Tourism marketing make do with 45% cut in FY16
Alaska’s tourism industry leaders are among the folks trying to manage significant state budget cuts.
The Alaska Travel Industry Association’s budget will be cut by about 45 percent starting July 1, the first day of the state fiscal year, according to ATIA President and CEO Sarah Leonard.
The fiscal year 2016 budget, through its work with the state Commerce Department’s Tourism Marketing Program, will be cut by about
$8.6 $7.7 million to $10.1 $10.2 million, which is down from $18.7 $17.9 million in 2015, Leonard said.
Left in the wake of the state’s budget deficit is its ability to market itself to potential Outside visitors.
“Television advertising was zeroed out,” she said. (The television advertising budget was "severely reduced" to about $1 million in fiscal year 2016, according to an update from ATIA.)
That includes national cable and network ad buys that reach large numbers of travelers.
Also eliminated from the 2016 state marketing plan were industry trade show participation and in state marketing plans. Outreach to travel agencies and tour operators, highway marketing, social media, direct response advertising and public relations work will all be severely reduced in the coming year, she said.
“The goal of the advertising was to raise awareness about Alaska as a destination. It’s something that small or medium-sized businesses can’t do on their own,” Leonard said. “So it’s something the state has been able to promote for Alaska, and then I think communities and businesses within Alaska benefit from that.”
Nearly three-quarters of ATIA member businesses have less than 20 employees.
With a limited public relations budget, the state’s social media presence will also fade, but not be blacked out completely. Social media strategies were handled largely by contracted public relations firms, which managed contests and a “whole suite of social media strategies,” Leonard said.
The marketing reductions were settled on after recommendations by the Alaska Tourism Marketing Board, which manages the program. They were done so the state would still have some marketing strategy, particularly in the Lower 48, that would benefit as many businesses in Alaska as possible, Leonard said.
A couple of the state’s primary target markets are California and the Midwest, she said.
Each visitor to the state spends an average of $930 once they get to Alaska, according to state data.
Filling the state marketing void will be left to local tourism and travel bureaus, but they will also feel the cuts, Explore Fairbanks President and CEO Deb Hickok said.
“The impact is on many different levels because we are a very active participant in all of the cooperative marketing opportunities that the State of Alaska offers,” Hickok said.
Explore Fairbanks regularly purchases consumer leads generated by state advertising, which are inquiries made by individuals interested in traveling to Alaska. When Explore Fairbanks finds a lead from a potential consumer in a target demographic it may send out its own direct mail to nudge the person towards the Golden Heart City.
Without the state advertising, Hickok and her team are asking, “How do we generate those leads ourselves?”
She said Explore Fairbanks has been in contact with similar groups to see how the state cut can be collectively absorbed.
Visit Anchorage spokesman Jack Bonney wrote in an email that the state has been able to maintain large and complex marketing programs that no single local entity could manage.
“Destination marketing organizations (DMOs) like Visit Anchorage, Explore Fairbanks, Travel Juneau and others have co-op programs for their respective memberships, and pretty much since the earliest days, we’ve teamed up where our goals are shared,” Bonney wrote. “That said, there’s an additive effect to having a state-level presence for these efforts, and having two or three local DMOs working together isn’t the same as a statewide marketing program.”
Leonard and Hickok both said Alaska, which competes as a global destination, would be less visible internationally as well.
A state economic development contract with Taiwan that included a marketing component has been terminated, Hickok said.
Also, the state will be doing very little Mainland China, an emerging market Explore Fairbanks was “really jazzed” to expand into, she said.
Although separate, the Alaska Marine Highway System marketing budget will not be immune to cuts in fiscal year 2016.
AMHS spokesman Jeremy Woodrow said previous years’ marketing budgets, totaling about $1.2 million annually, would be cut to about $600,000 this year.
The cuts include terminating a $500,000 contract with the Anchorage-based marketing firm Bradley Reid and one direct position cut.
With the remaining two positions in the marketing arm, the ferry system will have about $400,000 to spend on all of its advertising, according to Woodrow.
“It’s impossible to do more with less, especially when it comes to buying ad space,” he said.
The overall AMHS budget was, as it often is, a particularly contentious issue in the Legislature as the state operating budget was drafted.
About 30 percent of annual ridership on the state ferries is from Outside visitors, and cutting advertising to that group could further impact AMHS as it tries to generate as much of its own revenue as possible.
Woodrow said the AMHS is still planning its new strategy, but that it would likely be more digital media.
“It’s sort of a wait and see as the Marketing Program implements strategies that could impact how we’re able to attract and compete on a global scale because Alaska is the type of destination that can compete with other global destinations,” Leonard said. “I think we’re going to see a reduction (in travelers) without having that visibility on television or whatever the strategy is. I think we’re going to start seeing those effects next summer.”