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MEASURINGRETURN
ONINVESTMENTOF
TOURISMMARKETING
AReviewofSixteenStateTourismOffices
AdeelAhmed
AssistantExtensionProfessor
UniversityofMinnesotaExtension
CenterforCommunityVitality
12/24/2010
PreparedforExploreMinnesotaTourism,withfundingprovidedbyExploreMinnesotaTourism
andtheCarlsonChairforTravel,Tourism&Hospitality
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TableofContents
ExecutiveSummary 1
Introduction 4
Methodology 5
Table1SummaryofRecentStateLevelTourismAssessmentsofSelectedStates 6
Table2
Table2
Comparisonof
Selected
States
that
have
Measured
ROI
of
TourismMarketinginthelast10years.11
AnalysisandDiscussion 12
BriefMethodologyofLongwoodsInternationalandStrategicMarketing&
ResearchInc(SMARI)
14
FurtherInvestigationintoStates 16
California
16
Michigan 17
NorthDakota 18
SouthDakota 19
Conclusions 19
Appendix TourismMarketingROIStudyInitialAgreement 21
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ExecutiveSummary
Statetravelofficesjustificationsforfundingareincreasinglybeingscrutinizedasstatesseekto
balancebudgets.Thesejustificationsareexpectedtocontainwellstatedobjectivesand
measurableresults,includingindicationsofcosteffectiveness.Advertisingisabigportionof
thebudget
for
state
travel
offices
and
is
perhaps
the
budgetary
consideration
most
frequently
investigatedforitscosteffectiveness. InorderforExploreMinnesotaTourism(EMT),thestate
agencyresponsibleforpromotingtraveltoandwithinMinnesota,tobettergaugethereturnon
investment(ROI)ofitsrecentmarketingactivities,areviewofstatelevelreportsand
assessmentsforthetourismmarketingofMinnesotaand15otherstateswascompletedin
December2010andispresentedinthisreport.
ThisreportdoesnotreplacetheneedtoconductanROIstudyoftourismmarketingforthe
stateofMinnesota,whichhasnotbeendonesincetheyear2000.Tourismtrends,tourism
marketing,
and
measuring
ROI
have
changed
considerably
since
the
last
study
was
conducted.
Theincreasingcomplexityandintegrationofmarketingandcommunicationstacticsmakesan
ROIstudyamajorundertakingrequiringsignificantfinancialresources.EMTisincreasingly
awareoftheneedtoupdateMinnesotasROImeasurementsandintendstoconductanROI
studywhentheresourcesallowforit.EMTcollaboratedwiththeUniversityofMinnesota
TourismCenterandUniversityofMinnesotaExtensiontocompletethisprojectefficiently.The
studyandreportwerepaidforbyEMTandtheCarlsonChairforTravel,Tourism&Hospitality
andwasundertakenasaninterimmeasuretodeterminearangeofwhatMinnesotasROIlikely
isbycomparingtheROIanalysesofotherstates.
Themost
recent
ROI
study
of
tourism
marketing
in
Minnesota
was
conducted
for
the
spring/summerof2000advertisingcampaign(6months).TheMinnesotaDepartmentofTrade
andEconomicDevelopment(nowknownasMNDepartmentofEmploymentandEconomic
Development)wascontractedtodothestudywhichsurveyedcustomerswhohadaskedthe
travelofficetosendthemtravelinformationaboutMinnesota.Estimatesofvisitorsdaysand
dailyexpendituresfromthesurveyservedastheprimaryinputparameters,whileoutputfrom
theREMIeconometricinputoutputmodelprovidedtheeconomicimpactmeasuresthatwere
centraltotheROIanalysis.Theresultingimpactsincludeddirect,indirectandinducedimpacts.
Resultsshowedthateverydollarspentinmarketinggenerated$52.64inincrementalgross
salesand
$4.62
in
incremental
state
and
local
tax
revenues1.
ThedetailsregardingMinnesotasROIanalysisserveasacautionwhencomparingwiththeROI
resultsforotherstates.Forexample,somestudiesinthisreportmeasuredtheROIofasingle
seasonaladvertisingcampaign(likeMinnesota),othersmeasuredtheROIofanumberof
1AnalysisoftheMinnesotaOfficeofTourismsReturnonInvestmentforConsumersReceivingMailFulfillment,
Spring/Summer2000byMNDeptofTradeandEconomicDevelopment
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campaignsconductedoverthecourseofayear,whileafewmeasuredtheROIofcampaigns
thatspannedmultipleyears. Secondly,manyofthereportsfromwhichROIinformationwas
derivedwerebereftofdetails.ThuswhencomparingthemarketingROImeasurements(see
Table1andTable2)betweenthedifferentstatetourismofficespleasetakeintoaccountthe
followingfactors:
Whethertheinvestmentportionconsideredintheanalysiscoversallcostsassociatedwithmarketingandfulfillment;includingsalariesandofficesupplies,orjustthecostof
theadvertising?
CompaniescontractedtodoROIanalysishavevaryingmethodologiesonhowtomeasureincrementalvisitsandvisitorspending.
Whethertheeconomicimpactmeasurementsjustincludedirectspending onindustriesthattouchthevisitor(i.e.hotels,restaurants,museums),oralsoincludeindirect
spendingthatconsidersindustriesthatsupplythosethattouchthevisitor,andinduced
spendingthataffectsworkersofindustriesthatsupplythosethattouchthevisitor?
Doesincrementaltaxrevenueduetoadvertisingincludestatetax,localtaxorboth? WhetherROImeasurementsarebasedonlongtermorshorttermeffectsof
advertising?Oregonwastheonlystateinthestudytoexplicitlystateandgivebothlong
termandshorttermresults.
Thefifteenstatesthatservedasthestartingpointforthisinvestigationoftourismmarketing
ROIwereselectedbasedonthefollowingfactors:geographicproximitytoMinnesota,similarity
ofproductand/ormarketingeffortstoMinnesotas,prominencewithinthetourismmarketing
community,and
indications
that
an
ROI
study
or
studies
had
been
undertaken
for
the
state.
