Yes, contests are good for business. This allowed Lay's to get lots of new ideas, without having to pay R&D staff that may not come up with a good idea for many years. This also encourages people to buy their brand, because they will feel more attached to a company if they use an idea they have come up with.
Contests are great for business. This is because there is a fun factor added in as it relates to the brand. In addition, it garners the company more attention than it would have without a contest. So it at least just gives the company more chances to be in view of the consumer.
You get tons of opinions and idea's running a contest like this, and then only one person wins. They can use all the other idea's later, but everyone wants their stuff to be shared. Everyone also loves the idea of winning a million dollars for having a brilliant flavor that everyone will love.
Lay's is a company as old as time. With there original flavors and chips, you can not really go wrong. But to have contests, it gives people a chance to make money and the company grows if the fans like the new taste. And lets face it, a million dollars to lays is literally like buying a bag of chips to us.