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commercial advertisers often spend months developing ad campaigns for potential customers just to try and get an account. they spend thousands of dollars out of their own pocket to develop designs and logos that the customer may or may not purchase.
ofcourse if they get the contract it is well worth it.
designers that are worth a damn ought to realize that some of their time will be lost, contests are a good way to get your product out there.
there are several designers that already have a reputation for outstanding work and probably wont waste their time on a contest (they may participate but they arent doing the work because they need the prize money to feed their kids)
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