Domestic Advertising. Research Summary. March 2010 Prepared by Strategic Marketing & Research, Inc.

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1 Domestic Advertising Total 2009 ROI ROI Research Summary March 2010 Prepared by Strategic Marketing & Research, Inc.

2 Table of Contents Methodology 3 Conclusions 4 Recommendations Advertising Strategy and Campaign 8 Impact of the Advertising 17 Tactical Issues 24 Winter/Snow Campaign Results 30 Impact of the Advertising

3 Methodology 2,790 completed Interviews Data collection in March 2010 Web based data collection methodology National sample Show ads to accurately measure recall Target of households with $50K+ income generally and $75K+ in opportunity markets Surveyed by market, and weighted to be representative This is the ROI measure for the 2009 California Travel & Tourism Commission (CTTC) campaign; it includes the 2009/2010 winter campaign. Market Primary Domestic 727 Opportunity 420 Remaining Western 326 California 478 Remaining National 839 Total 2,

4 Conclusions The results from the total 2009 ROI measure are generally positive, although the impact of the negative trends in travel are certainly evident. The campaign overall generated $4.2 billion in additional visitor spending and $268 million in state and local taxes. This generated an overall ROI of $305 for every $1 spent and a tax ROI of $20 for every dollar spent. In terms of comparisons to 2008, the overall spending generated was down from $4.9 billion, with somewhat fewer trips generated and a decrease in per trip spending. But the advertising dollars for calendar year 2009 were also lower, so the ROI increased. The overall ROI went from $263 in 2008 to $305 in 2009, and the tax ROI went from $17 in 2008 to $20 in The positive finding is that CTTC s advertising is still reaching a large audience and having a major impact on travel. The refreshed brand spot did not receive ratings quite as high as the past spot, but the impact was still strong. The campaign this year was able to increase the layering, and more people saw multiple campaigns. This helps promote the abundance message that motivates people to choose the state. As people saw multiple campaigns promoting California, their level of travel grew. The strategy of layering messages is critical to the success of the overall effort. 4

5 Conclusions The incremental impact on travel was stronger this year in every market group except the national market. Incremental and repeat travel varied by geographic market. In state residents generated the most trips, but the national market generated the most spending. The national market remains very important, and it is encouraging that the advertising is working especially in light of national factors that are impacting travel behavior. With the negative economic climate, and the fact that many deals/price reductions are available, people spent less on their trips. Overall the decrease was only $100 per trip (from $1,348 to $1,248), but when the per person/per day expenditures are considered, expenditures decreased from $101 in 2008 to $78 in This is a 23% decrease for this year. This means that CTTC has to generate more trips to have the same level of economic influence as in the past. It is noteworthy that there were some changes in trip behavior that should be tracked. People were more likely to be traveling without children and more likely to participate in activities such as historic sites, museums and wineries. They were less likely to go to theme and amusement parks, participate in activities for children or go to the beach. It is important to track this behavior as new advertising is developed to influence desired behavior. The Winter/Snow campaign had slightly higher recall this year, although there were fewer people who reported a ski/snow trip nationally. 5

6 Conclusions Once again the Winter/Snow campaign did not generate additional visitation from the skier audience, but those who came spent more money in the state. As a result, this campaign generated an additional $43 million in spending in the state, with an overall ROI of $20 and a tax ROI of $2. The benefit of this campaign is generally not in the impact it has directly on the ski audience, but in its impact in helping to promote the overall abundance of what California has to offer. While there were some indications that people are traveling closer to home, California attracts visitors from across the country. The national market remains critical to generating a strong ROI, and it is important to maintain the national advertising effort with as many media as possible. The strongest impact from the advertising occurs when consumers see multiple CTTC campaigns and are exposed to the messages promoting the abundance of what the state has to offer. Therefore it is also critical to promote the abundance through multiple messages and/or campaigns. With the current economic conditions, the nearer markets are also critical especially instate residents. For California residents and the primary domestic markets, repeat visitation is also key. Therefore, the messages that focus on reasons to visit, such as the Insider effort, can help promote multiple trips to the state. 6

7 Recommendations It seems clear that people are traveling closer to home, and spending less money on their trips. But California attracts visitors from across the country. The national market remains critical to generating a strong ROI, and it is important to maintain the national advertising effort with as many media as possible. The strongest impact from the advertising occurs when consumers see multiple CTTC campaigns and are exposed to the messages promoting the abundance of what the state has to offer. Therefore it is also critical to promote the abundance through multiple messages and/or campaigns. With the current economic conditions, the nearer markets are also critical especially instate residents. For California residents and the primary domestic markets, repeat visitation is also key. Therefore, the messages that focus on reasons to visit, such as the Insider effort, can help promote multiple trips to the state. People are changing some of their behavior when traveling. It will be important to review and consider these changes as new creative is developed. The goal should be to influence the decisions and promote the activities that help generate more spending in the state. 7

