Toward a New Model for Destination Marketing
I'm not sure how it ever came about but for some reason Destination Marketing became something that only the public sector could do.
For me the very idea that there should be a public sector department of tourism marketing seems very odd. It's like something out of George Orwell's 1984. In fact the current staycation campaign would probably have had Winston Smith heading straight for Bondi - not Bridlington.
However as the government has seen fit to cut off the money, dismantle development agencies and not worry about the inevitable consequence to tourism you have to assume that public sector Destination Marketing was not working.
If it was we'd know about it wouldn't we?
The government would have said "we'll keep this investment in tourism going because it's really paying off". There would also be countless angry DMOs renouncing the cuts, pointing out exactly how well that marketing investment had performed, how much better the industry was following the years and years of investment! Tourism Business owners also would be up in arms, furious that this important route to market was being denied them, that they would suffer financially, that tourists would not now be able to find them.
But none of that happened. Probably because the government saw no recognisable Return On Investment. No one was able to quantify what the real benefit had been. And anyway people that work in the public sector risk losing too much by even voicing an opinion let alone being outspoken (the Silence of the Lambs). Or perhaps no one actually did the figures - we spent this, we made that, the profit was...
For tourism business owners there were no complaints because ultimately it made no difference to them. Public sector Destination Marketing was not driving any visible amount of new business.
A successful Tourism sector is profoundly important for this country but does that mean we need the public sector to be solely responsible for how our town's, cities and regions are marketed? The local tourist board will never be able to compete with the likes of Google, TripAdvisor, etc. Even the most successful national tourist board websites attract a tiny fraction of the available online audience - much less than 1% (0.01% or worse). This should be acknowledged and public sector tourism marketing should stop trying to compete against these industry giants.
In the UK now there's a movement to introduce Tourism Business Improvement Districts (TBIDs). TBIDs enable Destination Marketing to be funded through local taxes raised by tourism businesses. The problem we will face in the UK is that the idea of TBIDs is being driven by the public sector. The TBIDs model works very successfully in the United States because the private sector is much more involved, active and interested in Destination Marketing. There is no similar culture in the UK. Will it just be seen as yet another tax that tourism businesses have to bear with very little in return for the business?
If TBIDs succeed, and funding enables new and revitalised private sector led initiatives what will DMOs be offering that was different from the past?
What is the New Model for Destination Marketing?
This I believe is the question we should be asking. Please feel free to contribute - all ideas will be welcome and shared. You can contribute anonymously if you need to - no one will ever know :)
The new thinking amongst thinkers in South Africa is that government is there to create an enabling environment in which the private sector can function optimally. Unfortunately, government salaries here have outstripped private sector salaries, and the majority of government workers tend to use their positions to create little empires (or worse), and ignore the (or worse) the taxpayers whom they're supposed to be serving. The result, for tourism, is that we have a top-down approach to destination marketing (assuming that government is at the top of the heap), which is bureaucratic, clunky, and largely ineffective. For one - I'd say 90 or 95% of the government marketers with whom I have contact don't even use Facebook. Twitter is something that birds do, and Pinterest? - pah! Never heard of it...
ReplyDeleteHowever, in an ideal world, government should be creating awareness of its client - the taxpayer, and the destination that supports the taxpayer. Very few companies have the resources to market on this level: they need to focus on sales. But since DMOs aren't burdened with that responsibility...
Having said that, though, I agree with you, Martyn, and I would add that the provision of information quickly and accurately is the greatest service the DMO can provide. It is a typical - even ideal - way of creating that enabling environment in which the tourism industry can survive.
One more thing: many tourism attractions are tax-funded, are often not income producing (roads, parks, museums), and, in the South African context at least, are underfunded and can't afford to market themselves. This makes the DMO an indispensable part of the picture.
But, of course, DMOs must move into the digital age if they're going to do their jobs properly.
Thanks and
With best Barefoot Wishes - M
MARTIN HATCHUEL, Barefoot Writer
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Hi Martin, great comment! You've unmasked the masquerade that's been present in the UK for more than a decade, brought to heel now by EU Competition Law that came into force late 2009 with the Lisbon Treaty.
ReplyDeleteThe result has been central government's cut in VisitBritain's funding as part of the spending review - VB was operating at a £0.7m deficit - forcing abandonment of the National Tourism Open Platform together with associated systems that found UK government on the wrong side of the law. It was also a factor in the dismantling of development agencies that were funding local government DMOs using the same systems, which saw them too acting illegally.
The US equivalent of EU Competition Law is the Sherman Antitrust Act that came into effect in 1890. It underpins the American culture of innovation through open market competition and is why we have Apple, Google, TripAdvisor, Facebook, Twitter - I could go on. All these supranationals lie at the very heart of both international and intranational tourism marketing as we know it today. It's the reason why TBIDs in the US are more likely to succeed, whilst any in the UK are unlikely to because the culture's all wrong. Hypothecated taxation is not the issue. It's the ability to use the funding in a commercial environment where all marketing must lead to a sale.
This brings us back to the earlier question: was it poor performance that brought about the demise of the old DMOs? For this we must ignore the 'government marketer' oxymoron and consider who were the beneficiaries. Once this is clear, the question can be answered and the future of DMOs can be better determined. So here we go...
At the turn of the millennium, government-funded DMOs were intended as Destination Management Organisations. What happened next was a game changer. A handful of technology companies that had developed online booking systems, responded to government tenders that were to see their technologies embedded in DMO websites. It saw DMOs morph overnight into Destination Marketing Systems, bringing them into a space occupied by the private sector and finding them in competition with online travel agents (OTAs). Neither the bureaucrats nor the politicians had the wit to understand the economic consequences and legal implications.
Having built their new websites with booking systems in place, it became a political imperative for the DMOs to attract traffic to them and generate booking enquiries for tourism businesses listed on their sites. Using taxpayers' money they competed with the OTAs for popular keyphrases using pay-per-click (PPC), thus driving up the bidding prices that could only be recovered by the OTAs in commission charges to businesses.
With DMOs having none of their own products to sell, the only way booking enquiries could be converted to sales was to refer them direct to businesses listed on their websites or, and here's the rub, to OTAs nominated by the businesses to process the enquiries on their behalf for a commission payable on the booking value.
The twist, however, was that the technology suppliers to the DMOs were also OTAs in their own right, nominated to process the enquiries, and technology suppliers to other nominated OTAs. It takes a moment to realise the full implications. In effect, the technology suppliers had three interwoven income streams. One from the taxpayer for the systems; a second from the businesses for the bookings, and a third from other OTAs using their systems. All in a day's work and we must take our hats off to those who drafted the legal Agreements. But not so smart of the DMOs.
So back to the question: did the DMOs perform? Yes, incalculably! Who were the biggest single beneficiaries? The technology companies without a shadow of doubt but with none of their profits returning to local economies. And who were the biggest losers? The taxpayer, independent tourism businesses and local tourism economies. They have not only seen no growth from the investment but also, with Agreements now terminated, have nothing to show from it.
ReplyDeleteBut it doesn't stop there. Anther significant fallout and weakening effect has been the large numbers of small tourism businesses in the UK that are now digitally immature. With listings on DMO websites, which came free with their property star-gradings under the National Quality Assurance Scheme, businesses ticked the online marketing box, waited for the bookings to flow, abdicated all responsibility for developing their own branded web presence, and are prey now to snake-oil technologies that consume large chunks of their marketing budgets, not quite knowing how to monitor the results.
It's against this background we're setting out now to determine the future of DMOs with few knowing little of the folly of the existing ones; with the exception, of course, of the technology companies that helped build it.