MEASURINGRETURN ONINVESTMENTOF TOURISMMARKETING

AReviewofSixteenStateTourismOffices AdeelAhmed AssistantExtensionProfessor UniversityofMinnesotaExtension CenterforCommunityVitality 12/24/2010

PreparedforExploreMinnesotaTourism,withfundingprovidedbyExploreMinnesotaTourism andtheCarlsonChairforTravel,Tourism&Hospitality

TableofContents
ExecutiveSummary Introduction Methodology Table1SummaryofRecentStateLevelTourismAssessmentsofSelectedStates Table2Table2ComparisonofSelectedStatesthathaveMeasuredROIof TourismMarketinginthelast10years. AnalysisandDiscussion BriefMethodologyofLongwoodsInternationalandStrategicMarketing& ResearchInc(SMARI) FurtherInvestigationintoStates California Michigan NorthDakota SouthDakota Conclusions AppendixTourismMarketingROIStudyInitialAgreement 1 4 5 6 11

12 14

16 16 17 18 19 19 21

ExecutiveSummary Statetravelofficesjustificationsforfundingareincreasinglybeingscrutinizedasstatesseekto balancebudgets.Thesejustificationsareexpectedtocontainwellstatedobjectivesand measurableresults,includingindicationsofcosteffectiveness.Advertisingisabigportionof thebudgetforstatetravelofficesandisperhapsthebudgetaryconsiderationmostfrequently investigatedforitscosteffectiveness.InorderforExploreMinnesotaTourism(EMT),thestate agencyresponsibleforpromotingtraveltoandwithinMinnesota,tobettergaugethereturnon investment(ROI)ofitsrecentmarketingactivities,areviewofstatelevelreportsand assessmentsforthetourismmarketingofMinnesotaand15otherstateswascompletedin December2010andispresentedinthisreport. ThisreportdoesnotreplacetheneedtoconductanROIstudyoftourismmarketingforthe stateofMinnesota,whichhasnotbeendonesincetheyear2000.Tourismtrends,tourism marketing,andmeasuringROIhavechangedconsiderablysincethelaststudywasconducted. Theincreasingcomplexityandintegrationofmarketingandcommunicationstacticsmakesan ROIstudyamajorundertakingrequiringsignificantfinancialresources.EMTisincreasingly awareoftheneedtoupdateMinnesotasROImeasurementsandintendstoconductanROI studywhentheresourcesallowforit.EMTcollaboratedwiththeUniversityofMinnesota TourismCenterandUniversityofMinnesotaExtensiontocompletethisprojectefficiently.The studyandreportwerepaidforbyEMTandtheCarlsonChairforTravel,Tourism&Hospitality andwasundertakenasaninterimmeasuretodeterminearangeofwhatMinnesotasROIlikely isbycomparingtheROIanalysesofotherstates. ThemostrecentROIstudyoftourismmarketinginMinnesotawasconductedforthe spring/summerof2000advertisingcampaign(6months).TheMinnesotaDepartmentofTrade andEconomicDevelopment(nowknownasMNDepartmentofEmploymentandEconomic Development)wascontractedtodothestudywhichsurveyedcustomerswhohadaskedthe travelofficetosendthemtravelinformationaboutMinnesota.Estimatesofvisitorsdaysand dailyexpendituresfromthesurveyservedastheprimaryinputparameters,whileoutputfrom theREMIeconometricinputoutputmodelprovidedtheeconomicimpactmeasuresthatwere centraltotheROIanalysis.Theresultingimpactsincludeddirect,indirectandinducedimpacts. Resultsshowedthateverydollarspentinmarketinggenerated$52.64inincrementalgross salesand$4.62inincrementalstateandlocaltaxrevenues1. ThedetailsregardingMinnesotasROIanalysisserveasacautionwhencomparingwiththeROI resultsforotherstates.Forexample,somestudiesinthisreportmeasuredtheROIofasingle seasonaladvertisingcampaign(likeMinnesota),othersmeasuredtheROIofanumberof

AnalysisoftheMinnesotaOfficeofTourismsReturnonInvestmentforConsumersReceivingMailFulfillment, Spring/Summer2000byMNDeptofTradeandEconomicDevelopment
1

campaignsconductedoverthecourseofayear,whileafewmeasuredtheROIofcampaigns thatspannedmultipleyears.Secondly,manyofthereportsfromwhichROIinformationwas derivedwerebereftofdetails.ThuswhencomparingthemarketingROImeasurements(see Table1andTable2)betweenthedifferentstatetourismofficespleasetakeintoaccountthe followingfactors: Whethertheinvestmentportionconsideredintheanalysiscoversallcostsassociated withmarketingandfulfillment;includingsalariesandofficesupplies,orjustthecostof theadvertising? CompaniescontractedtodoROIanalysishavevaryingmethodologiesonhowto measureincrementalvisitsandvisitorspending. Whethertheeconomicimpactmeasurementsjustincludedirectspendingonindustries thattouchthevisitor(i.e.hotels,restaurants,museums),oralsoincludeindirect spendingthatconsidersindustriesthatsupplythosethattouchthevisitor,andinduced spendingthataffectsworkersofindustriesthatsupplythosethattouchthevisitor? Doesincrementaltaxrevenueduetoadvertisingincludestatetax,localtaxorboth? WhetherROImeasurementsarebasedonlongtermorshorttermeffectsof advertising?Oregonwastheonlystateinthestudytoexplicitlystateandgivebothlong termandshorttermresults.