Thisreviewfoundthatmoststatesareusinganumberofmarketresearchorganizationsto
determinethreedistinctpiecesofdataintheirattemptstomeasuremarketingROI:(1)visitor
ortravelerprofiles,(2)economicimpactduetovisitorspending,and(3)effectivenessofthe
advertisingcampaign(s)onincrementalvisits.
IncludingMinnesota,elevenstatesmeasuredtheeffectsofadvertisingcampaignson
incrementalvisitsandtheresultingROIofmarketing. Ofthesestates,sevenhiredLongwoods
International,threehiredStrategicMarketing&ResearchInc(SMARI),whileone,Minnesota,
utilizedagovernment
agency
2
.Additionally,
different
organizations,
and
hence
methodologies,
wereusedtomeasurevisitorexpendituresandtheeconomicimpactoftourism.
ROIestimatesofvisitorspendingperadvertisementdollarrangedfrom$48.53(Michigan)to
$305.00(California),withanaverageof$122.80andmedianof$123.Fivestates(MI,MT,VA,
MN,andMO)hadaspendingROIoflessthan$70peradvertisingdollarwhilesixstates(ND,
2EconomicDevelopmentandEvaluationOfficeofMNDeptofTradeandEconomicDevelopment
2
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OR,AZ,CO,FL,andCA)hadaspendingROIofmorethan$123peradvertisingdollar.Similarly,
ROIestimatesofstateandlocaltaxrevenueperadvertisementdollarrangedfrom$2.54
(Missouri)to$20(California),withanaverageof$8.18andmedianof$5.00.Fivestates(ND,
AZ,CO,FLandCA)hadataxROIofmorethan$9peradvertisingdollar,whilesixstates(MI,OR,
MT,VA,MN,andMO)hadataxROIoflessthan$5peradvertisingdollar.
FurtherexplorationofCalifornia,Michigan,NorthDakota,andSouthDakotaillustratethe
differingwaysstatesconducttourismmarketingresearch.Itwouldbequiteproblematicfor
anotherstatetravelofficetoattempttoestimateitsmarketingROIbasedonthestatelevel
informationprovidedinthisreport.Advertisingeffectiveness,targetmarkets,visitorspending
profiles,thecostofgoodsandservices,andmanyothervariablesallservetolimitthedegreeto
whichcomparisoncanbemade.However,thedetailedassessmentofotherstatestourism
marketingROImeasurementsfoundinthisreportprovidesExploreMinnesotaTourismwith
therangeoflikelyROIestimatesforitsownmarketingactivities.
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Introduction
ConsiderableresourcesareinvestedinmarketingMinnesotaasadestinationtopotential
travelers.Theexpectationisthatmarketingeffortswillenhancepositiveperceptionsof
Minnesotaasatraveldestination,increasebrandawareness,andincreasetraveland
associatedeconomic
impacts
throughout
the
state.
State
travel
offices
justifications
for
fundingareincreasinglybeingscrutinizedasstatesseektobalancebudgets.Thesejustifications
areexpectedtocontainwellstatedobjectivesandmeasurableresults,includingindicationsof
costeffectiveness.InorderforExploreMinnesotaTourism(EMT),thestateagencyresponsible
formarketingthestateasatraveldestination,tobetterestimatethereturnoninvestment
(ROI)ofitsmarketingactivities,areviewofstatelevelreportsandassessmentsfortourism
marketingofMinnesotaand15otherstatelevelagencieswascompletedinDecember2010
andispresentedinthisreport.
This
report
does
not
replace
the
need
to
conduct
an
ROI
study
of
tourism
marketing
for
the
stateofMinnesota,whichhasnotbeendonesincetheyear2000.Tourismtrends,tourism
marketing,andmeasuringROIhavechangedconsiderablysincethelaststudywasconducted.
Theincreasingcomplexityandintegrationofmarketingandcommunicationstacticsmakesan
ROIstudyamajorundertakingrequiringsignificantfinancialresources.EMTisincreasingly
awareoftheneedtoupdateMinnesotasROImeasurementsandintendstoconductanROI
studywhentheresourcesallowforit.EMTcollaboratedwiththeUniversityofMinnesota
TourismCenterandUniversityofMinnesotaExtensiontocompletethisprojectefficiently.The
studyandreportwerepaidforbyEMTandtheCarlsonChairforTravel,Tourism&Hospitality
and
was
undertaken
as
an
interim
measure
to
determine
a
range
of
what
Minnesotas
ROI
likely
isbycomparingtheROIanalysesofotherstates.
ThemostrecentROIstudyoftourismmarketinginMinnesotawasconductedforthe
spring/summerof2000advertisingcampaign(6months).TheMinnesotaDepartmentofTrade
andEconomicDevelopment(nowknownasMNDepartmentofEmploymentandEconomic
Development)wascontractedtodothestudywhichsurveyedcustomerswhohadaskedthe
travelofficetosendthemtravelinformationaboutMinnesota.Thesurveywasconductedvia
mailandphoneandmeasuredtravelvolumeandtravelexpendituresasthereturncomponent
oftheanalysis.Theinvestmentportionwasbasedonexpendituresformarketingandall
fulfillmentfunctions
(mailing,
printing,
staffing)
to
U.S.
residents.
Lastly,
the
REMI
econometric
inputoutputmodelwasusedtosimulatetheeffectoftravelspendingontheMinnesota
economy.Estimatesofvisitorsdaysanddailyexpendituresfromthesurveyservedasthe
primaryinputparameters,whileoutputfromREMIprovidedtheeconomicimpactmeasures
thatwerecentraltotheROIanalysis.Theresultingimpactsincludeddirect,indirectand
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inducedimpacts. Resultsshowedthateverydollarspentinmarketinggenerated$52.64in
incrementalgrosssalesand$4.62inincrementalstateandlocaltaxrevenues3.
