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HomeMy WebLinkAbout07/11/2000, 4 - PRESENTATION ON THE CITY'S TOURISM MARKETING PROGRAM AND THE RESULTS OF A TOURISM ADVERTISING EFFECTIVENESS STUDY counat M�D� ?-11 -oo j ac En as nEpout N.�J. CITY OF SAN LUIS O B I S P O FROM: Ken Hampian, Assistant Administrative Officer Prepared By: Wendy George, Assistant to the City Administrative Officer 1)U SUBJECT: PRESENTATION ON THE CITY'S TOURISM MARKETING PROGRAM AND THE RESULTS OF A TOURISM ADVERTISING EFFECTIVENESS STUDY. CAO RECOMMENDATION Receive a report from the Promotional Coordinating Committee (PCC) on the City's Tourism Marketing Program and the results of a tourism advertising effectiveness study, and provide direction to the PCC and staff, as appropriate. DISCUSSION Transient Occupancy Taxes (TOT), often called "bed taxes", are the third largest source of revenue for the City's General Fund, and are estimated to be almost $3.7 million dollars or 12% of the revenue for fiscal year 2000-01. Each year, the City spends about $350,000 on a variety of services to promote the City as an overnight tourist destination to assure that the amount of TOT continues to grow. The PCC oversees the City's tourism marketing program and makes recommendations to the Council on how the funding should be spent. Currently, the City maintains contracts with three organizations for advertising and promotional services. Representatives from these organizations will be present at the Council meeting to provide an overview of their services and examples of the types of materials they prepare on the City's behalf. Brief summaries of their services follow. Barnett Cox & Associates The City will be contracting with Barnett Cox & Associates (BCA) in the amount of$169,600 to provide paid advertising services in the 2000-01 fiscal year. Through BCA, the City pays for advertising in various newspapers, magazines and cable television. BCA also monitors an 800 telephone number included in advertisements, and subcontracts with the Chamber of Commerce to send out materials in response to requests for information received on this line. The materials sent out by the Chamber of Commerce under this subcontract are referred to in the promotions business as "fulfillment packages". In addition to basic advertising in various forms of media, BCA helps create materials for the fulfillment packages, provides a newsletter to members of the local hospitality industry, pursues web-related advertising opportunities and coordinates our advertising efforts with the other contractors. 4-1 Council Agenda Report—Tourism Marketing Program Page 2 San Luis Obispo County Visitors and Conference Bureau We also contract with the San Luis Obispo County Visitors and Conference Bureau (VCB) to include the City as part of a County-wide tourism thrust. The contract for the VCB in 2000-01 is for $64,100. In addition to its efforts to promote the County and all VCB member cities in a co- operative manner through paid advertising and press releases, the VCB also develops direct sales efforts. to attract group business and conferences and serves as the County-wide Film Commission. The purpose of the Film Commission is to encourage the filming of movies and commercials in San Luis Obispo, both as a major form of "free" advertising and because of the direct business brought into the County by the film crews. San Luis Obispo Chamber of Commerce Finally, the City has two contracts with the Chamber of Commerce. The first contract, in the amount of$37,500 in 2000-01, is for promotional services. Under the terms of this contract, the Chamber researches and writes news releases, maintains a comprehensive list of media outlets, handles requests from the media for information and solicits editorial space on behalf of the City. In other words, the Chamber seeks "free" publicity for the City, as opposed to paid advertising. The second contract with the Chamber provides payment for visitors services. In 2000-01 this contract will be in the amount of $76,669. Visitor services include maintaining the Visitors Center itself, which is open seven days and three evenings each week, dispensing information about San Luis Obispo, providing personal service to visitors and answering telephone calls from the public. The Visitors Center also maintains a web site and a master calendar of all events occurring in the City. Advertising Effectiveness Study For many years, the City has spent significant sums of money on tourism promotion. As indicated above, in recent years that amount has been around $350,000. However, during that time we have never had a way to measure the effectiveness of our advertising program, other than to look at increases in the TOT or the number of information packets sent out. Unfortunately, TOT is not a truly valid measure of promotional effectiveness. Since it is based on a percent of the room rate, it will naturally increase as room rates go up, even though the number of visitors may be constant or even declining. Similarly, evaluating effectiveness based on an increase in the number of packets sent out (an average of about 1,700 per month) can be fallacious, since there has been no data available to determine how many packet recipients actually visit the City. Accordingly, during the last budget period, the Council approved funding for an advertising effectiveness or "conversion" study. The purpose of such a study is to determine the degree of linkage between an advertisement placed in the media with an 800 phone number, the person who calls that number and requests information, and that person actually visiting the City.. In other words, did our advertising actually "convert" to visitors. Under the direction of the PCC, 4-2 Council Agenda Report—Tourism Marketing Program Page 3 and with input from staff and the City's three contractors, a consultant, Jim McGee of Campbell