Clients launch design contests. They describe their wishes as well as possible and they also determine the award they will give to the winner. Contests are launched for a certain period of time (usually one or two weeks).
Designers (graphic designers) can participate in these contests by submitting their design ideas.
The clients choose one of the entries at the end of the competition period. The winning designer receives the award. In return, the client gets the right to use the intellectual property over the design.