ThedetailsregardingMinnesotasROIanalysisserveasacautionwhencomparingwiththeROI
resultsforotherstates.Forexample,somestudiesinthisreportmeasuredtheROIofasingle
seasonaladvertising
campaign
(like
Minnesota),
others
measured
the
ROI
of
anumber
of
campaignsconductedoverthecourseofayear,whileafewmeasuredtheROIofcampaigns
thatspannedmultipleyears. Secondly,manyofthereportsfromwhichROIinformationwas
derivedwerebereftofdetails.Thuswhencomparing themarketingROImeasurements(see
Table1andTable2)betweenthedifferentstatetourismofficespleasetakeintoaccountthe
followingfactors:
Whethertheinvestmentportionconsideredintheanalysiscoversallcostsassociatedwithmarketingandfulfillment;includingsalariesandofficesupplies,orjustthecostof
theadvertising?
CompaniescontractedtodoROIanalysishavevaryingmethodologiesonhowto
measureincrementalvisitsandvisitorspending.
Whethertheeconomicimpactmeasurementsjustincludedirectspending onindustriesthattouchthevisitor(i.e.hotels,restaurants,museums),oralsoincludeindirect
spendingthatconsidersindustriesthatsupplythosethattouchthevisitor,andinduced
spendingthataffectsworkersofindustriesthatsupplythosethattouchthevisitor?
Doesincrementaltaxrevenueduetoadvertisingincludestatetax,localtaxorboth? WhetherROImeasurementsarebasedonlongtermorshorttermeffectsof
advertising?Oregonwastheonlystateinthestudytoexplicitlystateandgivebothlong
termandshorttermresults.
Methodology
Thefifteenstatesthatservedasthestartingpointforthisinvestigationoftourismmarketing
ROIwereselectedbasedonthefollowingfactors:geographicproximitytoMinnesota,similarity
ofproductand/ormarketingeffortstoMinnesotas,prominencewithinthetourismmarketing
community,andindicationsthatanROIstudyorstudieshadbeenundertakenforthestate.The
sixstatesincludedduetotheirgeographicproximitytoMinnesotawereWisconsin,Michigan,
Iowa,NorthDakota,SouthDakotaandMissouri. Additionalstatesonthelistincluded
Pennsylvania,Oregon,
Florida,
Arizona,
Montana,
California,
Colorado,
Kentucky
and
Virginia.
Thestatesrespectivetourismwebsitesweresearchedforstudiesfocusingonthe
measurementofROI.Wherenonewerefoundtheresearchdirectorofthestatetourism
officewascontacteddirectlyforinformation.Therelevantreportsandsubsequentfindingsare
summarizedinTable1andTable2.
3AnalysisoftheMinnesotaOfficeofTourismsReturnonInvestmentforConsumersReceivingMailFulfillment,
Spring/Summer2000byMNDeptofTradeandEconomicDevelopment
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SouthDakota:
HasnotdoneanalysisonROIoftourismmarketing
howevertheyareexaminingvariousscenarios
followingtheColoradoexampletoseehowthe
eliminationoftheOfficeofTourismwouldaffectthe
numberofvisits,tourismexpendituresofvisitors,and
stateandlocaltaxrevenue.COhadstoppedtheir
promotionaleffortsfrom1993to1997andhadseen
theirleisure
travel
decline
by
7.7%
for
those
4years.
EconomicimpactanalysisdonebyIHSGlobalInsight
2009
SDOTbudget:$11.3M
Directeconomicimpact:$1.2billion
Main
Acco
2010
Furt
http
State
http
Virginia
ROIinformationisavailablefromanexcerptof2006
LongwoodsIntlevaluationinthe2009marketing
plan.
EconomicimpactdataisprovidedbytheU.S.Travel
Associationandfocusesondomestictravelers.
2006advertisingcampaigns
Advertisingexpenditure:$2.5M
Incrementalvisits:688,000
Avgspendingfordaytrips:$112
Avgspendingforovernighttrips:$338
Incrementalvisitorspending:$177M
Incrementalstatetaxrevenue:$7.2M
Incrementallocaltaxrevenue$5.2M
ROI:Visitorspendingperaddollar:$70.8
ROI:Stateandlocaltaxrevenueperaddollar:$5
Economicimpact2009totaldirecttravelspending:
$17.7B
Main
Mar
Furt
http
State
http
Wisconsin:
HasnotdoneanyformalresearchtodetermineROI
ontourismbutannuallycontracts DavidsonPeterson
Associatestoconducteconomicimpactsof
expendituresbytravelerstoWisconsin.
WITourismDeptbudgetFY10:$13M
WITourismDeptbudgetFY09:$15M
2009Marketingbudget:$10M
2009Tourismgeneratedexpenditures:$12B
2009Taxrevenuetostate:$1.36B
2009TaxRevenuetolocal:$611M
2008Tourismgeneratedexpenditures:$13.1B
2007Tourism
generated
expenditures:
$12.8
B
Main
ofTr
2009
Furt
http
http
State
http
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able2 ComparisonofSelecedStatesthathaveMeasuredROIofTourismMarkeinginthelast10years.
