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Original article URL: http://bridgemi.com/2011/11/pure-michigan-credited-with-605-million-gain/

Public sector

Pure Michigan credited with $605 million gain

Pure Michigan. The sweeping lake vistas. The woods afire with autumnal splendor. The powdery snow covering a tranquil field. And over each image, the resonant voice of  Tim Allen.

And behind these ads, the state of Michigan has spent $67 million since 2006 in a bid to draw more tourists — and their dollars — to the Great Lakes State.

Tourism officials and industry analysts say the campaign is paying big dividends for Michigan: 2 million visitors who wouldn’t otherwise have visited, spending $605 million. And between 2009 and 2010, the tourism industry grew by $2 billion, enough to generate an additional 10,000 jobs for Michigan, they say.

By contrast, this summer, the state of Washington closed its tourism office, the victim of budget cutting that saw its finances drawn down from $10 million to $7 million to $1.8 million to nothing, reported the New York Times.

For the 2009-10 budget year, Michigan spent about $19 million promoting tourism. In 2010, visitors (tourists and business travelers) had direct spending of $17.2 billion, up $2 billion from the year before, though $1.5 billion less than the total from 2006.

An annual survey of state tourism office budgets for 2009-10 placed Michigan sixth on spending, with the $19 million. For 2010-11, Michigan slipped to No. 7, even with a total budget of $27.4 million.

Travel Michigan, part of the Michigan Economic Development Corp., in conjunction with Longwoods International, a research firm specializing in advertising research and return on investment, has been conducting yearly studies assessing the impact Michigan’s summer seasonal advertising on a national level and regional level since 2004. The focus of the study is to show the impact Michigan’s advertising has on the perceptions of Michigan as a travel destination, the levels of travel generated by the advertising and the economic impact of the travel.

According to the 2010 study, the latest available, more than 2 million visitors who would not have traveled to Michigan otherwise spent $605 million statewide as a direct result of the $9.8 million Pure Michigan program. This research revealed that this new visitor spending generated $43 million in incremental state tax collections, creating a return on investment of $4.32 for each state dollar spent on tourism advertising.

Michigan is ranked No. 7 nationally in both total and leisure travel by the U.S. Travel Association.

Coming Thursday

So you’ve seen the Pure Michigan ads and all. But how does Michigan’s effort stack up against tourism promotion in other states. Bridge Magazine reviews the national figures.

Most of the Pure Michigan advertising is spent on television, radio and billboards. George Zimmermann, vice president of  Travel Michigan, said, in 2010, that:

* Business travel rose 15.3 percent to $4.5 billion.

* Resident leisure travel rose 6.1 percent to $6.3 billion.

* And non-resident leisure travel — the prime target for Pure Michigan ads — rose 21.1 percent to $6.4 billion, the first time non-resident spending exceeded Michigan resident spending for leisure travel.

“Most Americans know Florida, California and Hawaii,” Zimmermann said. “We are just the opposite. We’ve only done a national campaign for just three years, with a modest budget. Michigan also is starting from a negative image of the Rust Belt, the depressed auto industry and urban decay in Detroit. The image of the state is much more favorable after visitors have seen the Pure Michigan ads.”

Peter Yesawich of Ypartnership, a Florida advertising, marketing and promotions company, said he studies what states do to attract leisure travelers, and is impressed with the Pure Michigan effort.

“I think the Pure Michigan campaign has to rank among the most well-crafted and appropriate destination campaigns in the United States,” Yesawich said. “We focus on destination marketing. George Zimmermann is doing a terrific job, in a challenging economic environment, to make Michigan a summer seasonal destination.”

Rep. Frank Foster, R-Pellston and chairman of the House committee that oversees tourism policy, seems convinced:

“According to at least one study, Pure Michigan returns more than $2 in tax revenue for every $1 invested, making this a very successful program that takes pressure off future budgets. … Our first priority in Michigan is revitalizing our economy and creating jobs. The Pure Michigan campaign attracts thousands of new tourists to Michigan, creating opportunities for local business owners such as restaurants, gas stations, hotels, bait shops, boat rental companies, and everything in between.

“The new funding model for Pure Michigan (from the 21st Century Jobs Fund),”
he added, “is a great improvement in that it is transparent and sustainable. I appreciate the governor’s approach to ensure that this program has a vibrant future, and look forward to the continued growth of the tourism industry in Michigan.”

Michael LaFaive of the free-market Mackinac Center for Public Policy in Midland, however, is not convinced of the effectiveness, or legitimacy, of Pure Michigan.

He questions the transparency of the Longwoods’ analysis of the tourism campaign and is wary without seeing the methods behind such repeatedly positive outcomes. LaFaive says Longwoods does similar analyses for other states’ programs and the return-on-investment results never seem to be negative.

LaFaive would prefer the state abandon the Pure Michigan campaign.

“I think it’s just implausible that taxing away money from one group can create a net benefit for jobs and in terms of the treasury,” he said. “In all likelihood we’ll get back less than we give up. We have two decades of studies on our side that say that.”

LaFaive reserves his biggest complaint for the Michigan tourism industry itself:

“If the industry is unwilling to pony up money for its own benefit, why should everyone else be forced to do so on their behalf?”