Research, was hired to perform such a study. It is extremely important for the City to know the effectiveness of its advertising and fulfillment materials at generating visits, as well as to know the nature of those visits in terms of time and dollars spent. With this knowledge the City can: • More accurately calculate the return on its advertising investment; • Enable more effective media buys; • Develop a more effective and efficient packet of fulfillment materials; • Understand how, why and when visitors come to the City or why they choose not to come. The PCC, its contractors, staff and the consultant spent several meetings developing the research objectives for the study. Specifically, objectives included determining: 1. The number of people who visit the City as a result of its advertising and fulfillment program; 2. Whether non-visitors intend to visit, and if not, the reasons for not visiting; 3. The relative effectiveness of individual advertising campaigns by measuring their actual conversion to visitors; 4. The relative conversion effectiveness of advertising placed in different media; 5. The recall and impact of the VCB's or Chamber's Visitors Guides which are sent with the fulfillment packages; 6. Visitor behavior patterns in terms of length of stay, size of party, activities, lodging and other destinations visited. 7. Visitor spending in San Luis Obispo. In order to determine these objectives, the consultant developed telephone survey questions with input from the PCC, its contractors and staff. During the month of March, interviews were conducted with 401 people who had requested information packets in 1998-99 in response to either the City's advertising through BCA or the VCB's advertising. Proportionate to the City's advertising expenditures, 60 percent of the interviews were with contacts generated by BCA, while 40 percent were with contacts generated through the VCB's advertising. Interviews averaged 12 minutes in length. The results of the survey were presented to the PCC in a report and verbally at its May meeting. The executive summary from the report is attached, and each Council member will be provided with a copy of the report. A copy of the actual individual statistical responses to each question will also be placed in the Council's reading file. Staff will be prepared to make an oral presentation highlighting the most significant findings from the study at the Council meeting. In addition to summarizing the responses to each question, the report also contains suggestions to the PCC and its contractors on how the information gathered by each question could be used to further refine the City's advertising. The PCC will be using that input, plus any direction 4-3 Council Agenda Report Tourism Marketing Program Page 4 received from the Council, as it develops its tourism marketing program for the next two-year Financial Plan. FISCAL IMPACT There is no direct fiscal impact from the study. Any changes made to the City's marketing plan, including any fiscal impact, would be approved by the Council at the time that it approves new tourism promotional contracts in July, 2001. ATTACHMENTS Advertising Effectiveness Study Executive Summary A copy of the complete study has been provided to each Council Member and is available in the City Clerk's Office. 4-4 Executive Summary Key findings from the San Luis Obispo advertising conversion study include: ❖ Two-thirds of people requesting information packets have previously visited San Luis Obispo. ❖ Overall, 38 percent of those receiving information packets have visited the City since. Previous visitors and California residents are more likely to have converted. ❖ An additional 21 percent indicate they are "Very Likely"to visit within the next six months. This estimate must be taken with a grain of salt— 86 percent of those converting did so within four months of receiving their packet. Generally, requesters travel to SLO in the season after they request information. ❖ Nearly half of those who have visited San Luis Obispo since requesting information have made multiple visits. ❖ Virtually all who visit are satisfied with their trip to the area. More than three out of four have recommended San Luis Obispo to others, and nearly the same number expect to make a return visit. ❖ The "typical visitor" profile is a well-educated adult couple who travels by car and makes at least three leisure trips a year. They stay for a day or a weekend to shop and sightsee in SLO and other area cities, spending $400 to $500. About half consider San Luis Obispo their primary destination. ❖ About two-thirds recall receiving a color magazine about the City in their information packet. Most of those who look at the magazine read nearly all of it and find the information to be very helpful. ❖ Visits to San Luis Obispo are fairly consistent throughout the year. Out of state visits peak in Summer, while in-state visits show a slight trend toward Fall. ❖ Those making requests in the Summer off-season are most likely to have converted. Those requesting information in Fall/Winter are most likely to have visited the City of San Luis Obispo during their trip. ❖ Conversion rates by media tend to be in proportion to their in-state audience. The L.A. 7-1177esis one of the strongest sources. ❖ The Visitors and Conference Bureau, despite having twice as many out-of-state contacts, produced a conversion rate as least as good as that of Barnett Cox & Associates. However, Barnett Cox contacts were more likely to make multiple visits to the area and were more likely to visit the City during their trip. ❖ Overall, the City's advertising and fulfillment investments yield a one-year return for the City of $151 per packet. That estimate takes into account conversion rate, multiple visits, spending per visit and proportion of travel time spent in the City of San Luis Obispo. Campbell irch -2-