Duetovaryingmethodologiesandunitsofmeasurement,pleaserefertomoredetailedpresentationofthedataelse
whenusingthisinformationforcomparativepurposes,suchaswhen makingcomparisonsbetweenstates.
tate AZ CA CO FL MI MN MO MT
Organzationmeasuring
heROI
Longwoods
Int'l
Strategic
Marketing&
Research
(SMARI)
Longwoods
Int'l
Strategic
Marketing&
Research
(SMARI)
Longwoods
Int'l
MNDept.of
Trade&
Economic
Development
Strategic
Marketing&
Research
(SMARI)
Longwoods
Int'l
Mostrecentyear 2007 2009 2008 2010 2005 2000 2009 2004
OIVisitorspending
erAddollar 180.00$ 305.00$ 193.00$ 147.00$ 48.53$ 52.64 46.81$ 50.00$
OIStateandlocaltax
evenueperAddollar 14.95$ 20.00$ 12.96$ 9.00$ $3.43 $4.62 $2.54 3.50$
isits(millions) 5.5 3.35 5.97 0.18 0.89 1.957 0.5
isitors
per
Ad
dollar 1.25 0.24 0.56 0.06 0.26 0.56
0.35 ampaignlength
months) 21 12 15 5 12 6 12 12
dvertisingexpenses
millions) 4.40$ 13.70$ 10.74$ 2.78$ 3.40$ 3.50$ 7.60$ 1.41$
Annualeconomicimpact
falltravel totaldirect
ravelspending(billions) 16.60$ 97.60$ 13.40$ 60.90$ 17.50$ $12.10 7.87$ 3.18$
Organizationmeasuring
conomicImpact
DeanRunyan
andTourism
Economics DeanRunyan DeanRunyan
VisitFlorida
Research
Dept.
D.K.Shifflet&
Associates
MNDept.of
Trade&
Economic
Development
TNSTravels
Americaand
Universityof
Missouri
Univeristyof
Montana
ourismofficebudget
millions) 31.00$ 50.00$ 15.80$ 67.50$ 30.00$ 8.90$ 10.00$ 11.60$
ear 2009 2010 2009 2010 2009 2010 2010 2011
Includesdirect,indirectandinducedimpacts VisitorDaysperAdDolla
UniversityofMontana InstituteforTourism&RecreationResearch Onlyincludesstatetax
GrossSalesperAdDollar Includesonlyshortterm
VisitorDays
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AnalysisandDiscussion
Thisreviewofsixteenstatetourismagencies,includingMinnesotas,showsthatstatesare
usinganumberofmarketresearchorganizationstodeterminethreedistinctpiecesofdatain
theirattemptstomeasuremarketingROI:(1)visitorortravelerprofiles,(2)economicimpact
modelof
that
spending,
and
(3)
effects
of
an
advertising
campaign
on
incremental
visits.
(1)Visitorortravelerprofilesthisseeksanswerstoquestionslike:howmuchdovisitorsspend,whattheybuy,andwhataretheirdemographics. Companiesthatprovidemarket
researchservices,likeMarketToolsInc.4,areoftenusedtogathersuchinformation.These
companiesmaintainconsumerpanels,whosedemographicsareclaimedtoresemblethe
overallpopulationthatothercompaniescansurveywithdetailedquestionsabouttheir
consumptionhabits,suchasspendingonvacations.
(2)Economicimpactmodelthisexplainshowvisitorexpendituresimpacttheeconomybothdirectly
and
indirectly.
The
two
principal
methods
for
estimating
recreation
and
tourism
relatedspendingandeconomicimpactsare(a)satelliteaccountsand(b)visitor
surveys/inputoutputmodels. Satelliteaccountsareprimarilyusedtogiveanoverall
aggregateestimateofthecontributionoftourismactivitytostateandnationaleconomies.
Theyextracttourismrelatedactivityfromasystemofnational(orstate)accounts.When
spendingandimpactsaredesiredforparticularmarketsegmentsorforlocalregions,
surveyapproachesaregenerallyused.Spendingdataisgatheredinvisitorsurveysand
appliedtoestimatesofthevolumeoftouristactivityinanarea.Spendingtotalsarethen
appliedtoregionaleconomicmodelsormultiplierstoestimateeconomicimpactsonthe
localarea,
usually
including
secondary
or
"multiplier
effects".
5
(3)Effectivenessoftheadvertisingcampaign(s)onIncrementalvisits Acertainamountofvisitorswilltraveltoadestinationwhethertheyhaveorhavenotbeenexposedto
advertisementsofthatdestination.ForROIstudiesitisrelevanttoknowhowmanyvisitors
cameasaresultoftheadvertisingcampaign.Thetwoprevailingmethodsfordetermining
destinationadvertisingeffectivenessandROIare(1)surveysofhouseholdsorpersonsin
marketsexposedtoadvertisingandwhoresemblethetargetsofadvertisingand,(2)
surveysofpersonswhocontactedthedestinationinresponsetoadvertising.Respondents
areaskediftheyremembertheads,howitaffectedtheirimageofthedestination,and
howlikelytheyweretotraveltotheadvertisedarea.Afewmonthslater(toallowtimeto
4LongwoodsintltendstosubcontractthisworktoMarketToolsInc.SeeLongwoodsTravelUSA2008Visitor
ReportforWestVirginia
http://www.wvcommerce.org/App_Media/assets/pdf/industryinformation/reports/West_Virginia_
_2008_Overnight.pdf5MichiganStateUniversityEconomicImpactsofRecreation&TourismWebSite
http://web4.msue.msu.edu/mgm2/econ/methods.htm#sat
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travel)thelikelytravelersaresurveyedagaintoseeiftheydidindeedtravelandhowmuch
theyspentduringtheirtravels.
Thus(3)incrementalvisitsandthedemographicsofthevisitorsaremultipliedby(1)visitor
spendingprofilestoprovideameasurementofincrementalspendingduetoadvertising.
Economicimpactmodeling(2)thenprovidestheeconomicimpactofthatspending.Common
ROImeasuresincludeincrementaltravelspendingperdollarofadvertisinginvestment,and
incrementalstateandlocaltaxrevenueperdollarofadvertisinginvestment.
Allofthesixteenstatescoveredinthisstudyhavehadatleastaneconomicimpactanalysis
oftourismcompletedinthelasttenyears.Elevenstateshavegoneonestepfurtherandhave
measuredtheeffectsofadvertisingcampaignsonincrementalvisitsandmarketingROI. Of
theseelevenstates,sevenhiredLongwoodsInternational,threehiredStrategicMarketing&
ResearchInc(SMARI),whileone,Minnesota,utilizedagovernmentagency6tomeasureROI.
