Where the DMO Budget Goes Now

By Joe Bush, December 12, 2014

Digital Revolution

Southern hospitality is more than just Dixiefied culture—it’s good business. For 20 years, tourism has been one of the major economic drivers in Savannah, Georgia. In 2006, nearly 7 million visitors came to the city, and by 2011 that number had almost doubled. The congenial city consistently ranks high on best-of lists for its beauty, history and high standards for customer service. This sustained popularity and reputation as a destination carries over into gatherings as well. Lately, though, things look significantly different inside the CVB office in Georgia’s oldest city, especially when it comes to meetings and conventions.

All members of the convention and group tour sales and services staff at Visit Savannah are now taking part in a social media training program for Twitter, Facebook and LinkedIn, with the goal of turning social interaction into future business and strengthening existing relationships with its event clients. The new program recognizes that everyone at a DMO, not only the marketing team, can and should actively promote the organization.

“Event and meeting professionals are looking for ways to obtain information as quickly as possible,” says Amy Brock, social media manager at Visit Savannah. “Empowering our sales team to use social media to learn about their clients and their immediate needs will help them work smarter, so when they meet the client face to face at a site visit, they’ll already have a rapport.”

The shift inside the Visit Savannah marketing organization is one that’s happening across the country in some form or another. The economy is strengthening, and as the nation’s destination marketing organizations see more money coming in, they are using more of it to improve and enhance digital efforts—a marked shift from a decade ago.

It goes without saying that an improved economy is good news for destinations. Destination Marketing Association International’s 2013 DMO Organizational and Financial Profile Study, which includes 218 participating U.S. and Canadian DMOs, shows the average DMO budget rose 3 percent above the 2012 average to slightly more than $3 million. The public investment portion of that average budget—the funding from taxes on tourism-related businesses like hotels and restaurants—rose 4 percent to $2.4 million.

While sales and marketing will always claim the bulk of DMO expenses, the tools of the promotion trade have changed. The omnipresence of the Internet, smartphones and tablets, and the rise of social media as a marketing force, has caused DMO executives to shift marketing dollars to IT and content, and invest in educating staff on the digital spectrum. The DMAI study doesn’t show this wave empirically, but talk to the folks running some of the country’s leading DMOs and the movement is clear.

New Investments, New Business

Screen Shot 2014-12-12 at 10.25.48 AMLike Visit Savannah, the San Diego Tourism Authority isn’t standing idle when it comes to digital efforts. San Diego’s resource allocation to digital has doubled since 2008. In 2007, the tourism authority began using money derived from a Tourism Marketing District in which 2 percent of all room revenue from the city’s hotels is collected by the city. When the five-year agreement expired and the renewal paperwork was not filed in time, a new mayor used the occasion to withhold his approval for the renewal unless he won some concessions.

The SDTA had a budget of $30 million in 2012. With the TMD money frozen pending the showdown with the mayor, the 2013 budget shrank to $6 million, most of which was surplus from 2012, according to Joe Terzi, president and CEO of SDTA.

Terzi had to lay off 40 percent of the SDTA staff and stop all advertising, except for a campaign named Why Tourism Matters, designed to call attention to the importance of SDTA’s mission. “The $4 million was for fixed expenses,” says Terzi. “We had to defer rent, and we worked with a lot of our partners to say, ‘We’re going to get money, but it’s going to take four, five, six months to work through this.’ The $4 million barely kept the organization solvent.”

In less than a year, the city restored the TMD funds to the SDTA. Similar to the way corporations reconfigured their operations after surviving the recession of 2008, SDTA used its rebirth to review its approach to bringing visitors to San Diego. “There were legacy functions we rethought; we figured we didn’t need certain things and could [rework other items in] a different way,” says Terzi. “We reconfigured our whole membership department. We eliminated some functions and we took a second look at our sales process.”

SDTA’s 2015 fiscal year budget is $32.6 million. Terzi allocated the biggest slices of pie, like before the crisis, to sales and marketing, which account for 80 percent of the SDTA spend. This is much higher than the average DMO of the DMAI study, which allocates half of its money to sales and marketing.

Terzi says as much as 38 percent of his marketing budget is devoted to social media and digital promotion. Every campaign has a digital aspect, while SDTA has greatly reduced its investment in print media to reach leisure travelers. It has started buying ads on Hulu, adding digital TV to its annual $13 million broadcast TV buy.

