With small tourism budget, ND aims for savvy marketing
FARGO – An unusual scene played out in downtown Fargo this summer.
A homegrown movie star, a woodchipper, musicians and a throng of people wearing NDSU and University of North Dakota jerseys hammed it up for camera crews that were there to film the latest advertisement meant to lure visitors to North Dakota. But behind the scenes, tourism officials say marketing North Dakota is as much a science as it is an art.
With one of the smallest tourism budgets in the nation, North Dakota officials say they have to make savvy marketing decisions. That involves analyzing reports to find out what brings people here and what media they consume.
The nearly $6 million North Dakota spent on its state tourism office in fiscal year 2013-14 was the eighth-lowest among the 46 states reporting figures to the U.S. Travel Association, and it was well below budgets in neighboring states. Hawaii spent the most that year with $82 million, and Delaware spent the least with just over $2 million.
But with the help of research, North Dakota Tourism Division Director Sara Otte Coleman said her office tries to make the most effective use of its money. And, according to the department, it appears to be paying off: visitation increased 22 percent between 2011 and 2013.
"It's really just trying to take all that information and trying to lay it all over on top of each other, and make sure the most important things rise to the top," she said. "The bottom line is most of the efforts we put in we want to be able to measure."
Where and when?
The tourism division of the North Dakota Department of Commerce is planning a $3.3 million media buy in 2016, with 78 percent of that being spent on ads in the U.S. and another 15 percent going to Canada. Roughly 6 percent will be spent on niche advertising.
Next year's campaign will feature Minot native Josh Duhamel, a movie and television actor. He's been involved with North Dakota tourism campaigns for some time, but his role will be expanded to most of the state's ads next year, including TV, print and digital. Duhamel is getting paid $475,000 for his work.
North Dakota is targeting Minnesota, Wisconsin and Illinois as U.S. markets, and Manitoba and Saskatchewan in Canada. That focus on the immediate region is partly based on research that shows North Dakota's target audience travels by car--one example of how research helps shape how North Dakota markets itself.
"We need to be very strategic about our media buys in order to make that as effective as possible," said Heather LeMoine, marketing manager at the North Dakota tourism office.
North Dakota will run broadcast television ads in major Minnesota and Wisconsin markets between early May and early June, as well as on cable television later in the summer.
Next year will be the first time in a few years that North Dakota will market itself on Canadian television, with ads airing in Winnipeg, Man., and Regina, Sask., in May and June. That's more feasible today because of a lower Canadian dollar.
Still, 80 to 90 percent of North Dakota visitors come from the U.S., LeMoine said. North Dakota tourism officials are adding Chicago in its digital and print advertisements, such as Chicago Magazine, newspaper inserts and email marketing lists.
Otte Coleman said Chicago and Illinois rank high in North Dakota Tourism's web traffic, but it tends to be an expensive market for advertising.
"I had hoped to be able to get there in a bigger way," she said. "We didn't get enough dollars to get there as big as we wanted, but we're going to dip our toe in the water and try to expand our footprint by adding some more Chicago and Illinois media this year."
But 2016 will also see North Dakota tourism pulling away from certain segments, like golf and birding niche advertising.
"We made this determination based on the awareness we have already built with previous campaigns and the lower participation numbers in these activities," Otte Coleman wrote in an email.
North Dakota has put more money into tourism in recent years, from $8 million in the 2005-07 biennium to nearly $13 million during this two-year budgeting cycle, according to figures provided by Otte Coleman.
Meanwhile, Minnesota increased its state funding for the tourism operating budget from about $8.4 million in fiscal year 2013 to nearly $14 million in the following year and has stayed at that level since. Minnesota's traditional markets include North and South Dakota, Iowa, Wisconsin, Illinois and Winnipeg, according to Explore Minnesota spokeswoman Alyssa Ebel.
"We have not seen dramatic increases like other states have," Otte Coleman said. "We're competing in those same markets for a lot of the same visitors."
But Nan Marchand Beauvois, vice president of National Councils at the U.S. Travel Association, said states with large and small budgets face the same task: identifying their consumers.
"Their marketing should be based on data," she said. "They have to have data to support who they're targeting and what markets they're going into."
But whether the millions of dollars states spend on tourism marketing are effective is a matter of some debate.
Longwoods International, a research firm contracted by the state of North Dakota, said in a 2014 report that visitors spent $94 for every advertising dollar spent. Those high return on investment claims make some researchers skeptical.
"They strain credulity," said Michael LaFaive, director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a free market think tank in Michigan. That state spent more than $32 million on tourism in 2013, and has become known for its "Pure Michigan" campaign.
Research conducted by LaFaive found that for every dollar increase in spending on tourism promotion by the state of Michigan, the accommodations industry sees a 1 cent increase in revenue. Moreover, a significantly smaller tourism budget in neighboring Indiana had the "same impact that we had here in Michigan," he said.
Meanwhile, the 2014 Longwoods report said the North Dakota ad campaign in U.S. markets generated 1.1 million incremental trips that would have not otherwise taken place, bringing in more than $200 million in visitor spending and nearly $16 million in state and local taxes. Minnesota's tourism department, Explore Minnesota, says advertising generated 3.1 million Minnesota trips and $320.2 million in traveler spending in 2014.
"If done well, it can be very effective in driving tourism business into the state, generating spending for the industry, jobs and tax dollars for the state treasury," Longwoods CEO Bill Siegel wrote in an email.