Thefifteenstatesthatservedasthestartingpointforthisinvestigationoftourismmarketing ROIwereselectedbasedonthefollowingfactors:geographicproximitytoMinnesota,similarity ofproductand/ormarketingeffortstoMinnesotas,prominencewithinthetourismmarketing community,andindicationsthatanROIstudyorstudieshadbeenundertakenforthestate. Thisreviewfoundthatmoststatesareusinganumberofmarketresearchorganizationsto determinethreedistinctpiecesofdataintheirattemptstomeasuremarketingROI:(1)visitor ortravelerprofiles,(2)economicimpactduetovisitorspending,and(3)effectivenessofthe advertisingcampaign(s)onincrementalvisits. IncludingMinnesota,elevenstatesmeasuredtheeffectsofadvertisingcampaignson incrementalvisitsandtheresultingROIofmarketing.Ofthesestates,sevenhiredLongwoods International,threehiredStrategicMarketing&ResearchInc(SMARI),whileone,Minnesota, utilizedagovernmentagency2.Additionally,differentorganizations,andhencemethodologies, wereusedtomeasurevisitorexpendituresandtheeconomicimpactoftourism. ROIestimatesofvisitorspendingperadvertisementdollarrangedfrom$48.53(Michigan)to $305.00(California),withanaverageof$122.80andmedianof$123.Fivestates(MI,MT,VA, MN,andMO)hadaspendingROIoflessthan$70peradvertisingdollarwhilesixstates(ND,

EconomicDevelopmentandEvaluationOfficeofMNDeptofTradeandEconomicDevelopment
2

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.

Introduction ConsiderableresourcesareinvestedinmarketingMinnesotaasadestinationtopotential travelers.Theexpectationisthatmarketingeffortswillenhancepositiveperceptionsof Minnesotaasatraveldestination,increasebrandawareness,andincreasetraveland associatedeconomicimpactsthroughoutthestate.Statetravelofficesjustificationsfor fundingareincreasinglybeingscrutinizedasstatesseektobalancebudgets.Thesejustifications areexpectedtocontainwellstatedobjectivesandmeasurableresults,includingindicationsof costeffectiveness.InorderforExploreMinnesotaTourism(EMT),thestateagencyresponsible formarketingthestateasatraveldestination,tobetterestimatethereturnoninvestment (ROI)ofitsmarketingactivities,areviewofstatelevelreportsandassessmentsfortourism marketingofMinnesotaand15otherstatelevelagencieswascompletedinDecember2010 andispresentedinthisreport. ThisreportdoesnotreplacetheneedtoconductanROIstudyoftourismmarketingforthe stateofMinnesota,whichhasnotbeendonesincetheyear2000.Tourismtrends,tourism marketing,andmeasuringROIhavechangedconsiderablysincethelaststudywasconducted. Theincreasingcomplexityandintegrationofmarketingandcommunicationstacticsmakesan ROIstudyamajorundertakingrequiringsignificantfinancialresources.EMTisincreasingly awareoftheneedtoupdateMinnesotasROImeasurementsandintendstoconductanROI studywhentheresourcesallowforit.EMTcollaboratedwiththeUniversityofMinnesota TourismCenterandUniversityofMinnesotaExtensiontocompletethisprojectefficiently.The studyandreportwerepaidforbyEMTandtheCarlsonChairforTravel,Tourism&Hospitality andwasundertakenasaninterimmeasuretodeterminearangeofwhatMinnesotasROIlikely isbycomparingtheROIanalysesofotherstates. ThemostrecentROIstudyoftourismmarketinginMinnesotawasconductedforthe spring/summerof2000advertisingcampaign(6months).TheMinnesotaDepartmentofTrade andEconomicDevelopment(nowknownasMNDepartmentofEmploymentandEconomic Development)wascontractedtodothestudywhichsurveyedcustomerswhohadaskedthe travelofficetosendthemtravelinformationaboutMinnesota.Thesurveywasconductedvia mailandphoneandmeasuredtravelvolumeandtravelexpendituresasthereturncomponent oftheanalysis.Theinvestmentportionwasbasedonexpendituresformarketingandall fulfillmentfunctions(mailing,printing,staffing)toU.S.residents.Lastly,theREMIeconometric inputoutputmodelwasusedtosimulatetheeffectoftravelspendingontheMinnesota economy.Estimatesofvisitorsdaysanddailyexpendituresfromthesurveyservedasthe primaryinputparameters,whileoutputfromREMIprovidedtheeconomicimpactmeasures thatwerecentraltotheROIanalysis.Theresultingimpactsincludeddirect,indirectand

inducedimpacts.Resultsshowedthateverydollarspentinmarketinggenerated$52.64in incrementalgrosssalesand$4.62inincrementalstateandlocaltaxrevenues3. ThedetailsregardingMinnesotasROIanalysisserveasacautionwhencomparingwiththeROI resultsforotherstates.Forexample,somestudiesinthisreportmeasuredtheROIofasingle seasonaladvertisingcampaign(likeMinnesota),othersmeasuredtheROIofanumberof campaignsconductedoverthecourseofayear,whileafewmeasuredtheROIofcampaigns thatspannedmultipleyears.Secondly,manyofthereportsfromwhichROIinformationwas derivedwerebereftofdetails.ThuswhencomparingthemarketingROImeasurements(see Table1andTable2)betweenthedifferentstatetourismofficespleasetakeintoaccountthe followingfactors: Whethertheinvestmentportionconsideredintheanalysiscoversallcostsassociated withmarketingandfulfillment;includingsalariesandofficesupplies,orjustthecostof theadvertising? CompaniescontractedtodoROIanalysishavevaryingmethodologiesonhowto measureincrementalvisitsandvisitorspending. Whethertheeconomicimpactmeasurementsjustincludedirectspendingonindustries thattouchthevisitor(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,KentuckyandVirginia. Thestatesrespectivetourismwebsitesweresearchedforstudiesfocusingonthe measurementofROI.Wherenonewerefoundtheresearchdirectorofthestatetourism officewascontacteddirectlyforinformation.Therelevantreportsandsubsequentfindingsare summarizedinTable1andTable2.

