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How Publishers Clearing House makes $1 billion a year

Publishers Clearing House became a household name thanks to its signature TV commercials featuring regular Americans receiving massive sweepstakes checks for millions of dollars from the company’s Prize Patrol. Founded in 1953, the company blazed a trail in the direct mail business, and after more than 60 years of existence, the company still commands millions of devotees. As Business Insider reported in April, the company brought in $US1 billion in revenue in 2017, thanks to merchandise sales and magazine subscriptions. But it hasn’t always been smooth sailing for the company. We took a look at the history of Publishers Clearing House, and how it remains a billion-dollar company despite decades of lawsuits alleging deceptive practices. Following is a transcript of the video.Announcer: You have won $US125,000 in the Publishers Clearing House giveaway.Woman: Oh!Announcer: You go right ahead and shed those tears.Narrator: The Publishers Clearing House Sweepstakes has been around for more than 50 years.Woman: I never knew there was this much money in the whole world.Narrator: Inspiring generations of dreamers with its commercials showing the iconic Prize Patrol delivering massive checks to regular Americans.Woman: Honest to God, Marge, I am not messing with you.

Narrator: Today, the company is still thriving, bringing in $US1 billion in 2017. So how does Publishers Clearing House make this much money when the company is known for literally giving it away and paying millions more to settle lawsuits? Publishers Clearing House was founded by Harold Mertz in 1953. Back then, the company only sold magazine subscriptions and it became a pioneer in direct mail.Announcer: This check from the Publishers Clearing House, it’s mine.Narrator: In 1967, it started its first sweepstakes as a way to entice people to buy more subscriptions.Announcer: January 29th is coming fast. That’s when Publishers Clearing House announces the winning number for $US10 million.Narrator: By the late 1980s, Publishers Clearing House was a household name.Kit Yarrow: I think that they have nailed it in the way that they approach consumers. They show people that other people feel like, look just like them. It could be them. And they show them getting this great big huge check and I think makes other people kind of think, well if it happened to them, it can happen to me. The emotion and joy that people showcase when they’re surprised and they win is really kind of infectious.Announcer: There’s only one Publishers Clearing House Sweepstakes.Narrator: The marketing campaign worked thanks to its exciting TV commercials and signature manila envelopes that arrived in mailboxes all over the country. But by the ’90s, the company faced some trouble. Numerous states sued the company, alleging deceptive practices that made customers think that the more magazines and other products they bought the better their chances would be of winning the big money.Actor: Smart people don’t enter those things.Narrator: To be fair, the company has been clear for years that no purchase is necessary to enter the sweepstakes, but apparently it wasn’t clear enough to the states that filed lawsuits against the company. The trouble came to a head in 1999 when Congress passed an actual law called the Deceptive Mail Prevention and Enforcement Act to better regulate Publishers Clearing House and companies like it.Announcer: You’ve just won our forever prize!Narrator: But that didn’t deter millions of Americans from coming back to Publishers Clearing House. The company currently has approximately 15 million registered users and that’s largely due to the company’s pivot to digital. In addition to magazines, the website has thousands of items of merchandise for sale.Mike Shields: They’re a really big digital business now. They’re still a mail order company. You can sign up and get stuff delivered to your home left and right, but they have daily prizes all the time. You can sign up for these sweepstakes.Narrator: Another one of the company’s biggest assets is its customer’s data.Mike Shields: They have got a large customer base that’s really willing to give their data. They have got people’s names, addresses, ages. People are very comfortable. It’s very direct and open, and they’re able to target them with advertising.Narrator: When you sign up for access to the Publishers Clearing House website, it’s easy to see why people would keep coming back. An endless stream of opportunities to win cash prizes. The High Roller Cashout. The $US1 Million Treasure Trove. The Pinata Payday.Mike Shields: They refer to it as gaming as entertainment or shopping as entertainment. They have really mastered this idea, it’s almost like those scratch-off lotto tickets you can buy in the drug store. They have created a digital version of that.Announcer: Welcome to Inside PCH.Narrator: The company broadcasts live on Facebook.Announcer: Hello, everyone!Narrator: Where users can tune in and play along live with even more chances to win.Announcer: So there’s nothing to lose and potentially millions to gain.Narrator: Even though the company has successfully adapted to digital, Publishers Clearing House hasn’t completely escaped controversy. In April of 2018, a class action lawsuit was filed against the company alleging deceptive practices. In a statement, Publishers Clearing House said it would “vigorously defend and fight this matter that has no basis.”Announcer: You recognise us?Woman: I sure do!Narrator: For years, the company has settled lawsuit after lawsuit for tens of millions of dollars.Woman: Keep entering, you never know!Narrator: Publishers Clearing House reveals the odds of winning its sweepstakes in the Official Rules section of its website. According to Publishers Clearing House, the odds of winning the company’s $US1,000 a Day For Life sweepstakes are one in 6.2 billion. Compare that to the odds of winning the highest Powerball jackpot of all time at one in 292 million.Announcer: You won $US1 million!Narrator: But one thing’s for sure, America is gonna keep playing because you never know, it could happen to you. We reached out to Publishers Clearing House with questions about allegations of deceptive practices and how the company protects its customer’s data. These are the company’s responses: “Publishers Clearing House’s broad range of chance-to-win opportunities are always free to play, fully transparent, and easy for consumers to understand. All PCH sweepstakes promotions carry prominent and repeated ‘no purchase necessary’ and ‘buying won’t help you win’ messages. We have comprehensive data security protections in place to ensure that all data provided by consumers is handled with the appropriate level of care.”

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