Theresearch
organizations
employed
to
measure
economic
impact
were
more
numerous
and
included:DeanRunyan,IHSGlobalInsight,D.K.Shifflet,OxfordTourismEconomics,universities,
andstateagencies.Intermsofvisitorprofiles,CaliforniaemployedD.K.Shifflet,MarketTools
Inc.wasusedinthestatesthatcommissionedLongwoodsIntl,whileSMARImaintainsitsown
consumerpanelsfromwhichitdevelopsvisitorprofiles.
ROIestimatesofvisitorspendingperadvertisementdollarrangedfrom$48.53(Michigan)to
$305.00(California),withanaverageof$122.80andmedianof$123.Fivestates(MI,MT,VA,
MN,andMO)hadaspendingROIoflessthan$70peradvertisingdollarwhilesixstates(ND,
OR,AZ,CO,FL,andCA)hadaspendingROIofmorethan$123peradvertisingdollar.Similarly,
ROIestimatesofstateandlocaltaxrevenueperadvertisementdollarrangedfrom$2.54
(Missouri)to$20(California),withanaverageof$8.18andmedianof$5.00.Fivestates(ND,
AZ,CO,FLandCA)hadataxROIofmorethan$9peradvertisingdollar,whilesixstates(MI,OR,
MT,VA,MN,andMO)hadataxROIoflessthan$5peradvertisingdollar.
ThevariationinthetwomainaspectsofmarketingROI,visitorexpendituresandtaxrevenue,in
eachstatemaybeduetoanynumberoffactorsincluding:
Howcreativeandeffectivetheadvertisingwasininducingpeopletovisitthetargetdestination?
Variationinvisitorssocioeconomicprofiles(i.e.discretionaryincome)fromthetargetmarket.
Thestatesuniquetourismproducts forinstancevisitorsspendmoreatskiresortsthantheydocampinginthewilderness.
Howrelativelyexpensivegoodsandservicesareinthestate.6AnalysisandEvaluationOfficeofMNDeptofTradeandEconomicDevelopment
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Whethertheincrementaltaxrevenuegeneratedincludesstatetax,localtaxorboth?MIandMOonlymeasuredstatetaxrevenueswhiletherestofthestatesmeasured
bothstateandlocaltaxrevenues.CompleteresultscanbeseeninTable2.
Whethertheinvestmentportionconsideredintheanalysiscoversallcostsassociatedwith
marketing;
including
salaries
and
office
supplies,
or
just
the
cost
of
the
advertising?
CompaniescontractedtodoROIanalyseshaveslightlyvaryingmethodologiesonhowtomeasureincrementalvisitsandvisitorspending.
Whethertheeconomicimpactmeasurementsjustincludedirectspending onindustriesthattouchthevisitor(i.e.hotels,restaurants,museums),oralsoindirectspending
thatconsidersindustriesthatsupplythosethattouchthevisitor,andinducedspending
thataffectsthewagesofworkersinindustriesthatsupplythosethattouchthevisitor?
WhetherROImeasurementsarebasedonlongtermorshorttermeffectsofadvertising?Oregonwastheonlystateinthestudytoexplicitlystateandgivethe
results
both
long
term
and
short
term
results.
Thedifferentandvaryingwaysstatesandlocalitiestaxvisitors.Forinstance,istherealodgingtaxandisitlocalorstatewide.
BriefMethodologyofLongwoodsInternationalandStrategicMarketing&ResearchInc(SMARI)
StatetourismofficesengagedLongwoodsInternationalprimarilytodeterminethestates
imageasatourismdestinationwithinitsadvertisingmarketsandtoevaluatetourism
marketing
campaigns.
Longwoods
evaluates
tourism
marketing
campaigns
in
terms
of
awarenessinthemindofthepotentialvisitor,theimpactoftheadvertisingondestination
image,andtheimpactoftheadvertisingontheincrementaltraveltothestateandthe
associatedincremental/additionalvisitorspending.Longwoodssurveystravelersinthestates
primaryadvertisingmarketstoprofilethestatesimageascomparedtokeyregional
competitors anddeterminetheimpact(shortorlongterm)ofaparticularadvertising
campaign(s)7.
LongwoodsInternationalhasconductedlargescalesyndicatedvisitorresearchsince1990.In
2007themethodologychangedfrommailsurveystoonlinesurveysandcontinuestoutilizea
proprietaryquestionnaire8.
The
survey
is
distributed
to
arepresentative
sample,
with
the
desiredattributes,throughamarketresearchcompanycalledMarketTools,Inc.Thiscompany
maintainsasizeablenumberofondemandpaneliststhatLongwoodsprofiles,intermsoftravel
7NorthDakotaTourism:AnEvaluationofNorthDakotas2007AdvertisingCampaignpg3,4
https://www.ndtourism.com/uploads/resources/592/ndbm07finalreport.pdf8LongwoodsTravelUSA 2008VisitorReport,WestVirginia,April2008
http://www.wvcommerce.org/App_Media/assets/pdf/industryinformation/reports/West_Virginia_
_2008_Overnight.pdf
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spendingandotherdemographicandtravelrelatedbehavioralcharacteristics.Theirresponses
areweightedandextrapolatedtotheoveralltravellingpublic.
StrategicMarketing&ResearchInc(SMARI)measuresawarenessthroughamultistepprocess
astherearemanywaysinwhichadvertisingcanimpactconsumers.Phase1oftheresearch
measures:(1)
exposure
through
advertising
awareness,
(2)
messaging
through
creative
evaluation,(3)shiftinattitudesthroughcomparativeimageassessments,and(4)buildingof
interestthroughcomparativeinterestinvisitation.Phase2oftheresearchisdonesometime
later,soastohaveallowedtimefortraveltohaveoccurred,andmeasuresincrementaltravel
bycomparingtherateoftravelamongthosewhowereawareoftheadvertisingandtherateof
travelbythosewhowereunawareofthecampaign9.
SMARImaintainsitsownconsumerpanelfromwhichitdevelopsvisitorprofilesbutusesa
similarapproachtothatofLongwoodsinmeasuringincrementalvisits.Bothfocuson
destination
image,
recall
of
the
advertisement,
and
likelihood
of
travel.