AnalysisoftheMinnesotaOfficeofTourismsReturnonInvestmentforConsumersReceivingMailFulfillment, Spring/Summer2000byMNDeptofTradeandEconomicDevelopment
5

Table1SummaryofRecentStateLevelTourismAssessmentsofSelectedStates

StateandSummary
Arizona LongwoodsIntldidanadvertisingeffectiveness reportin2007.Thereportisnotpublicallyavailable butreferencestoitaremadeina2008marketing presentationontheAZtourismwebsite.TheAZOT TourismResearchDirectorsupplementedthe informationinanemailexchange. DeanRunyanandTourismEconomicsprovided economicimpactanalysis.

MostRecentAdvertisingCampaignROIs and RelevantTourismStudies EconomicImpacts

MainsourceofROIinfo:Marketingthe StateofArizonapg2021 FurtherAZtourismresearchavailableat: http://www.azot.gov/researchand statistics Statetourismwebsite: http://www.azot.gov/

200721monthcampaign Advertisingexpenditure:$4.4M Incrementaltrips:5.5million Avgexpendituresperovernightvisitor:$358 Avgexpendituresperdaytripper:$89 Incrementalrevenue:$1.5B Incrementalstatetaxrevenue:$66M Incrementallocaltaxrevenue:$57M ROI:Visitorspendingperaddollar:$180 ROI:Stateandlocaltaxrevenueperaddollar:$14.95 Economicimpact2009totaldirecttravelspending: $16.6B California 2009campaignincluding2009/2010wintercampaign. CaliforniaTourism(CTTC)hastrackedthe Advertisingexpenditure:$13.7M effectivenessandROIofitsadvertisingeffortsfor Incrementaltrips:3.35M manyyears,usingthesamemethodologysince2004. Avgexpenditurepertrip:$1248 Theresearcheffortsfollowthesamepatternsothat Incrementalstateandlocaltaxrevenue:$268M resultswillbecomparabletopastyears.Advertising ROI:Visitorspendingperaddollar:$305 researchisconductedintwophases.(SeePg4for ROI:Stateandlocaltaxrevenueperaddollar:$20 Economicimpact2008totaldirecttravelspending: moredetail) $97.6B DeanRunyanhasdoneeconomicimpactanalysisfor CAonyearlybasissince2000 Colorado Basedon15monthAdcampaignApr07Jun08 Thelatestadvertisingevaluationwascompletedin Advertisingexpenditure:$10.74M 2008byLongwoodsIntlfora2007adcampaign. Incrementaltrips:5.97M LongwoodsistheonlyorganizationdoingROIanalysis Incrementalvisitorspending:$2078M forCO.ThepreviousROIanalysiswasdonein2003. Statetaxesgenerated:$62.4M Localtaxesgenerated:$76.9Million DeanRunyanhasdoneeconomicimpactanalysisof ROI:VisitorSpendingperaddollar:$193 tourisminCOsince2003. ROI:Stateandlocaltaxrevenueperaddollar:$12.96 Economicimpact2009totaldirecttravelspending: $13.4B

Mainsourceofinfo::CaliforniaDomestic AdvertisingTotal2009ROIResearch SummarybySMARIMarch2010pg22 FurtherCAtourismresearchavailableat: http://tourism.visitcalifornia.com/Research /AdvertisingEffectivenessandROI/ Statetourismwebsite: http://tourism.visitcalifornia.com Mainsourceofinfo:Colorado2007Ad CampaignEvaluationbyLongwoods August2008Pgs1821 FurtherCOtourismresearchavailableat: http://www.colorado.com/IndustryPartner s/Research.aspx Statetourismwebsite: http://www.colorado.gov
6

Florida InJanuary,VisitFloridaannouncedthelaunchoftheir newspring2010YourFloridaSidemarketing campaign,whichranthroughearlyMay.Strategic Marketing&Research,Inc.(SMARI)wascontracted toconductresearchquantifyingthe5month campaignsROI. VisitFloridaisaforprofitorganizationthattheState ofFLcontractstoperformandevaluatestatelevel tourismpromotion,includingeconomicimpact. Iowa: IowahasnotspecificallymeasuredROIonmarketing duetobudgetaryconstraints.Anumberofother studieshavebeenconductedtomeasureeconomic impactoftourism.

2010springcampaign Advertisingexpenditure:$2.78M Tripsgenerated:180,000 IncrementalvisitorSpending:$417M Localandstatetaxrevenuegenerated:$25M ROI:Visitorspendingperaddollar:$147 ROI:Stateandlocaltaxrevenueperaddollar:$9 Economicimpact2009totaldirecttravelspending: $60.9B

Mainsourceofinfo;The2010SMARIstudy isnotpublicallyavailablebutareference wasmadetoitinVisitFloridasofficialblog. FurtherFLtourismresearchavailableat: http://media.visitflorida.org/research.php Statetourismwebsite: http://www.visitflorida.org

Economicimpact2008totaldirecttravelspending: $6.4B 2008Taxrevenuetostate:$303.2M IowaTourismDeptbudgetFY08:$5.05M

Kentucky TheKentuckyTourismResearchprogram hasnotdoneanROIstudyin10yearsbutintendsto withinthenext3years.TheyaredevelopinganRFP tohaveavisitorprofile,conversionstudy,andanROI studydone. Michigan: MichiganhashadLongwoodsIntlconductROI studiesannuallyfrom2004to2007.Threereports havebeenmadepublic:2004,abriefsummaryof 2005,andamoredetailedpresentationfromthe combinedyearsof20042007. D.K.ShiffletdidtheeconomicimpactstudiesforMI from2000to2004

