Thursday, January 07, 2010

Pure Michigan: A Sales Pitch for a Sales Pitch

cross posted at Right Michigan

I don't know about you, but I believe just about everything that either government or any politician tells me. Lock, stock, and barrel.

The state House of Representatives recently passed a plan sponsored by [Gary] McDowell that will grow Michigan's tourism industry by re-investing in the highly successful "Pure Michigan" promotional campaign. Every dollar invested in out-of-state advertising generates more than $40 for Michigan businesses and nearly $3 in revenue, according to the Michigan Economic Development Corporation.
If these claims are true, our government owes it to the Michigan taxpayers to jump on the Pure Michigan bandwagon with both feet, because all by itself it will solve our state's budget problem.

If, for every $1 invested the state can receive $3 in revenue and, if in addition to that, our businesses can recoup an additional $40 in new receipts, why aren't we spending every penny of Michigan's budget on "Pure Michigan"?

Why hasn't T. Boone Pickens and Carl Icahn called up the MEDC and offered to buy the department if every dollar invested would result in a tripling of the principle in only a year's time?

Screw education spending--put it all into Pure Michigan, and then parlay that bet! Sure, for the first couple of years our kids would be missing out on school, but by year four and five, after the dividend checks start rolling in, they won't need to work anyway. Nintendo 24/7!

I work (occasionally) for a struggling company in Michigan. If the owners were guaranteed $40 in revenue for every buck they spent in advertising we'd be living on easy street.

The reason none of this is happening, of course, is that these numbers are cooked for taxpayer (and voter) consumption from a context so complicated and restrictive that Houdini couldn't escape it.

It is a sales pitch for a sales pitch.

I do believe that few states can get as much bang for the advertising buck as Michigan can. When you get very far from our state's borders most of the people you meet merely equate Michigan with Detroit. This is not a kind equation. Too many outsiders feel the whole state is dirty and blighted and think most everyone living here is either on the Synagro Technologies payroll or breaks kneecaps for the UAW.

To them, Michigan is a two industry state, automobiles and corruption, and who wants to spend the summer vacation bouncing between the sights of a transmission factory and a back alley beat down? These are misconceptions of (most of) Michigan and do not reflect its total reality, and it does benefit our tourism industry at large to dispel such notions.

Michigan is a beautiful state. This fact, among those who live here or have ever visited, is not disputed.

Few other states can rival its depth and breadth of landscapes, seasons, activities and culture. People from many states travel millions of miles each year to reach our tourist destinations and drop off points from which they can further explore the state's even more remote beauty.

If the MEDC can get Michigan's businesses $40 for every buck it spends promoting tourism out of state, why cannot Michigan's tourist industry itself spend a few bucks out of state on its own for the same proportional result?

Or, have the wizards in government stumbled upon a super efficient money generating algorithm so secret and so fragile that it cannot exist outside the confines of a benevolent government agency's lab? If so, no wonder the Postal Service, Secretary of State's Office, and Amtrak rock so hard, though in retrospect it does appear as if the $800 billion federal bailout could have been more wisely focused.

As the old axiom goes, if it sounds too good to be true it probably is, and a 200% annual return on a taxpayer investment sounds pretty darn good to me.

Who do we need to make the check out to?


Hershblogger said...

Maybe we should use every dollar for "Pure Michigan" ads, but isn't there a point of diminishing returns? I mean, maybe if we only spent $1 million we'd get back $100 dollars for every dollar spent. Or, if we spent $0 we'd get an infinite return. And we'd need no bureaucrats to "calculate" it.

Trisha said...

For a state that you seem to loathe so intensely, you seem to have a lot to say about it. Tourism is Michigan's 3rd largest industry. The ROI numbers you quoted were provided by an independent research study. Do you have any proof that they are inaccurate? Have you spent your time calculating the ROI? Have you spoken to Michigan hotel owners to determine what sort of lift (or decline) in tourism they have seen as a result of the campaign?

Without proof to the contrary, your argument holds no water. You simply come off as someone who complains just to hear the sound of your own voice - a perpetual whiner that would be happy with nothing.

Do you have a solution to the state's budget crisis? Because without one, you provide nothing but noise.

The Rougman said...


Are you suggesting that I have a deep distrust of state government, or are you saying that I hate the land and people that it governs? If you are asserting the former I stand guilty as charged. If you are saying the latter you are just talking silly.

The ROI numbers I used were the often quoted ones provided by Longwoods International, an independent research group that, astonishingly, specializes in promoting tourism.

That, in and of itself, does not make the numbers bogus. The mocking tone I take is because the claims made by supporters of the campaign neither reveal how the numbers were arrived at nor do they identify any level of diminishing return. They simply repeat over and over again that every dollar dumped into the pot generates over $2.00 in taxpayer revenue and $40.00 in industry support. An open ended claim like this is ridiculous.

As far as talking to hotel owners as to the effectiveness of the ad campaign goes...I have not. I have however read a quote from the industry's "Michigan Tourism Strategic Plan" that says "There is absolutely no industry support for a broad-based industry self-assessment approach to generate sufficient monies to fund Travel Michigan. Last year, TICOM created a special task force to explore such an approach. Without exception, representatives from a variety of tourism industry segments indicated their members and/or Boards would strongly oppose such an approach." (via Mackinac Center)

So, if advertising campaigns are not where the affected industry wants to spend its own money, why should taxpayers trying to keep their aggravated little heads above water be the ones who must provide the cash?

Do I have any solutions to the budget crises? Ya, I do--but they are all long-term fixes because our tax and spend buttinsky government (you know, the one I loathe) has gotten us so far off the track that there are no quick fixes to be had.

The long term fix tool box includes lower taxes on business. Lower taxes on individuals. Creating a business friendly environment with less red tape and regulation. Creating a consumer friendly environment where buyers, whether they are purchasing a house, a car, or a loaf of bread, can enjoy the pricing advantages of a free market. You ever read any Milton Friedman, or is he too noisy too?

As far as whining goes, you ain't heard nothin' sister until you've stood next to me at the craps table. Its a skill I've acquired through many years of hard practice. Don't worry though, you sound like you're on the right track.