8 2009 ADVERTISING STRATEGY & CAMPAIGN 8

9 2009 Advertising Campaign The budget for calendar year 2009 advertising declined from $18.8 million to $13.7 million. This represents a 27% decrease in spending. In general this is not a change in the level of advertising, but how and when it was allocated. The spring 2008 campaign was larger, and included the support for the launch of the Culinary campaign, which increased the money spent during this part of the calendar year. Four linked efforts were used during 2009: California Attitude the continuation of the brand building program. A refreshed ad was launched in the fall California Insider a print campaign using real Californians to highlight the California attitude Culinary California acampaignthatfocusedonthetrendoffoodandwineasadriverofdestination choice and highlighted California s assets in this area California Snow a campaign highlighting winter activities in the state, a refreshed ad was launched in 2009 The budget allocation for these efforts was: California Attitude California Insider Culinary California Winter/Snow Total $ 7.8 million $ 1.2 million $ 3.1 million $1.6 million $13.7 million 9

10 Travel Environment Total leisure travel is down slightly 1% fewer people report taking a trip in the past 12 months. (This is among the more affluent audience: $50K+ household income, so the decrease is less than the national average of 2%.) Among those traveling, the highest percentage of people reported a trip to Florida, followed by California. By the end of the year, reported travel to California was even with 2008, although with fewer people traveling this represents a slight decline. % of Households Reporting Trip to State in Last 12 months Visited in Last 12 Months Florida 28% 29% California 24% 24% New York 21% 17% Nevada 17% 15% Texas 11% 9% Arizona 11% 9% Washington 7% 8% Colorado 7% 8% Oregon 6% 6% Hawaii 6% 5% Utah 4% 4% 10

11 Travel Environment Trip Share It is also important to consider repeat visitation and the share of trips that were reported to each state. Florida again leads, followed by California. Both states saw a slight increase in share. Generally the pattern did not shift much, indicating that once people decided to travel, at least within the competitive set their behavior was similar to last year. Share of Trips in Last 12 months State Florida 19% 21% California 18% 19% New York 18% 15% Nevada 11% 11% Texas 8% 9% Arizona 7% 6% Washington 5% 6% Colorado 5% 6% Oregon 4% 5% Utah 3% 2% Hawaii 3% 3% 11

12 Travel Environment People seem to be staying somewhat closer to home, and therefore the nearby markets and in state travel showed an increase in visitation. But the loss of travel was generally small even nationally. The only area where it fell substantially was the Opportunity Markets (New York City, Chicago & Dallas/Houston/San Antonio). Of course, without the national advertising strategy it is possible that travel from the more distant markets would have decreased more substantially. Visitation to California Primary Domestic 21% 24% Remaining Western 17% 16% Opportunity 13% 10% Remaining National 10% 9% In State 42% 46% 12

13 Advertising Recall The overall result of the 74.2% 72.1% 69.3% strategy in 2009 was a slight 65.2% decrease in awareness from 74% to 72%. This is a small decrease, and not meaningful, as the level of recall is 2008 extremely high. 22% 2009 The cost to reach an aware 12.8% household was $0.36, which is 3.5% 8% well below the mark of $0.50 that is average across the other states SMARI measures. Television Print On line Total It is noteworthy that recall of each of the media types actually increased. Therefore, the lack of overall increase is likely due to more media overlap. Past research has indicated that generating more overlap was key to increasing the level of incremental travel to the state. 13

14 Advertising Overlap In fact, more than a quarter of the respondents recalled three or more of the California campaigns, which is up significantly. Plus fewer only saw one campaign. The advertising was more successful at reaching consumers with multiple messages a key strategy for communicating the abundance message and for generating incremental travel. 45% 39% 36% 35% 26% 19% One Two Three or more

15 Advertising Recall by Market The final levels of awareness by market show a range from 83% of those in the Primary Domestic markets reporting recall down to 71% in the National and Opportunity markets. 83% 79% 79% 75% 82% 75% 71% 72% 72% 71% 74% 72% Generally recall was a bit lower in 2009, although not among those in the Primary Domestic markets. 15

16 Creative Evaluation The TV that aired in the fall of 2008 included the Work brand spot, which was revised for 2009 to include new scenes. While the ratings for the new Serious Business ad continue to be some of the highest SMARI has recorded during the testing of hundreds of ads, consumers are not responding to it as well as the Work spot. But SMARI has found that consumers are generally more negative toward creative at this point. The key measure of effectiveness will be the impact on travel, and whether the advertising supported strong incremental visitation. Attributes 2008 Fall Work TV 2009 Serious Business TV After seeing these ads I am more interested in visiting this state These ads show experiences and places that you are interested in These ads show a place with a unique attitude toward life These ads portray a place that offers vacationers the best life has to offer all in one place