Economicimpact2009totaldirecttravelspending: $10.8B

Mainsourceofinfo:IowaTourism ResultsbytheIowaDeptofEconomic DevelopmentTourismOffice FurtherIAtourismresearchavailableat: http://www.traveliowa.com/travelindustry research.aspx Statetourismwebsite: http://www.traveliowa.com FurtherKYtourismresearchavailableat:: http://www.kentuckytourism.com/industry /research.aspx Statetourismwebsite: http://www.kentuckytourism.com Mainsourceofinfo:MichiganImageand 2005AdvertisingEvaluationStudyby LongwoodsMarch2006pg7 FurtherMItourismresearchavailableat: http://ref.michigan.org/mtr/research/ Statetourismwebsite: http://www.travelmichigan.com/
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2005advertisingcampaign Advertisinginvestment:$3.4M Visits:0.89 Incrementalvisitorspending:$165M Incrementalstatetaxrevenue:$11.6M ROIVisitorspendingperaddollar:$48.53 ROIStatetaxrevenueperAddollar:$3.43 Economicimpact2004totaldirecttravelspending: $17.5B

Minnesota ROIstudydonein2000byMNDept.ofTrade& EconomicAnalysisforthespring/summerof2000. Travelvolume(visitordays)andexpenditures determinedviasurveyofMNOfficeofTravel customers.Travelerspendingandeconomicimpact simulatedthroughtheREMIeconometricinput outputmodel.

Forspring/summer20006monthadcampaign Advertisinginvestment:$3.05M Incrementalvisitordays:1,957,237 Grosssalesimpact:$160.6M Stateandlocaltaximpact:$14.1M ROI:Grosssalesperaddollar:$52.64 ROI:Stateandlocaltaxrevenueperaddollar:$4.62 ROIfiguresincludedirect,indirectandinducedimpacts. Economicimpact2008totaldirecttravelspending: $12.1B

Missouri: SMARIdidadvertising/publicrelationseffectiveness analysis,includingROI,forMO.TheROIinformation wasonlybrieflysharedintheMissouriDivisionof TourismFY09AnnualReport. TNSTravelsAmericaandUniversityofMissouridid economicimpactanalysisoftourismforMO

2009advertisingcampaign Advertisingexpenditure:$7.6M ROIVisitorspendingperaddollar:$46.81 ROIStatetaxrevenueperaddollar:$2.54 Economicimpact2009totaldirecttravelspending: $7.87B

Montana Hasnothadmarketingeffectivenessresearchdone since2004.Thelastmarketingeffectivenessresearch studywasdonein2004byLongwoodsIntl. UniversityofMontanadidtheeconomicimpactof tourismstudyin2008

2003200412monthadvertisingcampaign Advertisingexpenditure:$1.41M Incrementalvisits:0.5M Incrementalvisitorspending:$68M Incrementalstate&localtaxrevenue:$4.9M ROIstateandlocaltaxrevenueperAd$:$3.50 ROIVisitorspendingperAd$:$50 Economicimpact2007totaldirecttravelspending: $3.18B

MainSourceofInfo AnalysisoftheMNOfficeofTourisms ReturnonInvestmentforConsumers ReceivingMailFulfillment,Spring/Summer 2000byAnalysisandEvaluationOfficeof MNDeptofTradeandEconomicAnalysis, 2001 FurtherMNtourismresearchavailableat: http://industry.exploreminnesota.com/min nesotatraveltourismresearch/ Statetourismwebsite: http://www.exploreminnesota.com MainSourceofInfo:MissouriDivisionof TourismFY09AnnualReport. Pgs8,13,23 FurtherMOtourismresearchavailableat: http://industry.visitmo.com/IndustryInsight s/ResearchandReports.aspx Statetourismwebsite: http://www.visitmo.com/ Mainsourceofinfo:2004Tourism AdvertisingEvaluationFinalReport Pgs6974 FurtherMTtourismresearchavailableat: http://travelmontana.mt.gov/research/con version.asp Statetourismwebsite: http://travelmontana.mt.gov

NorthDakota: LongwoodsIntldidROIresearchforNDin2008to determineNorthDakotasimageasatourism destinationwithinitsadvertisingmarketsand evaluatetheDepartments2007tourismadvertising campaignsinboththeU.S.andCanadaintermsof: awareness,theimpactoftheadvertisingonimage, theimpactoftheadvertisingonincrementaltravelto NorthDakota,andtheassociatedincrementalvisitor spending. IHSGlobalInsightdidtheEconomicImpactAnalysis: Oregon OregonhashadLongwoodsInternationalmeasure theeffectivenessandROIofitsadvertising periodicallyin2002,2004,&2008.Thecurrentreport providesasummaryoftheshortterm,longerterm andcombinedimpactsofthe2008advertising program,withcomparisonsto2004campaignresults. EconomicimpactdataprovidedbyDeanRunyan& Assoc.

2007advertisingcampaigns Advertisinginvestment:$1.7M Visits:1.2M Incrementalspending:$203.9M Localandstatetaxrevenue:$14.7M ROIVisitorspendingperaddollar:$123 ROILocalandstatetaxrevenueperaddollar:$9 Economicimpact2009totaldirecttravelspending: $0.94B

Mainsourceofinfo:AnEvaluationof NorthDakotas2007Advertising CampaignbyLongwoodsMay2008pg42 FurtherNDtourismresearchavailableat: http://www.ndtourism.com/industry/resea rch/ Statetourismwebsite; http://ndtourism.com

Pennsylvania: Onlythe2006annualreportfortourismstatswas availableonthePAtourismwebsite.D.K.Shifflet& AssociatesandIHSGlobalInsightprovidedthe analysisforthereport.Thereportdidnotmention measuringROIoftourismmarketing.