Where
they
differ
is
in
whatquestionsareasked. Forexample,Longwoods10
asksrespondentstorate,fromStrongly
AgreetoStronglyDisagree,asamplingofdestinationattributeswhichthenintheanalysis
arecomparedtoratingsofotherdestinationsfrompastLongwoodsengagements.
Mustseedestination Lotstoseeanddo Afunplaceforavacation Excellentvacationvalue Anexcitingplace
ExamplesofSMARIsquestionsareexcerptedfromCaliforniasDomesticAdvertising Total
2009ROIResearchSummary11.Respondentsareaskedtorateeachchoicefrom1to5.
AfterseeingtheseadsIammoreinterestedinvisitingthisstate Theseadsshowexperiencesandplacesthatyouareinterestedin Theseadsshowaplacewithauniqueattitudetowardlife Theseadsportrayaplacethatoffersvacationersthebestlifehastoofferallinone
place
Fromthe
sampling
of
sixteen
states
Longwoods
appears
to
have
greater
depth
and
breadth
in
thenumberofvisitorstheyhavesurveyedandprofiledandtheamountoftimetheyhavebeen
9SMARIAdvertisingEffectiveness&ROI2007/2008SnowCampaignPg5
http://tourism.visitcalifornia.com/media/uploads/files/editor/Research/CTTC_CASnow2007_ROI.pdf10
ExcerptedfromLongwoodsEvaluationofNorthDakotas2007advertisingcampaign:
https://www.ndtourism.com/uploads/resources/592/ndbm07finalreport.pdf11
CaliforniasDomesticAdvertising Total2009ROIResearchSummaryPg16
http://tourism.visitcalifornia.com/media/uploads/files/editor/Research/california%202009%20Total%20domestic
%20ROI%2003_25_10.pdf
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doingthiswork,comparedtoSMARI.Bothcompaniestendtouseeconomicimpactdata
providedbytheclient12
onpercapitavisitorspending,andtherelationshipbetweenvisitor
spendingandstateandlocaltaxes,forROImeasurementsofvisitorspendingandstateand
localtaxrevenue.
FurtherInvestigationintoStatesSeeTable1and2formoredetailedcomparisons
Californiahasthemostvisibleandaccessiblecatalogoftourismmarketandimpactresearch
ofthestatescoveredinthisstudy.Californiasbrandadvertisinghasbeencontinuouslytracked
fromaquantitativestandpointoverthepastdecadebyD.K.Shifflet&AssociatesandStrategic
Marketing&Research,Inc.(SMARI). CaliforniaTourism(CTTC)hastrackedtheeffectiveness
andROIofitsadvertisingeffortsformanyyears,usingthesamemethodologysince2004.The
researcheffortsfollowthesamepatternsothatresultswillbecomparabletopastyears.
Advertisingresearchisconductedintwophases.Phase1isconductedimmediatelyafterthe
conclusionofanadvertisementrunandmeasures:(1)thereachofthecampaign;(2)reactions
tothecreativeaspectsofthecampaign;(3)theimpactofthecampaignonchangingattitudes
towardCaliforniaand;(4)thewaysinwhichthecampaigninfluencedconsumerinterestin
visitingthestate.
Phase2oftheadvertisingresearchisconductedafteraperiodoftimedeemedreasonableto
allowfortravelthatisrelatedtoadvertisingexposure.Itmeasures:(1)incrementaltraveland
spendingassociatedwithCaliforniaTourismsmarketingeffortsand(2)ROIasdeterminedby
thistravelspendinginrelationtocampaignexpenditures.
CTTCutilizedD.K.Shifflettoprepareanextensivevisitorprofilein200913
.Thiswasafterthe
SMARI2009advertisingevaluationandthustheeconomicimpactnumberswerenotusedin
calculatingtheROIfromthe2009campaign.CTTCemploysDeanRunyantomeasurethe
economicimpact14
fromtourismonayearlybasisandSMARItomeasureincrementalvisitation
andROI.The$13.7million2009advertisingcampaign15
generated3.35incrementalvisitsper
addollar,$305invisitorspendingperaddollar,and$20instateandlocaltaxrevenueperad
12MichiganImageand2005AdvertisingEvaluationStudy:http://ref.michigan.org/cm/attach/7FCE50AA 1D21
411DA4CEB2C55EE09612/2005_ROI_report.pdf13
California2009VisitorProfileReport:
http://tourism.visitcalifornia.com/media/uploads/files/editor/Research/2009%20California%20Data%20Report%2
0%20Public%20Version.pdf14
EconomicImpactofTourisminCalifornia2009
http://tourism.visitcalifornia.com/media/uploads/files/editor/Research/CA09pRptrev.pdf15
CaliforniasDomesticAdvertising Total2009ROIResearchSummary
http://tourism.visitcalifornia.com/media/uploads/files/editor/Research/california%202009%20Total%20domestic
%20ROI%2003_25_10.pdf
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dollar.ThiswasthehighestROIgeneratedforanyoftheeleveninvestigatedstatesthathad
undertakenROIstudies.
CaliforniaTourismhashadalotoftourismmarketingresearchdoneinthepastdecade.Their
strategyhasbeentoevaluatelargeandfocusedmarketinginitiatives.Thereportslistedbelow
illustratethis
approach.
Their
website16
allows
others
to
easily
find
and
access
this
information.