Zimmermann counters by noting some $3 million in private money flowed into the Pure Michigan ad campaign in 2011 from 30 tourism-related entities in the state. Two of the biggest contributors were the Henry Ford Museum in Dearborn and Mackinac Island, investing $500,000 each.

“Frankly, we’re not like Florida, we don’t have a Disney World that spends hundreds of millions of dollars marketing our state,” Zimmermann said.  “But the $25 million for Pure Michigan dwarfs all funding from private sources. And if we didn’t do it, it wouldn’t get done and we wouldn’t create Michigan tourism jobs.”

Zimmermann also defended the Longwoods report, citing positive reactions from major Longwoods clients such as consumer products giant Proctor & Gamble. What’s more, in 2007, the MEDC commissioned Michigan State University to do an analysis of Longwoods’ work. The MSU study put its stamp of approval on the research.

“Researchers are never comfortable drawing firm conclusions from limited observations, such as here when only comparisons could be made for a single year; however, the work we performed is strong evidence that Travel Michigan’s approach to estimating tax return ROI is valid,” the MSU report stated.

Dan McCole, who does research on the tourism industry as a professor at Michigan State University, said he thinks the Pure Michigan campaign has been very good for the state:

“People outside Michigan have a distorted image of what Michigan is. … The campaign is well done. It connects with people. Taping into people’s emotions highlights Michigan in its best light.”

8 comments from Bridge readers.Add mine!

  1. Laurel Gene

    Good! That means we’ll have lots of minimum wage jobs for those kids whose school budgets are getting slammed by the State.

  2. Jackie D

    I have always enjoyed Pure Michigan ads. If I never visit a place, I can be proud that it is Michigan. Pure Michigan was started with State monies. And yes, it benefits a giant industry in Michigan. How is this different from Governor Granholm’s pillars that only benefited specific industries–and not the big ones.

    This should not be a political issue, or someone’s sound bite. Michael LaFaive has not liked Pure Michigan for a long time. What’s the big deal about Michael LaFaive ?

  3. Barbara Barden

    I represent a small non-profit destination marketing organization (convention & visitor bureau), and I can testify that I “pony-up” each and every year to market our destination. With a meager budget, I can only dream of finances worthy of marketing on a regional and national level. Yet the Pure Michigan campaign has created an interest and image our entire state benefits from. How many state programs can you say that about? My CVB collegues from across the state agree, out-of-state traffic has increased dramatically since the campaign began. If it were not working, I think we would know. And tourism aside, Pure Michigan commercials resonate with nearly every resident and have created a sense of momentum and pride in our state we have not seen in decades. Put a value on that Mr. Lafaive. I say, that alone is priceless.

  4. Jack matthias

    Pure Michigan is great. We lost over 50,000 MI tourism jobs in about 4 years – it is nice to get 10,000 of them back and for the state to more than double their investment in the process. But it still leaves us down over 40,000 jobs. Research shows these “Return On Investment” ratios (getting back $2 to $4 in state tax revenue for every $1 spent and generating over $40 in tourism spending) hold up quite well at higher levels of funding. Lets fund the Pure Michigan campaign at $60,000,000 – promote all 4 seasons and recreate the other 40,000 plus jobs again. That level of funding would generate about 24,000 jobs a year – so it would take a couple of years. I know of no other government or private program where you can invest $2,500 to create a job and get back 2 to 4 times your investment – most of it within the same year. There are no losers in investing more money in “Pure Michigan – only winners! And the additional revenues come from non- Michigan residents – that is great public policy – you would think even the Mackinaw Center people could get behind that. In addition we enhance the Michigan image or Brand and entice some of those visitors to invest here to create additional non-tourism jobs, or buy or build a vacation home.

  5. Sheri Greenhoe

    It’s good to see that Michigan finally has returned to its pre-eminent place as a popular tourist destination that it was in the 1970s, when the “Say YES to Michigan” campaign and related efforts had extraordinary results. Several decades of burying our state tourism efforts at the bottom of the Commerce/MEDC pile eroded Michigan’s stature as a prime destination–and how soon tourists forget (if not reminded)! The past several decades also have seen our tourism industry turned into a political football. Keep the smarmy politics and politicians out of it, and let our beautiful, abundant state speak for itself: If you show (and tell) them, they will come.

  6. norm

    Saddly, the Governor and his sidekicks have told us that the free market rules and the state is not to pick “winners and losers”. With Pure Michigan, the gov is taking tax payer money and interferring with the free market concept and picking a winner (travel industry etc) and losers (all other matters that no longer have funding available).. I thinkl that is called hypocracy!

  7. Grumpy Old Man

    “Pure Michigan”, BS! How pure will MI be after these Repug politicians get done weakening and removing environmental regulations? How pure will MI be when there is one or more sulfide metal mines operating in each of the counties of the western half of the U.P., and in the northern lower peninsula under which lies the same ore bearing geological formation? How pure will MI be when most of the L.P.’s ground water supply is contaminated from FRACKING for gas and oil? “Pure Michigan”, BS!

  8. Riley

    For LaFaive to question another organization’s research when the Mackinac Center comes to the same anti-government conclusion no matter what the subject is a case of the pot calling the kettle an interesting shade of black.

    Has Longwoods ever been accused of using faulty methodology or math in their studies? Because the Mackinac Center has. Ask Mitch Bean, formerly of the House Fiscal Agency. He will tell you all about it.

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