2008campaignshortterm Advertisinginvestment:$1.7M Incrementalspending:$228.2M Incrementallocalandstatetaxesgenerated:$9.1M ROIVisitorspendingperaddollar:$134 ROILocalandstatetaxrevenueperaddollar:$5 2008campaignlongerTerm Advertisinginvestment:$1.7M Incrementalspending:$100.4M Incrementallocalandstatetaxesgenerated:$4.0M ROIVisitorspendingperaddollar:$59 ROILocalandstatetaxrevenueperaddollar:$3 Economicimpact2009totaldirecttravelspending: $7.7B Economicimpact2006totaldirecttravelspending: $26.9B Taxrevenue:$2.6B Visits:110M

Mainsourceofinfo:Oregon2008 AdvertisingLongTermConversion ReportbyLongwoodsMay2010 Pgs4856 FurtherORtourismresearchavailableat: http://industry.traveloregon.com/ Statetourismwebsite: http://www.traveloregon.com

*PADeptofTourism:Pennsylvania Tourism2006ReporttotheIndustry Statetourismwebsite; http://www.visitpa.com

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 Wisconsin: WITourismDeptbudgetFY10:$13M HasnotdoneanyformalresearchtodetermineROI WITourismDeptbudgetFY09:$15M ontourismbutannuallycontractsDavidsonPeterson 2009Marketingbudget:$10M Associatestoconducteconomicimpactsof 2009Tourismgeneratedexpenditures:$12B 2009Taxrevenuetostate:$1.36B expendituresbytravelerstoWisconsin. 2009TaxRevenuetolocal:$611M 2008Tourismgeneratedexpenditures:$13.1B 2007Tourismgeneratedexpenditures:$12.8B

SouthDakota: HasnotdoneanalysisonROIoftourismmarketing howevertheyareexaminingvariousscenarios followingtheColoradoexampletoseehowthe eliminationoftheOfficeofTourismwouldaffectthe numberofvisits,tourismexpendituresofvisitors,and stateandlocaltaxrevenue.COhadstoppedtheir promotionaleffortsfrom1993to1997andhadseen theirleisuretraveldeclineby7.7%forthose4years. EconomicimpactanalysisdonebyIHSGlobalInsight Virginia ROIinformationisavailablefromanexcerptof2006 LongwoodsIntlevaluationinthe2009marketing plan. EconomicimpactdataisprovidedbytheU.S.Travel Associationandfocusesondomestictravelers.

2009 SDOTbudget:$11.3M Directeconomicimpact:$1.2billion

Mainsourceofinfo:SDTourismSatellite AccountbyIHSGlobalInsightJanuary 2010pgs15,20 FurtherSDtourismresearchavailableat: http://www.sdvisit.com/tools/research/ Statetourismwebsite: http://www.sdvisit.com

Mainsourceofinfo:VirginiaTourismFY09 MarketingPlanpgs89 FurtherVAtourismresearchavailableat: http://www.vatc.org/research/index.asp Statetourismwebsite: http://www.virginia.org/

Mainsourceofinfo:TheEconomicImpact ofTravelersonWisconsin:Calendaryear 2009byDavidsonPetersonAssociates FurtherWItourismresearchavailableat: http://tourism.state.wi.us/ http://industry.travelwisconsin.com/ Statetourismwebsite: http://tourism.state.wi.us/

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Table2ComparisonofSelecedStatesthathaveMeasuredROIofTourismMarkeinginthelast10years. Duetovaryingmethodologiesandunitsofmeasurement,pleaserefertomoredetailedpresentationofthedataelsewhereinthisreport whenusingthisinformationforcomparativepurposes,suchaswhenmakingcomparisonsbetweenstates.

State Organzationmeasuring theROI Mostrecentyear ROIVisitorspending perAddollar AZ CA
Strategic Marketing& Research (SMARI)

CO

FL
Strategic Marketing& Research (SMARI)

MI

MN
MNDept.of Trade& Economic Development

MO

MT

ND

OR

VA

Average

Longwoods Int'l

Longwoods Int'l

Longwoods Int'l

Strategic Marketing& Research Longwoods (SMARI) Int'l

Longwoods Int'l

Longwoods Int'l

Longwoods Int'l

2007 $ 180.00

2009 $ 305.00

2008 $ 193.00

2010 $ 147.00

2005 $ 48.53

2000 52.64

2009 $ 46.81

2004 $50.00

2007 $123.00

2008 $134

2006 $ 70.80 68.18

ROIStateandlocaltax revenueperAddollar $ 14.95 Visits(millions) VisitorsperAddollar Campaignlength (months) Advertisingexpenses (millions)

Annualeconomicimpact ofalltraveltotaldirect travelspending(billions)

$ 20.00 3.35 0.24 12 $ 13.70

$12.96 $ 9.00 5.97 0.56 15 0.18 0.06 5

$3.43 0.89 0.26

12

$4.62 1.957 0.56 6 $3.50

$2.54

$ 3.50 $ 9.00 0.5 0.35 1.2 0.71

12

$5.00 1.04 0.61

12

$ 5.00 0.68 0.27 12 $ 2.50

4.73

5.5 1.25
21

12

12

$4.40

$10.74 $ 2.78

$3.40

$ 7.60 $ 1.41 $ 1.70 $ 1.70

$ 16.60

$ 97.60

$13.40

$60.90

$ 17.50

$12.10

$ 7.87 $ 3.18 $ 0.94 $ 7.70

TNSTravels Americaand Universityof Univeristyof Missouri Montana

$ 17.70

Organizationmeasuring economicImpact Tourismofficebudget (millions) Year

DeanRunyan andTourism Economics DeanRunyan DeanRunyan

MNDept.of Trade& VisitFlorida Economic Research D.K.Shifflet& Development Dept. Associates

IHSGlobal U.S.Travel insight DeanRunyan Association

$ 31.00 2009

$ 50.00 2010

$15.80 2009

$67.50 2010

$ 30.00 2009

$8.90 2010

$ 10.00 2010

$11.60 $ 3.30 2011 2009

$11.50 2008

$ 18.10 2010

Includesdirect,indirectandinducedimpacts UniversityofMontanaInstituteforTourism&RecreationResearch GrossSalesperAdDollar VisitorDays

