what I am thinking of is that the whole reason why I would give give away free hosting as part of a prize draw or competition is as a way of promoting our company.
For example, if you had a competition advertised on these forums to win a hosting package from HomepageUniverse. People will click on it to find out more about what the prize is, who it is from and how to win it. They will also see HomepageUniverse all over the page aswell as links to our site for more info. This will mean that more people will see our offerings and even if they don't win the prize, they may well still order hosting or domains from us as a result of finding us through the promotion.