Can running a Contest Hurt Your Company?

Running a contest can be a great way to get links and traffic in the short term but in the end can it actually hurt your company? Let's look at the recent Invesp debacle. Invesp decided to do a contest for Internet Marketer of 2009. They picked 100 people who have a blog. Sounds smart right? That should get them a lot of links and traffic! Well... lets see what happened. I was talking with John Chow about how silly I thought the contest was and how we should endorse an underdog to win. He suggested we tell everyone to vote for ZK. I thought it was a great idea. Within the next couple days ZK jumped out to a massive commanding lead. Then the powers that be at Invesp nuked all of ZK's votes claiming they were all from a couple IP addresses. So here is the thing. Either way Invesp looks incompetent. They either completely rigged their contest OR they are so incompetent that they cant do a voting script that discounts the same IP address. Another issue I see is that If 100 people are nominated for an award then that means you have to tell 99 people that they are losers. Now I don't know about you but I do not like to lose at anything. To be fair to Invesp I know nothing about them or what they do. They could be the greatest PPC management & SEO company in the world. But at viral marketing with contests they clearly cost themselves a lot of reputation... and for what? So be careful with your contests. If you are going to do them... then do them right!