Destination marketing organizations (DMOs) rely on public funds to survive, but state governments are cutting some budgets—and this could impact inbound tourism in the United States. The Alaska Travel Industry Association (ATIA)—who promote travel and tourism in "The Last Frontier"—received just $1.5 million in 2017, a reduction of 90 percent from two years before.
But government funds are just one source of income for DMOs. Organizations are benefiting from various funding models, including private-public partnerships and co-funding.
DMOs are also investing more cash in digital. Last year, 48% of all ad spend was digital, and 73 percent plan to increase spend in 2019, which is more than cruise and car rental companies.
Research shows that just 13 percent of DMO revenue comes from hotel taxes and fees, so organizations are doubling down on these new digital promotion strategies: social media, search engines, digital ads, and so on.
Source: Destinations International
As we enter DMO budget season for 2019, here are 3 things you should consider when determining how and where to allocate spend.
1. Personalized Digital Ads Provide Strong ROI
More people are using social media when booking a vacation. Fifty-five percent of 18-65 year olds booked trips based on Instagram posts, for example.
Capitalizing on digital media can provide DMOs with more income as governments scale back on budgets. Dynamic Facebook ads, for instance, let DMOs tailor travel experiences to individuals based on their likes and previous vacations. Dynamic ads might look similar to other ads on the platform, but they automatically use images and videos from your data feed that will appeal the most to targets.
It's not just Facebook, either. DMOs can use dynamic ads on other platforms, like Instagram, to appeal to prospective travelers. These ads incorporate user-generated content (UGC) from your social media pages—photos and videos from real people who have visited travel destinations in the past.
Unlike traditional advertising, UGC and visuals on social media provide "a more unique, inspirational experience for the traveler as they dream," writes Richard Black.
The results are impressive. Visit Indy, the official tourism board of Indianapolis, improved click-through rates by 300 percent after using persona-based UGC ads on Facebook. Visit Indy tailored these ads to different segments—history buffs, nature lovers, romantics, etc.
- More people are using social media to research travel destinations.
- Persona-based UGC ads on Facebook and other platforms increase click-through rates.
2. Prove Success on Digital to Increase Budgets
DMOs can secure more funding from governments when they measure and showcase their success on digital platforms.
“The organizations that are much more prudent and demonstrate ROI are the ones that will continue to get funding,” says Choose Chicago CEO, Don Welsh.
So, how do you measure success on digital?
Click-through rates, conversions, engagement—all of these key performance indicators prove to investors that DMOs are successful. Even smaller DMOs who lack advanced measurement tools can show the value tourism brings to their local economy.
"I think that DMOs struggle to be able to prove their functionality. What is the additional value of visitors that come to a destination as a result of the activities that they’ve performed?" says Tourism New Zealand CEO Kevin Bowler.
It's no wonder, then, that building analytics and ROI measurement capabilities is high on the priority list for destination marketers. Measurement tools and even new marketing functions can help DMOs of all sizes prove better prove the success of their efforts.
- DMOs should measure success in order to secure more government funds.
- The latest software can help them do this.
3. Keep Costs Down By Repurposing Existing Content
Tight budgets don't have to mean ineffective digital campaigns. Instead of spending cash on expensive TV or radio spots, DMOs can curate authentic content from travelers and use this as the foundation of their marketing drives. UGC, for example, is a great way to target niche communities who share common travel interests. This might include sports teams or community groups.
Destination marketers can then test their best-performing visual content and repurpose ad campaigns for increased visibility and growth.
“We’re not getting any more money for our advertising, but our annual goal keeps increasing. When we see UGC bringing in more clicks that is a direct reflection of what we’re going to choose to do in the future. We’re always looking to do more of what’s working, and right now UGC is working," says Christine Zetzl, Visit Indy’s Digital Marketing Manager.
Micro-influencers, on the other hand, prove useful for targeting hard-to-reach prospects. These online personalities, who have social audiences of around 1,000-10,000 people, generate seven times more engagement on Instagram than influencers with larger audiences. Working with micro-influencers will be more cost-effective too.
Alternatively, DMOs can partner with other DMOs and even state governments to share marketing materials, which will bring costs down.
- DMOs can save money by using UGC, repurposing ad campaigns with high-performing content, using micro-influencers, and partnering with other DMOs and state governments.
If destination marketers want to remain successful, they'll need to continually invest in fresh strategies to improve their existing efforts, and experiment with new ways of reaching, engaging and converting all kinds of diverse travelers.