SomeofthetourismmarketingresearchCaliforniahasdonesince2005are:
Domesticadvertisingeffectiveness 2006Spring,2007Spring,2008Fall,2009Fall,2009Spring,and2010SpringbySMARI
DomesticROIonmarketing 2006Spring,2007Spring,2008Spring,2008Total,2009Spring,2009TotalbySMARI
Wintertraveladvertisingeffectiveness 2007,2008,2009,2010bySMARI WintertravelmarketingROI 2007bySMARI Digitaladvertisingeffectiveness 2009bySMARI EconomicimpactsoftravelinCalifornia CaliforniaTravelImpactsbyCounty2009,by
DeanRunyanAssociates,April2009.Prioryears:2008,2007,2006,2005
DomesticTraveltoCalifornia CaliforniaDomesticTravelReport,2009,byD.K.Shifflet&Associates,July,2009.Prioryears: 2008,2007,2006,2005
MichiganThoughMichiganhashadLongwoodsIntlconductROIstudiesannuallyfrom2004
to2007,theyonlypublishedthreereportsontheirtravelresearchwebsite17;onefrom2004,a
briefsummaryfrom2005,andtheotherisasummaryofthecombinedfouryears2004
200718
.TravelMichigansmarketingactivitiesin2004and2005involvedtheGreatLakesGreat
TimesadvertisingcampaignrunintheChicago,Cleveland,andIndianapolisLafayetteDMAs
(DesignatedMarketingAreas).For2006,themarketswereexpandedtoincludetheDMAsof
Cincinnati,MilwaukeeandSouthWesternOntarioandthelaunchofthePureMichigan
campaigninthosemarkets.In2007,thePureMichigancampaignreplacedGreatLakesGreat
TimescampaigninChicago,Cleveland,andIndianapolisLafayette.
Thepurposeoftheimageandadvertisingevaluationstudieswastoprovide:fundamental
strategicinsights
about
the
image
of
Michigan
and
its
key
competitors
with
respect
to
key
destinationchoicefactors;anevaluationoftheimpactoftheTravelMichiganadvertising
campaignincludingthefinancialreturnontheadvertisinginvestment(ROI); messagingand
16VisitCaliforniawebsite researchpage:http://tourism.visitcalifornia.com/Research/
17MichiganTourismResearchWebsite:http://ref.michigan.org/mtr/research/
18MichiganTourismandAdvertisingEvaluationStudies2004to2007:
http://ref.michigan.org/cm/attach/7FCE50AA1D21411DA4CE
B2C55EE09612/LongwoodSummary_final_04to07.pdf
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mediadiagnosticstoilluminatecontributingfactorstocampaignperformanceand,inturn,
insightstohelpoptimizetheimpactandyieldoffutureactivities.
TheobjectivesoftheongoingadvertisingevaluationresearcharetoprofileMichigansimageas
atraveldestination,includingitsstrengthsandweaknessesamongkeycompetitors,andto
identifywhat
is
important
to
travelers
in
choosing
Michigan
and
key
competitors
as
destinationsfortravel.Secondly,TravelMichigansadvertisingcampaignswereevaluatedin
termsof:theawarenessthattheygenerate;theirimpactonMichigansimageandontravelto
thestate;theincrementalbottomlineimpactofthattravel,andtheresultingrateofreturnon
theadvertisinginvestment(ROI).
From2004to2007,TravelMichiganinvested$19.97millioninadvertising.Thisinvestment
generated3.8millionincrementalvisits,$40.29invisitorspendingperadvertisingdollar,and
$2.82instatetaxrevenueperadvertisingdollar.The2005LongwoodsROIevaluationresulted
in
slightly
better
numbers
with
$48.53
in
visitor
spending
per
advertising
dollar,
and
$3.43
in
statetaxrevenueperadvertisingdollar19
.ThisisthelowestintermsofROIofvisitorspending
peradvertisingdollar.KeepinmindthattheotherninestateswhomeasuredROIalsoincluded
localtaxrevenueinadditiontothestatetaxrevenueandthatisprobablywhyMIandMOare
atthebottomofthepackintaxrevenue.
Otherrecenttourismmarketingresearchpublications(allbyLongwoodsIntl)TravelMichigan
hasreleasedare20
:
2004TO2007MichiganTourismAdvertisingEvaluationStudies 2007ResearchandReview 2004AdvertisingEvaluationandROIStudy 2005MichiganImageandAdvertisingStudy
NorthDakota TheNorthDakotaTourismDivisionutilizesmultitudeofresearch
methodologies,andorganizations.Theseinclude21:
CanadianTravel ProvidedbyStatisticsCanada,measurestravelandspendingbyCanadians
to
the
United
States;
gathered
through
Stats
Canadas
International
Travel
Survey.
DomesticTravelExpenditures ComparativedataprovidedbytheUnitedStatesTravelAssociation,usingtaxrevenuefromtheU.S.BureauofLaborStatistics.
19MichiganImageand2005AdvertisingEvaluationStudy: http://ref.michigan.org/cm/attach/7FCE50AA1D21
411DA4CEB2C55EE09612/2005_ROI_report.pdf20
Allofthesestudiescanbefoundat:http://ref.michigan.org/mtr/research/21
NorthDakotaTourismDivision:http://www.ndtourism.com/industry/research/
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EconomicBase ComparativeanalysisprovidedbyNorthDakotaStateUniversity(NDSU)ofthestatessixprimaryindustries;measuresnonresidenttravelspending.
ReturnonInvestment(ROI) ContractedthroughLongwoodsInternational,measurestheawarenessandeffectivenessofadvertisingcampaigns.
Tourism
Satellite
Account
A
measurement
of
the
economic
impact
of
travel
and
tourism,contractedbyIHSGlobalInsightthatusesjobs,wagesandtaxestoquantifythe
contributiontourismmakestothegrossstateproduct(GSP).
VisitorStudies AsurveyofrecentvisitorstoNorthDakota,documentingtheirtravelhabitsandspendingandcomparingtoU.S.traveldata;contractedthroughLongwoods
International.
The2007campaigninvested$1.7millioninadvertisingthatgenerated$203.9millionin
incrementalvisitorspendingand$14.7millioninstateandlocaltaxes.ThisamountedtoanROI
of$123invisitorspendingperaddollarand$9instateandlocaltaxrevenueperaddollar.
TheseresultsarerightaboutaverageforthestatesthathaveinformationavailableonROI.
