Hosting an online contest is an effective method for marketing on Facebook. As many companies have already proven, a contest can cut through the clutter of marketing messages and attract people to your business Page.

Contests are not a new concept. Consumer marketing companies have traditionally relied on them to create buzz and attract traffic, taking advantage of the irresistible lure of winning something of value for free.

Big or small, backed by a full scale media campaign or spread by word-of-mouth, contests are powerful tools that motivate people and drive engagement.

Facebook provides tools that let its members create their own contests and make them available to all the other members of their social network. All the advantages and benefits of conventional contests outside the Facebook platform also apply, but marketing on Facebook using contests lets small businesses run side by side with the big corporations and major brands.

Businesses and individuals don't need to spend much to get their contests running, and the bulk of costs can shift toward providing high value prizes that pull in people to participate. Anyone with a Facebook Page can create a contest and promote it through the network.

Although Facebook itself does not provide a native contest application, there are numerous third party app providers that you can use, and you can easily announce your contest on your Wall.
Here are some of the advantages and benefits contests offer marketers.

Contests help you promote your brand. Word travels fast when you offer something that catches people's fancy.
Contests appeal to the competitive nature of people.
Contests drive traffic toward websites.
Contests help build community.

Now here are some quick tips to help create effective contests for marketing on Facebook.

Offer an attractive prize. You'll get a higher response rate if the prize you put up for grabs is something people aspire to have. But an attractive prize doesn't need to cost a lot.

Starting is always difficult. Use your existing customers and contacts to kick-start your contest until you get enough traction to build critical mass for your contest.

Just like any other promotional campaign, you need to promote your Facebook contests across all of your channels to gain maximum participation. You can integrate with a media campaign, or promote using Facebook ads to maximize the viral effect and amplify the number of engagements.

Keep things simple. Make sure the rules are not overly complicated.

It's a good idea to keep the requirements to a minimum. You want people to participate, not get discouraged by how difficult and complex the contest requirements are.

Let your contest run for at least one month. You need time for word-of-mouth marketing to kick in and perform its magic. The longer you promote the contest, the more likely you'll get people to join.

When planning a contest, keep in mind that members want to be entertained. They want to have fun. If your contests offer outlets for members to express themselves, interact and share with their friends, as well as communicate something unique about your brand, then you stand a higher chance of succeeding with your marketing objectives on Facebook.