VisitorDaysperAdDollar Onlyincludesstatetax Includesonlyshorttermresults

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AnalysisandDiscussion Thisreviewofsixteenstatetourismagencies,includingMinnesotas,showsthatstatesare usinganumberofmarketresearchorganizationstodeterminethreedistinctpiecesofdatain theirattemptstomeasuremarketingROI:(1)visitorortravelerprofiles,(2)economicimpact modelofthatspending,and(3)effectsofanadvertisingcampaignonincrementalvisits. (1) Visitorortravelerprofilesthisseeksanswerstoquestionslike:howmuchdovisitors spend,whattheybuy,andwhataretheirdemographics.Companiesthatprovidemarket researchservices,likeMarketToolsInc.4,areoftenusedtogathersuchinformation.These companiesmaintainconsumerpanels,whosedemographicsareclaimedtoresemblethe overallpopulationthatothercompaniescansurveywithdetailedquestionsabouttheir consumptionhabits,suchasspendingonvacations. (2) Economicimpactmodelthisexplainshowvisitorexpendituresimpacttheeconomyboth directlyandindirectly.Thetwoprincipalmethodsforestimatingrecreationandtourism relatedspendingandeconomicimpactsare(a)satelliteaccountsand(b)visitor surveys/inputoutputmodels.Satelliteaccountsareprimarilyusedtogiveanoverall aggregateestimateofthecontributionoftourismactivitytostateandnationaleconomies. Theyextracttourismrelatedactivityfromasystemofnational(orstate)accounts.When spendingandimpactsaredesiredforparticularmarketsegmentsorforlocalregions, surveyapproachesaregenerallyused.Spendingdataisgatheredinvisitorsurveysand appliedtoestimatesofthevolumeoftouristactivityinanarea.Spendingtotalsarethen appliedtoregionaleconomicmodelsormultiplierstoestimateeconomicimpactsonthe localarea,usuallyincludingsecondaryor"multipliereffects".5 (3) Effectivenessoftheadvertisingcampaign(s)onIncrementalvisitsAcertainamountof visitorswilltraveltoadestinationwhethertheyhaveorhavenotbeenexposedto advertisementsofthatdestination.ForROIstudiesitisrelevanttoknowhowmanyvisitors cameasaresultoftheadvertisingcampaign.Thetwoprevailingmethodsfordetermining destinationadvertisingeffectivenessandROIare(1)surveysofhouseholdsorpersonsin marketsexposedtoadvertisingandwhoresemblethetargetsofadvertisingand,(2) surveysofpersonswhocontactedthedestinationinresponsetoadvertising.Respondents areaskediftheyremembertheads,howitaffectedtheirimageofthedestination,and howlikelytheyweretotraveltotheadvertisedarea.Afewmonthslater(toallowtimeto

LongwoodsintltendstosubcontractthisworktoMarketToolsInc.SeeLongwoodsTravelUSA2008Visitor ReportforWestVirginia http://www.wvcommerce.org/App_Media/assets/pdf/industryinformation/reports/West_Virginia_ _2008_Overnight.pdf 5 MichiganStateUniversityEconomicImpactsofRecreation&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. Theresearchorganizationsemployedtomeasureeconomicimpactweremorenumerousand 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:
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Howcreativeandeffectivetheadvertisingwasininducingpeopletovisitthetarget destination? Variationinvisitorssocioeconomicprofiles(i.e.discretionaryincome)fromthetarget market. Thestatesuniquetourismproductsforinstancevisitorsspendmoreatskiresorts thantheydocampinginthewilderness. Howrelativelyexpensivegoodsandservicesareinthestate.

AnalysisandEvaluationOfficeofMNDeptofTradeandEconomicDevelopment
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Whethertheincrementaltaxrevenuegeneratedincludesstatetax,localtaxorboth? MIandMOonlymeasuredstatetaxrevenueswhiletherestofthestatesmeasured bothstateandlocaltaxrevenues.CompleteresultscanbeseeninTable2. Whethertheinvestmentportionconsideredintheanalysiscoversallcostsassociated withmarketing;includingsalariesandofficesupplies,orjustthecostoftheadvertising? CompaniescontractedtodoROIanalyseshaveslightlyvaryingmethodologiesonhow tomeasureincrementalvisitsandvisitorspending. Whethertheeconomicimpactmeasurementsjustincludedirectspendingonindustries thattouchthevisitor(i.e.hotels,restaurants,museums),oralsoindirectspending thatconsidersindustriesthatsupplythosethattouchthevisitor,andinducedspending thataffectsthewagesofworkersinindustriesthatsupplythosethattouchthevisitor? WhetherROImeasurementsarebasedonlongtermorshorttermeffectsof advertising?Oregonwastheonlystateinthestudytoexplicitlystateandgivethe resultsbothlongtermandshorttermresults. Thedifferentandvaryingwaysstatesandlocalitiestaxvisitors.Forinstance,istherea lodgingtaxandisitlocalorstatewide.

BriefMethodologyofLongwoodsInternationalandStrategicMarketing&ResearchInc(SMARI) StatetourismofficesengagedLongwoodsInternationalprimarilytodeterminethestates imageasatourismdestinationwithinitsadvertisingmarketsandtoevaluatetourism marketingcampaigns.Longwoodsevaluatestourismmarketingcampaignsintermsof awarenessinthemindofthepotentialvisitor,theimpactoftheadvertisingondestination image,andtheimpactoftheadvertisingontheincrementaltraveltothestateandthe associatedincremental/additionalvisitorspending.Longwoodssurveystravelersinthestates primaryadvertisingmarketstoprofilethestatesimageascomparedtokeyregional competitorsanddeterminetheimpact(shortorlongterm)ofaparticularadvertising campaign(s)7. LongwoodsInternationalhasconductedlargescalesyndicatedvisitorresearchsince1990.In 2007themethodologychangedfrommailsurveystoonlinesurveysandcontinuestoutilizea proprietaryquestionnaire8.Thesurveyisdistributedtoarepresentativesample,withthe desiredattributes,throughamarketresearchcompanycalledMarketTools,Inc.Thiscompany maintainsasizeablenumberofondemandpaneliststhatLongwoodsprofiles,intermsoftravel

