The Michigan Strategic Fund board on Tuesday approved a three-year contract for Indianapolis-based Strategic Marketing and Research Insights starting in 2018 to evaluate the tourism marketing and branding campaign's return on investment.
The Michigan Economic Development Corp. said in a memo that Strategic Marketing narrowly edged out Toronto-based Longwoods International, which has had the state contract since 2006.
Strategic Marketing's contract is worth an estimated $92,500 per year, or $277,500 in full, according to the MEDC. It is set to expire in the 2020 fiscal year, though the agreement comes with two one-year extensions.
The MEDC has hired a company to analyze the cost effectiveness of the Pure Michigan campaign since it launched in 2006. In 2016, Longwoods' research found, the state invested $12.9 million into the Pure Michigan ad campaign, generating 5 million trips and $1.5 billion in new visitor spending. For every $1 the state invested in the campaign, Longwoods found, Pure Michigan returned $8.33 in tax revenue when combining its reach in the region and nationally.
The company surveys travelers and uses its own methodology to calculate ROI. Longwoods' findings have elicited criticism, notably from the Midland-based Mackinac Center for Public Policy, which contends the numbers are inflated and criticizes a lack of transparency in the firm's modeling tool.
Longwoods executives said the company's methodology is proprietary and confidential. The most recent contract with Longwoods ran Dec. 1, 2015, through Nov. 30, 2016, and was worth $229,000, said Michelle Grinnell, a spokeswoman for Travel Michigan. That includes the return-on-investment analysis, as well as a competitive analysis worth $15,000 and an economic impact review worth $65,000 and subcontracted to Wayne, Pa.-based Tourism Economics Inc., Grinnell said.
Travel Michigan's request for proposals, issued this summer, specifies that the winning bidder will be expected to study the Pure Michigan campaign's effects on the state and awareness among travelers of the brand and the ad spots, among other things. The results are expected to be shared in March at the Pure Michigan Governor's Conference on Tourism.
"Having insights into messaging and marketing efforts that are working, and what could be working better, will continue to be critical as Travel Michigan moves forward with efforts to evolve the Pure Michigan campaign," David Lorenz, vice president of Travel Michigan, said in an emailed statement. "Research and data are the cornerstone of that strategic planning effort."
Lorenz stressed that while the campaign's ROI results often get the spotlight, it is the marketing insights that make up the vast majority of the annual insights report and that inform the creative and strategic direction of the campaign.