SouthDakota SouthDakotaTourismemploysIHSGlobalInsighttomaintainatourismsatellite
accountthatmeasurestheeconomicimpactfromtourismbuthavenotyetformallytriedto
measuretheROIoftourismmarketing/advertising.Theyarehowevertakinganovelapproach
tocomparethemselvestoColoradowhohadstoppedtheirpromotionaleffortsfrom1993to
1997andthushadseentheirleisuretraveldeclineby7.7%forthose4years. SDisbasically
looking
at
various
scenarios
following
the
Colorado
22
example
to
estimate
how
much
visitor
loss,tourismexpendituredeclines,andstateandlocaltaxlosseswouldfolloweliminationof
thetourismoffice.
Conclusions
Statetravelofficejustificationsforannualallocationsofstatefundsareincreasinglybeing
scrutinizedasstatesseektobalancebudgets.Thus,thesejustificationsareexpectedtocontain
wellstatedobjectives,measurableresults,andclearstandardsofcosteffectiveness.
Advertisingis
abig
portion
of
the
budget
for
state
travel
offices
and
they
need
to
justify
this
expensebymeasuringandshowingthereturnoninvestment.
Ofthesixteenstatetravelofficesreviewedinthisstudy,elevenofthemhadconductedROI
studiessince2000,includingMinnesota.LongwoodsIntlandSMARIarethedominant
companiesthatstatetravelofficeshiretoconductthestudies.Sevenoutofelevenstateshired
22COhadtourismmarketingROIstudiesdonebyLongwoodsIntlandeconomicimpactoftourismbyIHSGlobal
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LongwoodsIntlwhilethreehiredSMARI.Onlyonestate,Minnesota,hiredadifferententity
MNDept.ofTrade&EconomicAnalysisin2000toconducttheROIandeconomicimpact
research.ThetwomainmeasurementsofROIwereincrementalstateandlocaltaxrevenue
generatedperadvertisingdollarandincrementalvisitorspendinggeneratedper
advertisementdollar.
Visitorexpendituresvaryineachstatedependingonthevisitorssocioeconomicprofileand
thestatesuniquetourismproducts.Butanotherlikelyreasonthatmayartificiallyincreasethe
spreadmaybethepracticeofstatetravelofficestohireavarietyofthirdpartiestoconduct
economicimpactassessmentstoestimatepercapitavisitorspendingandtherelationship
betweenvisitorspendingandstatetaxes.ThecompanieshiredtomeasureROItendtousethe
economicimpactdataprovidedtothembythestatewhilestatesemployavarietyof
organizationstomeasuretheeconomicimpactoftourism.Thevaryingorganizationsthat
performtheeconomicimpactstudiesandthemethodologiestheyutilizecontributetothe
variationin
ROI.
FurtherexplorationofCalifornia,Michigan,NorthDakota,andSouthDakotaillustratethe
differingwaysstatesconducttourismmarketingresearch.Itwouldbequiteproblematicfor
anotherstatetravelofficetoattempttoestimateitsmarketingROIbasedonthestatelevel
informationprovidedinthisreport.Advertisingeffectiveness,targetmarkets,visitorspending
profiles,thecostofgoodsandservices,andmanyothervariablesallservetolimitthedegreeto
whichcomparisoncanbemade.However,thedetailedassessmentofotherstatestourism
marketingROImeasurementsfoundinthisreportprovidesExploreMinnesotaTourismwith
the
range
of
likely
ROI
estimates
for
its
own
marketing
activities.
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October 1, 2010
Tourism Marketing ROI study
Overview: Explore Minnesota Tourism (EMT) is the state agency responsible for
promoting travel to and within Minnesota. Considerable resources are invested in
marketing Minnesota as a destination to potential travelers. The expectation is that
marketing efforts will enhance positive perceptions of Minnesota as a travel
destination, increase brand awareness, and increase travel and associated economic
impacts throughout the state. In order for EMT to better estimate the return on
investment (ROI) of its marketing activities a review of state-level reports and
assessments for tourism marketing of other states is proposed until budgetary
constraints allow for more direct assessments.
Purpose: To identify and compare state-level approaches, and results of tourism
marketing return on investment analyses
Methods: Review of state-level reports and assessments for tourism marketing to
document:
Marketing budgets (total)
Marketing strategies where return on investment (ROI) is calculated
Methodologies used to calculate ROI
Results of ROI studies
Initial state tourism agencies assessed:
*Wisconsin
*Michigan
*Iowa
*North Dakota
*South Dakota
*Missouri Pennsylvania
Oregon
Florida
Arizona
Montana
California
Colorado
Kentucky
Virginia
Extension Regional
Office, St. Cloud
Midtown Office Building
3400 First Street N, Suite 400St. Cloud, MN 56303-4000
PHONE
(320) 203-6050
FAX
(320) 203-6110
EMAIL
WEB
www.extension.umn.edu
Making a difference for
Communities
the Environment
Families
Food and Agriculture
Youth
Appendix - Tourism Marketing ROI Study Initial Agreement
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Process:For this study, different state marketing programs are of varying levels ofinterest due to geographic proximity (e.g., the first six states listed above with
asterisks) similarity of product and/or marketing efforts, and prominence within the
tourism marketing community. In addition, it is anticipated that states will vary
considerably in how they address tourism marketing ROI, including instances where
multiple states may be very similar due to using the same research contractor,
impacting their relevance to this study. With this in mind, a higher level review of
the ROI efforts of states will be useful in paring the list to states that warrant
additional, more in-depth investigation. An initial comparative table of higher level
ROI-related information will provide information for all of the states listed above,
and will facilitate the paring down process.
Adeel AhmedAssistant Extension Professor
University of Minnesota Extension - Center for Community Vitality
Office: 320-203-6109
Email: [email protected]
Website:http://www.extension.umn.edu/Community/
mailto:[email protected]:[email protected]://www.extension.umn.edu/Community/http://www.extension.umn.edu/Community/http://www.extension.umn.edu/Community/http://www.extension.umn.edu/Community/mailto:[email protected]