Much of the remaining 20 percent of the SDTA budget goes to IT, says Terzi. The SDTA now has a new Web platform to make sure its website works on smartphones and tablets. It partners with an agency that helps with Web development and has a handful of staff members dedicated to social media content. “Over the last three to four years, we’ve invested millions of dollars in technology, connecting ourselves to our market and connecting ourselves to our members,” says Terzi.

Kerri Kapich, SDTA’s senior vice president of marketing, says of the marketing dollars assigned to reach planners, “We know that planners are using online tools such as LinkedIn and Twitter to make business connections, so we have increased our efforts to communicate to planners on digital channels.” 

SDTA isn’t planning to launch a mobile app right now. Kapich says the main digital outreach for meeting planners is its website (which has a mobile version) and digital RFP tool, iLead. iLead sends meeting specifications to only the San Diego hotels that best match each planner’s needs. The hotels respond in real time using an electronic proposal template, and the responses are compiled by iLead in a summary format. They can be downloaded to an Excel spreadsheet for comparison. All information is linked to the planner’s original CVB lead, hotel websites, Google Maps and SDTA’s digital meeting planner guide.

Basics Still Apply

Screen Shot 2014-12-12 at 10.26.05 AMButch Spyridon, president and CEO of Nashville Convention & Visitors Corp., says his budget has nearly doubled in the past five years, and with those resources come good problems.  “Currently, our biggest challenges are managing success and sustaining the momentum,” he says. “Tourism in Nashville is enjoying unprecedented growth.”

Spyridon says the trends of digital marketing and outreach have given Nashville the opportunity to reach more planners more efficiently than ever before. The NCVC interacts with attendees via Twitter, an app called Nashville Live Music that updates users on which artists are playing where and when and a website with content catering to planners who are in the booking process as well as those who are already booked and in the planning stage.

But new media does not mean marketing principles change. “It makes it more important than ever to target your right message to the right audience with the right channels, both traditional and digital,” Spyridon says. “Listening to your consumers is also key. Make sure you’re consistently productive, and you’re always accountable. Measure your results and account for your actions. If you’re productive you’re going to build opportunity for revenue, partnerships and more credibility to try new and different things. At the end of the day, it’s all about results.”

Players or Workers?

Screen Shot 2014-12-12 at 10.26.32 AMDeciding on the amount of money to spend on advertising for each category is one of the main challenges facing San Antonio, says Casandra Matej, executive director at San Antonio Convention & Visitors Bureau.

“Our destination appeals to both [meetings and leisure] markets. It’s important we ensure the health and growth of each sector, so where we place emphasis in our advertising dollars is a vital decision to our success,” says Matej. “We want to keep meeting professionals abreast of recent developments,” she adds, such as promoting the expansion of the Henry B. Gonzalez Convention Center.

Then again, says Matej, being a top leisure destination encourages attendance for meetings, and San Antonio is a destination that potential attendees will want to visit, maybe even bringing their families along for a vacation. So investing in the awareness of San Antonio’s leisure attributes also directly affects the health of its meetings industry. Finding the right ratio, which can vary from year to year depending on what is occurring in the destination, is crucial, she says.

“We have a $325 million convention center transformation going on, so it makes sense to invest heavier in trade advertising,” Matej says. “We are currently making a strong effort to make sure people know we are open for business during the expansion, as the original section of the convention center will remain as is until the new section is added.”

Another focus of San Antonio’s resources is battling the noise people must absorb and parse: How can a CVB reach potential visitors and not let digital efforts become one more distraction? Matej says even though the digital world is part of the problem, it is also part of the solution. The San Antonio CVB spends 52 percent of its marketing budget on digital, she says.

“One way we increased our digital footprint was through a social media campaign where we encouraged people to like our Facebook page and submit photos to win various prizes, including trips to San Antonio,” Matej says. “Social media is becoming an increasingly important factor in influencing people’s decisions on where to travel, so expanding our network, inspiring more conversations about San Antonio, and attaining additional destination images has proven successful for us.”

Whether enhanced investment in digital marketing and social media content, monitoring and interaction is directed toward leisure travelers or meeting planners—or both—it’s clear the trend is toward more of it. More dollars are being allocated toward websites, mobile apps, social media and new media advertising, and less to traditional media. As Terzi says,
“It’s a whole different world out there.”

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