17 IMPACT OF THE ADVERTISING 17

18 Incremental Travel The campaign had a strong impact, with the overall increment of travel rising from 3.4% to 4.7%. There was incremental impact in all of the markets, with the strongest impactamong the PrimaryDomestic and In state markets. The only area to see a decrease in impact was the Remaining National. This is probably due to the tendency for people to stay closer to home. Due to the size of the national market, even a small increment still generates a strong impact. Incremental Increase in Visitation to California Primary Domestic Remaining West Opportunity Remaining Natl In State Total 18

19 Incremental & Repeat Travel The actual numbers for the incremental trips show that there were 1.8 million households that traveled to California as a result of the advertising. The biggest group, almost 800,000, were from the Remaining National market, followed by Instate residents. The advertising also generated more repeat visitation from those who traveled, and this represented an additional 1.5 million trips. In state residents generated about half of these trips. The result was that the 2009 advertising generated 3.35 million additional trips to California. Market Increment Repeat Total % of Total Primary 302, , ,909 14% Remaining West 93, , ,004 9% Opportunity 171, , ,516 9% Remaining National 797, ,136 1,056,478 32% In state 448, ,762 1,237,819 37% Total 1,813,355 1,536,372 3,349,

20 Incremental & Repeat Travel There were significant changes in the markets generating the incremental and repeat travel. The In state market doubled this year, with more incremental and repeat visitation. The major decrease was among the Remaining National market again highlighting a trend of people staying closer to home. Even at the decreased level, the Remaining National market still was important. It generated the second greatest number of trips, and the most economic impact. Market Change Primary 424, ,909 7% Remaining West 578, ,004 50% Opportunity 310, ,516 1% Remaining National 1,715,781 1,056,478 38% In state 618,069 1,237, % Total 3,647,280 3,349,

21 Trip Spending As might be expected this year, the average cost per trip was down. Overall there was only a $100 decrease in trip spending. But when the per person/per day expenditures are considered, the decrease was more dramatic. In 2008 the average was $101 per person/per day, but this fell to $78 in Consumers were being much more frugal, and finding more deals for their trips. $1,348 $1,248 Calendar 2008 Calendar

22 Economic Impact & ROI The total economic impact generated by the campaign was approximately $4.2 billion, and this represents $268.4 million in state and local taxes. With the campaign expenditures at $13.7 million, this translates into an ROI of $305 and a tax ROI of $ Trips 3,349,727 Average Expenditures $1,248 Economic Impact $4.2 billion Tax Revenue $268.4 million Campaign Expenditures $13.7 million ROI $305 General Fund ROI $

23 Year to Year Comparisons A comparison with the past 2 years is interesting both in terms of the overall economic impact and the ROI. The economic impact this year is down compared to 2008, due to fewer trips generated and lower per trip spending. But the media expenditures are also much less and as a result the ROI is much stronger than in last year. The decrease this year was ROI Calculations partially due to how and when Trips 3.6 million 3.35 million funds were allocated during the year, and it seems that a more Average Expenditures $1,348 $1,248 equal distribution in spring and Economic Impact $4.9 billion $4.2 billion fall is more effective. Tax Revenue $318 million $268 million Campaign Expenditures $18.8 million $13.7 million ROI $263 $305 General Fund ROI $17 $

24 TACTICAL ISSUES 24

25 Tactical Issues While the goal of the study is to measure the overall economic impact and ROI of the advertising efforts, the research also provides insights on media, markets and campaigns. The following reviews these issues to provide information that can help CTTC maintain the high level of performance that has been achieved. The following issues are reviewed: Use of multiple media & messages Market considerations Changes in travel behavior 25

26 Impact of Layering Media As noted earlier, this year s strategy did a better job of reaching consumers with multiple campaigns. The reason that this type of layering is important is due to its impact on travel. As in the past, those who saw the multiple campaigns were much more likely to visit California. The impact of a single campaign is small, but it grows significantly with more exposures. It should be a key goal to generate overlap. Visitation to California 39.2% 31.1% 19.8% 20.5% 24.5% No ads One Campaign Two Campaigns Three campaigns Four campaigns 26

27 Market Considerations It is important to understand which market groups are generating the most impact for the state. During 2009, residents generated the most trips but the Remaining National market generated more dollars. This is because residents spend less on their trips. The National market remains the most important in terms of generating additional travel and dollars to the state. Trip Market Spending Primary $942 Remaining West $1,108 Opportunity $1,539 Remaining National $1,472 California $1,128 Market Trips % of Total Expenditures % of Total Spending Primary 453,909 14% $427.6 million 10% Remaining West 288,004 9% $319.1 million 8% Opportunity 313,516 9% $482.5 million 12% Remaining Nat l 1,056,478 32% $1.56 billion 37% In state 1,237,819 37% $1.4 billion 33% Total 3,349,727 $4.2 billion 27