NorthDakotaTourism:AnEvaluationofNorthDakotas2007AdvertisingCampaignpg3,4 https://www.ndtourism.com/uploads/resources/592/ndbm07finalreport.pdf 8 LongwoodsTravelUSA2008VisitorReport,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)exposurethroughadvertisingawareness,(2)messagingthroughcreative evaluation,(3)shiftinattitudesthroughcomparativeimageassessments,and(4)buildingof interestthroughcomparativeinterestinvisitation.Phase2oftheresearchisdonesometime later,soastohaveallowedtimefortraveltohaveoccurred,andmeasuresincrementaltravel bycomparingtherateoftravelamongthosewhowereawareoftheadvertisingandtherateof travelbythosewhowereunawareofthecampaign9. SMARImaintainsitsownconsumerpanelfromwhichitdevelopsvisitorprofilesbutusesa similarapproachtothatofLongwoodsinmeasuringincrementalvisits.Bothfocuson destinationimage,recalloftheadvertisement,andlikelihoodoftravel.Wheretheydifferisin whatquestionsareasked.Forexample,Longwoods10asksrespondentstorate,fromStrongly AgreetoStronglyDisagree,asamplingofdestinationattributeswhichthenintheanalysis arecomparedtoratingsofotherdestinationsfrompastLongwoodsengagements. Mustseedestination Lotstoseeanddo Afunplaceforavacation Excellentvacationvalue Anexcitingplace

ExamplesofSMARIsquestionsareexcerptedfromCaliforniasDomesticAdvertisingTotal 2009ROIResearchSummary11.Respondentsareaskedtorateeachchoicefrom1to5. AfterseeingtheseadsIammoreinterestedinvisitingthisstate Theseadsshowexperiencesandplacesthatyouareinterestedin Theseadsshowaplacewithauniqueattitudetowardlife Theseadsportrayaplacethatoffersvacationersthebestlifehastoofferallinone place

FromthesamplingofsixteenstatesLongwoodsappearstohavegreaterdepthandbreadthin thenumberofvisitorstheyhavesurveyedandprofiledandtheamountoftimetheyhavebeen

SMARIAdvertisingEffectiveness&ROI2007/2008SnowCampaignPg5 http://tourism.visitcalifornia.com/media/uploads/files/editor/Research/CTTC_CASnow2007_ROI.pdf 10 ExcerptedfromLongwoodsEvaluationofNorthDakotas2007advertisingcampaign: https://www.ndtourism.com/uploads/resources/592/ndbm07finalreport.pdf 11 CaliforniasDomesticAdvertisingTotal2009ROIResearchSummaryPg16 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 providedbytheclient12onpercapitavisitorspending,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 economicimpact14fromtourismonayearlybasisandSMARItomeasureincrementalvisitation andROI.The$13.7million2009advertisingcampaign15generated3.35incrementalvisitsper addollar,$305invisitorspendingperaddollar,and$20instateandlocaltaxrevenueperad

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MichiganImageand2005AdvertisingEvaluationStudy:http://ref.michigan.org/cm/attach/7FCE50AA1D21 411DA4CEB2C55EE09612/2005_ROI_report.pdf 13 California2009VisitorProfileReport: http://tourism.visitcalifornia.com/media/uploads/files/editor/Research/2009%20California%20Data%20Report%2 0%20Public%20Version.pdf 14 EconomicImpactofTourisminCalifornia2009 http://tourism.visitcalifornia.com/media/uploads/files/editor/Research/CA09pRptrev.pdf 15 CaliforniasDomesticAdvertisingTotal2009ROIResearchSummary 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 illustratethisapproach.Theirwebsite16allowsotherstoeasilyfindandaccessthisinformation. SomeofthetourismmarketingresearchCaliforniahasdonesince2005are: Domesticadvertisingeffectiveness2006Spring,2007Spring,2008Fall,2009Fall, 2009Spring,and2010SpringbySMARI DomesticROIonmarketing2006Spring,2007Spring,2008Spring,2008Total, 2009Spring,2009TotalbySMARI Wintertraveladvertisingeffectiveness2007,2008,2009,2010bySMARI WintertravelmarketingROI2007bySMARI Digitaladvertisingeffectiveness2009bySMARI EconomicimpactsoftravelinCaliforniaCaliforniaTravelImpactsbyCounty2009,by DeanRunyanAssociates,April2009.Prioryears:2008,2007,2006,2005 DomesticTraveltoCaliforniaCaliforniaDomesticTravelReport,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 strategicinsightsabouttheimageofMichigananditskeycompetitorswithrespecttokey destinationchoicefactors;anevaluationoftheimpactoftheTravelMichiganadvertising campaignincludingthefinancialreturnontheadvertisinginvestment(ROI);messagingand

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VisitCaliforniawebsiteresearchpage:http://tourism.visitcalifornia.com/Research/ MichiganTourismResearchWebsite:http://ref.michigan.org/mtr/research/ 18 MichiganTourismandAdvertisingEvaluationStudies2004to2007: http://ref.michigan.org/cm/attach/7FCE50AA1D21411DA4CE B2C55EE09612/LongwoodSummary_final_04to07.pdf

