The Price Of Pure. Michigan, That Is.

Is Pure Michigan a boon to the state’s economy? Or a huge waste of money?

In this week’s Crain’s Detroit Business, there’s an opinion piece that falls squarely in the huge-waste-of-money camp. Starting with the title, “Pure Michigan program is expensive and ineffective.” It’s by a gentleman named Michael LaFaive of the Mackinac Center for Public Policy.

I, on the other hand, am solidly in the boon-to-the-state’s-economy camp.

Here’s some background on the Mackinac Center: It describes itself as “a nonprofit research and educational institute that advances the principles of free markets and limited government.” It’s been around since 1987. Its offices are in Midland, Michigan.

Here’s some background on me: In 2006, I was neck deep in the creation of Pure Michigan when I worked at an ad agency called McCann Erickson. I spent the next three years helping grow the campaign. And I came up with that moniker, “Pure Michigan.”

Also, I’m about as free market as anyone gets. The Mackinac Center and I likely agree on many things. Just not this. Since Pure Michigan launched in the spring of 2006, the Center has positioned itself against the campaign. Or at least the state’s spending money on the campaign. I don’t know that they have an opinion on the work itself.

So what gripes does the Center have with Pure Michigan? Four of them: Pure Michigan is “expensive,” Pure Michigan is “ineffective,” Pure Michigan is “unfair” and Pure Michigan “may be undermining attempts to control the COVID-19 pandemic.”

Let’s look at those one by one.

Pure Michigan Is Expensive?

Is Pure Michigan expensive? As Mr. LaFaive writes: “The program currently operates under a $15 million state appropriation, down from a pre-pandemic peak of $36 million.”

Viewed through a certain lens, those are big numbers. Viewed through another lens – say, the lens of national advertising campaign budgets – they aren’t big at all.

My two cents is Michigan has NEVER spent enough on Pure Michigan. Other big states with important tourism sectors have routinely spent more than Michigan. For instance, here’s a list (per CNBC) of the top 10 state advertising and promotion budgets from back in the 2013-2014 fiscal year, the heyday of Pure Michigan funding.

1. Hawaii:  $82.0 million
2. Florida:  $69.5 million
3. California:  $64.5 million
4. Illinois:  $53.3 million
5. Texas:  $43.4 million
6. Michigan:  $32.3 million
7. New York:  $30.7 million
8. Arizona:  $23.3 million
9. Virginia:  $18.6 million
10. Alaska  $18.1 million

Michigan came in sixth. That’s better than many states. But well behind even Illinois. And half of what California spends.

When you look at Pure Michigan’s media calendar over the years, what you usually see is a dozen or so weeks of national advertising at the front end of the “warm weather” season, a few weeks of regional advertising ahead of the fall color season and some in-state (or maybe regional) advertising to promote winter tourism.

Given the quality of Michigan autumns, that Pure Michigan has never had budget enough to really promote fall tourism suggests the campaign has not been overfunded.

Also, media costs are only one chunk of those budgets. Typically, tourism funding also covers production, agency fees, website and internet marketing, brochure printing, staff salaries, signage, sponsorships, public relations (including “FAM tours” for travel media) and a bunch of other stuff, even welcome centers. For most states, actual media expenditures are probably half of total budget.

When the Center complains about the expense of Pure Michigan, they should keep in mind that a substantial portion of the annual budget goes for things that really aren’t about Pure Michigan. Those expenses would happen regardless of what the actual ad campaign is. Yes, the Center is against that, too. But that’s not Pure Michigan’s fault.

Pure Michigan Is Ineffective?

Travel Michigan, the arm of the Michigan Economic Development Corporation that oversees tourism promotion, has long contracted with outside research companies to assess the economic impact of its advertising spending. This predates the existence of Pure Michigan.

Mr. LaFaive says, “State officials have crowed that every dollar spent on out-of-state advertisements creates huge returns to the state treasury. No independent study confirms that it does. Quite the contrary.” He segues into the Center’s analysis of Pure Michigan’s impact. As if the Center was independent. Truth is, the Center has been riding this hobbyhorse for over a decade. I suspect their analysis fits their conclusions, not the other way around.

It’s been a long time since I had anything to do with Pure Michigan or spoke with anyone from the company hired to assess effectiveness (my ad agency, Factory, has done no work with the state of Michigan). But here’s the way it went back in the day:

A questionnaire was fielded among people living in geographies where Michigan advertised. They were surveyed about their travel habits, including trips to Michigan, and whether their trips were already planned or new trips. They were asked (among other questions) to identity which factors influenced their travel destination decisions. If – and only if – people explicitly said advertising specifically influenced their travel decisions were those folks counted as evidence of effectiveness.

Now, I’ve worked in advertising for north of 30 years. The first 20 of that in the strategy-insight-research side of the business. I've fielded several million dollars’ worth of quantitative and qualitative primary research and have personally moderated several hundred focus groups and another several hundred one-on-one interviews. And I can tell you this:

In market research, people hate admitting that advertising influences their purchase decisions.

