this matter, and we have, going the extra mile by agreeing to pay for consumer restitution and education and by adopting high standards that will make our advertising even clearer for the public."[6]
However despite this PCH statement that they had settled because "prolonged litigation is very expensive", in June 2001, as part of a $34 million settlement with 25 states, Publishers Clearing House acknowledged for the first time, the "harm done in the past by its deceptive practices", and apologized for that harm. It also agreed to “immediate restitution to thousands of consumers – and will make significant and permanent reforms in the way it conducts its future contests.” The agreement included the following concessions:[7]
Despite having signed these two Settlement Agreements with 48 states within 11 months, PCH continued to employ questionable tactics (see December 2007, Iowa Attorney General Letter of Understanding and September, 2010 settlement of contempt charges).
In December 2007 PCH agreed to a formal Letter of understanding with Iowa’s Attorney General that requires PCH 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 PCH products.[8]
In September 2010, to settle contempt charges that it had violated the 2001 Agreement, Publishers Clearing House 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:[9][10]
As posted on the PCH website on September 7, 2011, the odds of winning Giveaway #1400 were 1 in 1.75 billion.[11] This is an increase of more than 23% from the August 2010 odds for Giveaway #1830, of 1 in 1.21 billion.[11]
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).”[12]
In 2007, for the $10 million drawing, Publishers Clearing House said "your odds of winning are 1 in 330 million.”[13]
In 2011, the PCH website stated that the odds of winning Giveaway #1400 increased 5 fold to 1 in 1.75 billion (See "Online Development" section, above, for link).
Publishers Clearing House 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. Upon his death, many articles and obituaries around the country mistakenly associated McMahon with PCH.
^ "Official Rules." Publishers Clearing House website. Retrieved on 2010-08-29.