Successful companies and organizations have to be flexible and ready to adapt to changing circumstances – changes in the economy, changes in technology, changes in the larger society. To have that flexibility or adaptability, the organization needs to have an established mechanism to bring in new information and data on an ongoing and consistent basis. Research plays a large part of that role. The Tourism Division established a marketing strategy, and it can be 100% the right thing for us to be doing today, but in a month or six months or a year from now, it could no longer be the right strategy. The Research Section of the Tourism Division is focused on continually providing feedback so we can assess how we are doing and figure out what adjustments we need to make. Having this information ensures our marketing strategy and the Arkansas brand stay relevant, not just today, but tomorrow and next year.
Economic Impact Analysis
Historically, when the Department has projected the economic impact of tourism in Arkansas, the calculations have been the direct impact of tourism – projection of how many visitors come, how much they spend, how much state and local taxes are collected and how many jobs the industry creates. Think of tossing a rock into a pond: the rock creates a splash. We’ve been measuring that splash.
In addition to the splash, there are ripples that emanate out from the splash. Those ripples through the economy are indirect and also what we call induced impacts. We’ll still measure and report the direct impact, but also quantify and help our industry get credit for all those ripples in the economy.
Marketing Effectiveness – Market Potential Model
Marketing Effectiveness measures what we are currently doing – it’s a measure and reflection of our current marketing efforts. But we can also use the information we learn from this study and combine it with a myriad of other factors to create what is known as a Market Potential Model. The Market Potential Model helps us determine what we could achieve across different markets and at what cost so we can prioritize those marketing spend decisions.
This information will help us assess current and emerging markets:
- Are there any markets we have maxed out how much we should be spending or is the market oversaturated, and there’s a diminished ROI for additional spending?
- Are there any current markets we need to increase spending?
- Are there emerging markets where we could achieve more visitation for the same amount of spending in other markets?
Most folks in the tourism business are familiar with the cautionary tale of Colorado Tourism. In 1993, the state cut their advertising budget from $12 million to zero. What happened is that their domestic market share plunged over 30% in just two years, and represented a loss of $1.4 billion in lost revenue annually. Over time, the annual losses rose to as high as $2 billion. Vacationers and travelers still went to Colorado, but all the incremental visitation that was supported by their marketing activity evaporated.
The Marketing Effectiveness research we are undertaking will allow us to quantify how much additional visitation our marketing efforts are drawing to Arkansas. Our overall Economic Impact we just discussed – that’s looking at ALL the visitation that comes to our state. We can’t take credit for 100% of all that visitation because some folks are going to come and do come even without being reached by our marketing efforts. But what we’ll be able to estimate is just how much is coming because of the efforts of the Tourism Division and our efforts through CJRW and Miles.
Research Results in Spring 2018
All these key research projects are in the process, and we’ll start analyzing results at the end of the year into early 2018. The insights are not just for the Department and our partners CJRW and Miles – what we learn is for the entire industry, and so we will be sharing results in March as a part of the Governor’s Conference on Tourism.