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mediadiagnosticstoilluminatecontributingfactorstocampaignperformanceand,inturn, insightstohelpoptimizetheimpactandyieldoffutureactivities. TheobjectivesoftheongoingadvertisingevaluationresearcharetoprofileMichigansimageas atraveldestination,includingitsstrengthsandweaknessesamongkeycompetitors,andto identifywhatisimportanttotravelersinchoosingMichiganandkeycompetitorsas destinationsfortravel.Secondly,TravelMichigansadvertisingcampaignswereevaluatedin termsof:theawarenessthattheygenerate;theirimpactonMichigansimageandontravelto thestate;theincrementalbottomlineimpactofthattravel,andtheresultingrateofreturnon theadvertisinginvestment(ROI). From2004to2007,TravelMichiganinvested$19.97millioninadvertising.Thisinvestment generated3.8millionincrementalvisits,$40.29invisitorspendingperadvertisingdollar,and $2.82instatetaxrevenueperadvertisingdollar.The2005LongwoodsROIevaluationresulted inslightlybetternumberswith$48.53invisitorspendingperadvertisingdollar,and$3.43in statetaxrevenueperadvertisingdollar19.ThisisthelowestintermsofROIofvisitorspending peradvertisingdollar.KeepinmindthattheotherninestateswhomeasuredROIalsoincluded localtaxrevenueinadditiontothestatetaxrevenueandthatisprobablywhyMIandMOare atthebottomofthepackintaxrevenue. Otherrecenttourismmarketingresearchpublications(allbyLongwoodsIntl)TravelMichigan hasreleasedare20: NorthDakotaTheNorthDakotaTourismDivisionutilizesmultitudeofresearch methodologies,andorganizations.Theseinclude21: CanadianTravelProvidedbyStatisticsCanada,measurestravelandspendingby CanadianstotheUnitedStates;gatheredthroughStatsCanadasInternationalTravel Survey. DomesticTravelExpendituresComparativedataprovidedbytheUnitedStatesTravel Association,usingtaxrevenuefromtheU.S.BureauofLaborStatistics. 2004TO2007MichiganTourismAdvertisingEvaluationStudies 2007ResearchandReview 2004AdvertisingEvaluationandROIStudy 2005MichiganImageandAdvertisingStudy

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MichiganImageand2005AdvertisingEvaluationStudy:http://ref.michigan.org/cm/attach/7FCE50AA1D21 411DA4CEB2C55EE09612/2005_ROI_report.pdf 20 Allofthesestudiescanbefoundat:http://ref.michigan.org/mtr/research/ 21 NorthDakotaTourismDivision:http://www.ndtourism.com/industry/research/

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EconomicBaseComparativeanalysisprovidedbyNorthDakotaStateUniversity (NDSU)ofthestatessixprimaryindustries;measuresnonresidenttravelspending. ReturnonInvestment(ROI)ContractedthroughLongwoodsInternational,measures theawarenessandeffectivenessofadvertisingcampaigns. TourismSatelliteAccountAmeasurementoftheeconomicimpactoftraveland tourism,contractedbyIHSGlobalInsightthatusesjobs,wagesandtaxestoquantifythe contributiontourismmakestothegrossstateproduct(GSP). VisitorStudiesAsurveyofrecentvisitorstoNorthDakota,documentingtheirtravel habitsandspendingandcomparingtoU.S.traveldata;contractedthroughLongwoods International.

The2007campaigninvested$1.7millioninadvertisingthatgenerated$203.9millionin incrementalvisitorspendingand$14.7millioninstateandlocaltaxes.ThisamountedtoanROI of$123invisitorspendingperaddollarand$9instateandlocaltaxrevenueperaddollar. TheseresultsarerightaboutaverageforthestatesthathaveinformationavailableonROI. SouthDakotaSouthDakotaTourismemploysIHSGlobalInsighttomaintainatourismsatellite accountthatmeasurestheeconomicimpactfromtourismbuthavenotyetformallytriedto measuretheROIoftourismmarketing/advertising.Theyarehowevertakinganovelapproach tocomparethemselvestoColoradowhohadstoppedtheirpromotionaleffortsfrom1993to 1997andthushadseentheirleisuretraveldeclineby7.7%forthose4years.SDisbasically lookingatvariousscenariosfollowingtheColorado22exampletoestimatehowmuchvisitor loss,tourismexpendituredeclines,andstateandlocaltaxlosseswouldfolloweliminationof thetourismoffice.

Conclusions Statetravelofficejustificationsforannualallocationsofstatefundsareincreasinglybeing scrutinizedasstatesseektobalancebudgets.Thus,thesejustificationsareexpectedtocontain wellstatedobjectives,measurableresults,andclearstandardsofcosteffectiveness. Advertisingisabigportionofthebudgetforstatetravelofficesandtheyneedtojustifythis expensebymeasuringandshowingthereturnoninvestment. Ofthesixteenstatetravelofficesreviewedinthisstudy,elevenofthemhadconductedROI studiessince2000,includingMinnesota.LongwoodsIntlandSMARIarethedominant companiesthatstatetravelofficeshiretoconductthestudies.Sevenoutofelevenstateshired

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COhadtourismmarketingROIstudiesdonebyLongwoodsIntlandeconomicimpactoftourismbyIHSGlobal
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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 variationinROI. FurtherexplorationofCalifornia,Michigan,NorthDakota,andSouthDakotaillustratethe differingwaysstatesconducttourismmarketingresearch.Itwouldbequiteproblematicfor anotherstatetravelofficetoattempttoestimateitsmarketingROIbasedonthestatelevel informationprovidedinthisreport.Advertisingeffectiveness,targetmarkets,visitorspending profiles,thecostofgoodsandservices,andmanyothervariablesallservetolimitthedegreeto whichcomparisoncanbemade.However,thedetailedassessmentofotherstatestourism marketingROImeasurementsfoundinthisreportprovidesExploreMinnesotaTourismwith therangeoflikelyROIestimatesforitsownmarketingactivities.

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Appendix - Tourism Marketing ROI Study Initial Agreement

Extension Regional Office, St. Cloud

Midtown Office Building 3400 First Street N, Suite 400 St. Cloud, MN 56303-4000
PHONE

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
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(320) 203-6050
FAX

(320) 203-6110 EMAIL rcstcloud@umn.edu

WEB

www.extension.umn.edu

Making a difference for Communities the Environment Families Food and Agriculture Youth

Process: For this study, different state marketing programs are of varying levels of interest 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.

Assistant Extension Professor University of Minnesota Extension - Center for Community Vitality Office: 320-203-6109 Email: ahme0004@umn.edu Website: http://www.extension.umn.edu/Community/

Adeel Ahmed

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