28 Trip Specifics The length of trip actually increased slightly this year, while the travel party size was stable. Even with the stable party size, there were fewer people traveling with children, and fewer children on the trips. Trips involving couples are the most prevalent among California visits, followed by families traveling with children. Trips with extended families and girlfriend getaways both grew slightly. Trip Specifics # of people on trip # of children under age of Length of trip Travel Party Couple Family traveling with children Extended family Women only trip Male only trip Other

29 Trip Specifics Visitors also noted some changes in the activities that they enjoyed during their trips. They were more likely to report visiting historical sites, scenic byways, arts activities, dining, scenery and wineries. And they were more motivated by experiencing the unique feeling and attitude of the area. They were less likely to visit theme or amusement parks, activities for small children, the beach and entertainment and nightlife. Activity Difference Visit historical sites 27% 18% 9% Experiencing the unique feeling & attitude of the area 45% 37% 8% Driving on scenic byways or roads 47% 40% 7% Arts activities such as museums, theater performances 28% 21% 7% Fine dining or eating at a unique local restaurant 65% 60% 6% Viewing and enjoying natural scenery such as mountains, oceans, etc. 67% 62% 5% Visiting a winery 20% 16% 5% Activity Difference Visiting a theme or amusement park 21% 28% 7% Visiting activities that are fun for small children 11% 16% 4% Going to the beach 34% 39% 4% Entertainment and nightlife 26% 28% 3% Percentages rounded 29

30 WINTER/SNOW CAMPAIGN RESULTS 30

31 Advertising Recall With another year of the Ambitious creative in place, awareness of the winter focused ad increased among both skiers and the general travel audience. In fact, awareness of the spot was higher among the general travel audience than the ski audience. As the Ambitious spot is part of CTTC s larger integrated campaign, it is important that awareness of all fall advertising increased from the previous year for both audiences. Skiers Non skiers % 24% 63% 15% % 20% % 14% 0% 20% 40% 60% 80% Any Awareness Ambitious 31

32 Advertising Recall Though there are fewer households interested in taking a ski focused trip this year, the additional awareness of the winter ad results in more aware households than in 2008/09. And though there was slightly more spending on the Ambitious spot, the cost to reach an aware household declined. With ski enthusiasts being such a small target audience, it is expected that the cost per aware household would be higher than that of the general travel audience. While many state destination marketing organizations typically see a CPH of around $.50, CTTC typically sees a cost per aware household of around $.20. Ski Audience 2006/ / / /10 Targeted HHs 3,764,483 16,295,573 15,020,909 14,471,298 Awareness of winter ads 39% 27% 14% 20% Aware HHs 1,469,065 4,472,782 2,161,939 2,874,313 Spending $1,450,000 $972,260 $1,483,995 $1,627,900 Cost/aware household $0.99 $0.22 $0.69 $

33 IMPACT OF THE ADVERTISING 33

34 Incremental Travel The methodology SMARI has developed for measuring the impact of destination advertising relies on determining the incremental travel the advertising is able to generate. Incremental travel uses the rate of travel by unaware consumers as the base and any travel beyond that by aware consumers is considered the increment. As in 2008/09, the current strategy makes determining incremental travel for the ski efforts difficult as there is very little recall of the snow ad Ambitious without recall of additional CTTC marketing. Therefore no incremental travel, SMARI s traditional measure of effectiveness, can be attributed to the effort. There are other ways in which the campaign is influential, however. This includes additional spending by ski visitors compared to other visitors to the state. Though spending on both types of trips has continued to fall as the economy has suffered, those taking ski focused trips continue to spend more than those taking other types of trips to California. Ski Trips Non Ski Trips Difference 2008 $2,037 $1,877 $ $1,666 $1,440 $ $1,368 $1,248 $

35 Economic Impact & ROI With far fewer influenced trips and less incremental spending on ski trips, the economic impact from this target audience fell dramatically. However, more than $43.6 million in additional spending can still be attributed to this small group of ski enthusiasts. In addition, the state took in $2.8 million in taxes that would not have been realized were it not for the Ambitious campaign. 2008/ /10 Targeted HHs 15,020,909 14,471,298 Total Influenced Trips 954, ,071 Incremental Spending on Ski Trips $160 $120 Economic Impact $152,887,647 $43,668,145 Taxes Generated $9,891,831 $2,825,329 CTTC Expenditures $1,483,995 $1,627,900 ROI $103 $27 Tax ROI $7 $2 35

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