Counting Pennies

Sunday’s editorial looks more deeply into the tourism numbers presented by the Myrtle Beach Area Chamber of Commerce at a recent meeting.

Perhaps the most important chart in the recent tourism report by the Myrtle Beach Area Chamber of Commerce was tucked away on page 9 of the first presentation.

In the first half of 2009, occupancy was down about 11 percent both here and nationwide, and revenue was down about 9 percent across the country and 10 percent here. There is no doubt that those were dark days.

In the second half of the year, occupancy nationwide healed some (to negative 6.5 percent), but revenue stayed down at 9 percent. In Myrtle Beach, however, occupancy jumped to positive 2 percent over 2008 (a 13-point swing), and revenue, while still down, recovered to about negative 5.6 percent.

Clearly, something happened here in the second half of 2009 that did not happen nationwide - and it probably has to do with the millions of dollars in new taxpayer money that was used to advertise Myrtle Beach across the nation.

Advertising works. Exactly how well Myrtle Beach’s new penny-supported ads have worked is much harder to say, and one prominent figure in the report that purports to do so - that for every marketing dollar the Chamber spent, area businesses raked in $77 in revenue - left us with serious questions.

That figure was based on the work on an independent research company who looked at the total number of inquiries to the Chamber in 2009 that resulted in visits, about 212,000, and the average amount they spent, about $2,210. That works out to $470 million in revenue, which when divided by the amount spent on marketing, leaves that $77-to-$1 ratio.

For anyone seeking to judge the efficacy of the new sales tax, however, that number raises more questions than it answers. It assumes that no one who contacted the chamber would have come to Myrtle Beach in the absence of that marketing, and (while we know the ads raise our awareness even among past visitors) many visitors simply come here every year because they love the place. It’s a brand loyalty that has more to do with the experience Myrtle Beach offers than how we sell it.

Included in the same report - practically the same slides - was a different number showing the number of those visitors who were coming to Myrtle Beach for the first time. They represent 25 percent of the number who inquired with the Chamber, or about 36 percent of those who then actually came. First-time visitors alone, then, generated about $169 million last year - a remarkable sum of money that is undoubtedly attributable to advertising, and perhaps a better starting point for taxpayers who want to compare this year’s results to last year’s.

That figure is likewise blunt, incomplete in determining the effect of the tax. The Chamber also counts the number of “lapsed” visitors, those who are returning for the first time in five years, and the majority of those too are likely coming based on advertising. Many returning visitors are likely being influenced by the advertising, and many visitors saw the ads and booked their trips without ever visiting the Chamber site - though those numbers are harder to quantify.

“We’re only taking credit for the portion we can measure, but I’d argue there’s a much greater impact out there,” chamber CEO Brad Dean told us last week.

Perhaps putting that measurable $77 return-on-investment number into context would help. What was the demonstrable return in years prior to the tax? Because the marketing is based on tax money, the Chamber made the commendable decision to hire an outside firm to study its conversions for the first time this year - but surely its internal numbers from previous years would at least provide some basis for comparison.

Again, the data appears strong that in a terrible recession, Myrtle Beach used aggressive advertising to grow its market share as a destination, which will poise us for significant growth when the economy recovers. But because that growth is coming with a price - an added burden on local taxpayers and businesses that they did not even get to vote on amid that same recession - the Chamber must walk a very fine line while explaining and defending its results to avoid even an appearance of overstating them.

Advertising works. Exactly how well Myrtle Beach’s new penny-supported ads have worked is much harder to say, and one prominent figure in the report that purports to do so - that for every marketing dollar the Chamber spent, area businesses raked in $77 in revenue - left us with serious questions.

That figure was based on the work on an independent research company who looked at the total number of inquiries to the Chamber in 2009 that resulted in visits, about 212,000, and the average amount they spent, about $2,210. That works out to $470 million in revenue, which when divided by the amount spent on marketing, leaves that $77-to-$1 ratio.

For anyone seeking to judge the efficacy of the new sales tax, however, that number raises more questions than it answers. It assumes that no one who contacted the chamber would have come to Myrtle Beach in the absence of that marketing, and (while we know the ads raise our awareness even among past visitors) many visitors simply come here every year because they love the place. It’s a brand loyalty that has more to do with the experience Myrtle Beach offers than how we sell it.

Included in the same report - practically the same slides - was a different number showing the number of those visitors who were coming to Myrtle Beach for the first time. They represent 25 percent of the number who inquired with the Chamber, or about 36 percent of those who then actually came. First-time visitors alone, then, generated about $169 million last year - a remarkable sum of money that is undoubtedly attributable to advertising, and perhaps a better starting point for taxpayers who want to compare this year’s results to last year’s.

That figure is likewise blunt, incomplete in determining the effect of the tax. The Chamber also counts the number of “lapsed” visitors, those who are returning for the first time in five years, and the majority of those too are likely coming based on advertising. Many returning visitors are likely being influenced by the advertising, and many visitors saw the ads and booked their trips without ever visiting the Chamber site - though those numbers are harder to quantify.

“We’re only taking credit for the portion we can measure, but I’d argue there’s a much greater impact out there,” chamber CEO Brad Dean told us last week.

Perhaps putting that measurable $77 return-on-investment number into context would help. What was the demonstrable return in years prior to the tax? Because the marketing is based on tax money, the Chamber made the commendable decision to hire an outside firm to study its conversions for the first time this year - but surely its internal numbers from previous years would at least provide some basis for comparison.

Again, the data appears strong that in a terrible recession, Myrtle Beach used aggressive advertising to grow its market share as a destination, which will poise us for significant growth when the economy recovers. But because that growth is coming with a price - an added burden on local taxpayers and businesses that they did not even get to vote on amid that same recession - the Chamber must walk a very fine line while explaining and defending its results to avoid even an appearance of overstating them.