Choose a prize

Choose a prize or prizes for your contest carefully. Most authors want to give away a copy of their book, but you have to ask yourself whether that’s going to motivate people to enter.

Consider giving an e-copy of your book to everyone who enters your contest and you might get a head start on your word-of-mouth marketing by putting your book into the hands of a lot of people over a short period of time.

Keep the entry time limited, since our attention spans seem to be shrinking all the time. A contest that goes on for a month will likely lose steam.
The bigger the prize, the more interest and attention your contest will generate. If your budget is very limited, get some other authors together and run the contest jointly, with everyone contributing to the prize and sharing in the excitement on their own blogs. You can amass a lot of books in the same genre from different authors, for instance, for a more impressive prize, or chip in and give away a more expensive gift than you could manage on your own.