That a significant portion of Michigan visitors admits their visits are influenced by advertising is a big thing. Because it is such a high hurdle to clear. And because there will always be other people who were also influenced by the advertising but who may not acknowledge as much.

I don’t suspect the folks at the Center have much experience working in advertising, either on the client or agency side. So maybe they don’t understand that. But I can tell you, when I went over the data (back in the day), the results in no way smacked of cooking the books for the campaign.

Pure Michigan Is Unfair?

I hate unfairness. You hate unfairness. Most folks hate unfairness. So why is Pure Michigan unfair?

According to Mr. LaFaive, it’s because “Many taxpayers with no direct tourism interest are forced to pay for it.”

The Center has long argued that the state’s spending on tourism promotion benefits a narrow band of interests in the tourism sector. As Mr. LaFaive says, “The state's Pure Michigan program subsidizes a tourism industry by running expensive advertisements out of state in order to lure tourists to Michigan.” Later he focuses his critique of Pure Michigan effectiveness solely on the “accommodations industry.”

I’m assuming that language covers hotels, motels, inns, resorts, bed and breakfasts (beds and breakfasts?), campgrounds and hostels. I‘m not sure if it covers vacation rentals.

But what does it exclude? Literally everything else in the tourism business.

Ferry services. Golf courses. State, regional and county park systems. Museums, theaters and live music venues. Art fairs. Festivals. U-pick farms and cider mills. Boutiques, fudge shops, antique stores, souvenir merchants and other tourist traps. Wineries, craft breweries, distilleries, coffee shops. Hunting and fishing licenses. Restaurants, from the finest to the fastest. And gas stations. Lots and lots of gas stations.

Beyond tourism, the Pure Michigan platform also has the ability to support non-tourism economic development, Michigan’s agriculture sector, Michigan’s design, craft and manufacturing sectors, the state’s talent pipeline, competition for out-of-state college and university students. And more.

Tourism is a huge part of the Michigan economy. Up there with manufacturing and agriculture. It touches all 83 Michigan counties and the people who live in them. A state tourism initiative is the most efficient way to support an industry that functionally diverse and geographically dispersed. While folks like the Center have argued that the industry should fund its own campaign, it’s not a practical alternative, given how many thousands of businesses are involved.

Pure Michigan May Be Undermining Attempts To Control COVID-19?

“Remarkably, the state budgeted $15 million to spend on Pure Michigan advertisements this fiscal year,” Mr. Faive writes. “In other words, during a pandemic, the state is buying advertisements to entice people to come here. The campaign began in December, after the state ordered the closure of indoor restaurant dining and waterparks and just after Gov. Gretchen Whitmer asked Michigan citizens not to travel for fear of spreading the novel coronavirus.”

The implication that the Mackinac Center for Public Policy –  a right-leaning organization that “advances the principles of free markets and limited government” – is concerned the state’s COVID strategy will be undermined by tourism promotion amuses me. I find their concern insincere.

As mentioned, the $15 million line item won’t cover only media expenditures. There’s a tourism infrastructure in place that needs to be maintained, if one chooses to have a tourism infrastructure (which is a different question). But saying Michigan “budgeted $15 million to spend on Pure Michigan advertisements” is misleading.

Even if it was true, consider this greater (IMO) truth: There are different kinds of purchase decisions.

If, for instance, Taco Bell launches a new chalupa, the advertising will typically run on top of the availability in store of said chalupa. It’s stimulus-response. You run the ads, people buy the chalupas soon thereafter.

That’s NOT how tourism works.

Vacations are planned sometimes weeks, typically months and sometimes years in advance. If you want to influence that decision, you need to be in-market long before the vacation takes place. So, if you’re Michigan and you’re hoping to get some people to support the state’s massively challenged tourism industry, you gotta get ahead of the game. It’s stimulus-wait-response.

If you believe that advertising can have effectiveness, you have to believe there’s a value in keeping Michigan on the front burner of consumer attention.

The Bottom Line

Is the state’s expenditure on Pure Michigan worthwhile?

I think it is.

The data I’ve seen (back when I was looking at research results) showed a real impact. And I considered the research reasonably fair. Also, I’ve spent a good amount of time over the years with folks from Michigan's tourism industry and they certainly felt it was helping their businesses and their regions. There’s plenty of evidence that A) state tourism promotion can work, B) it can work specifically for Michigan and C) the Pure Michigan campaign has had a largely positive impact on the wellbeing of Michigan’s tourism economy and economy economy.

Do I have quibbles with the way Pure Michigan is being brought to the world?

Of course I do. I have quibbles with everything.

For instance, I don’t think the non-tourism use of Pure Michigan has ever really done what it’s capable of doing. And I can’t say I’m wild about the last couple years’ worth of new Pure Michigan creative. I think the campaign is in danger of being generic tourism promotion. It feels like the emotion is gone. Which means the Pure Michigan is missing from Pure Michigan.

But that’s fixable (one hopes).

The bottom line is that the Mackinac Center for Public Policy appears to object less to the Pure Michigan campaign and more to the basic idea of state tourism promotion. They just target Pure Michigan by name, I suspect, to score some cheap PR points.

Either way, I disagree