Marketing by Brand USA produces an ROI of 47:1

Brand USA, the entity created to market U.S. destinations internationally, released a report last week that for the first time gave the travel and tourism industry a glimpse at what kind of return it is getting on the millions of dollars its members have invested in the effort.

The in-depth report, based on research conducted by Tourism Economics, an Oxford Economics company, found that during Brand USA's second fiscal year, its marketing efforts had resulted in 1.1 million additional visitors to the U.S. That amounts to 2.3% more growth than would have occurred without Brand USA's global marketing initiatives, as well as $3.4 billion in additional travel spend stateside.

Tourism Economics analyzed Brand USA's investments in its eight core international markets: Canada, Mexico, Japan, South Korea, the U.K., Germany, Brazil and Australia. What the research found was that for the fiscal year ended Sept. 30, Brand USA had spent $72 million on marketing in those destinations and had seen a 47-to-1 return on that investment.

The analysis was based on an econometric model of how the eight markets in which Brand USA is fully active -- the countries in which it deploys consumer, trade and cooperative marketing initiatives -- would have performed without Brand USA marketing vs. how they actually did perform. Hypothetical performance was based on a global forecast model developed by Tourism Economics.

"For us to be able to have this kind of impact in our second year of operation, honestly [this] has exceeded the expectations I could have ever hoped for," said Chris Thompson, CEO of Brand USA.

"This public-private partnership that we created back in 2010 ... is now having a huge impact in the nation's No. 1 service export," he added. "And that, to me, was probably the most compelling part of what the study brought out."

The report, titled "The Return on Investment of Brand USA Marketing," also found that the $3.4 billion in additional visitor spend attributable to Brand USA's global marketing initiatives had generated $7.4 billion in business sales, $3.8 billion in gross domestic product, $2.2 billion in personal income and 53,000 jobs.

Brand USA's budget for fiscal year 2012-13, including marketing spend and overhead, totaled $99 million.

Building the Brand USA case

Brand USA came into being in 2010, after the Travel Promotion Act was and signed into legislation by President Obama. Currently, Brand USA is authorized through Sept. 30, 2015.

Brand USA is supported by cash and in-kind contributions from the private sector that are matched by the federal government. The federal part of matching funds are generated by visa fees paid by international travelers to the Electronic System for Travel Authorization program.

Last year, the industry generated nearly $134 million in cash and in-kind contributions, which enables Brand USA to draw down the $100 million in matching annual federal revenue promised by the Travel Promotion Act.

Asked how and whether the report might help Brand USA make its case to Congress and the federal government to ensure that its mission is reauthorized come September 2015, Thompson said he was not thinking in terms of a possible end for Brand USA.

"If we're doing our job ... then all that will take care of itself," he said.

While Thompson did not directly acknowledge how the report could be leveraged to help keep Brand USA's funding and support alive beyond September 2015, he acknowledged that the campaign was making sure to shout its findings from the rooftops and was circulating the report among all its stakeholders, from the federal level down to individual private investors.

"Now that they truly understand the contribution that travel and tourism adds not only directly to our industry but indirectly as a driver to the nation's economy, that is what's going to sustain our success in the future," Thompson said.

How Brand USA stacks up

In addition to analyzing Brand USA's impact on travel to, and spend in, the U.S., Tourism Economics also looked at how the results compared with other national destination marketing organizations' efforts.

A big part of Brand USA's push, after all, is the argument that the U.S. has lost and will continue to lose market share to other destinations if it isn't aggressive in the tourism marketing game.

Oxford Economics estimates that $4.3 billion was spent on national-level tourism promotion in 2012, with the majority spent by European destinations ($1.7 billion) and Asia-Pacific destinations ($1.2 billion), creating stiff competition in the global travel marketplace for tourism dollars.

According to the report, the U.S. welcomed 25% of all European long-haul travel in 1997, a share that had fallen to 16% by 2012, and 20% of all Asian long-haul travel, a share that had fallen to 10% by 2012.

Tourism Economics found that across the eight markets it analyzed for the report, the U.S. as a destination either experienced an increase in global travel market share or a slowdown in the rate of share loss.

As for how Brand USA's 47-to-1 ROI compares with other national destination marketing campaigns, the research found that Australia's 2005 tourism campaign yielded a 64-to-1 return on marketing spend, while VisitBritain's fiscal year 2012-13 marketing yielded an 8-to-1 ROI.

Room for improvement

While the report certainly highlighted the positive impact Brand USA's marketing is having on international visitation and spending, a careful reading also suggested areas where the campaign could improve its strategy. One example was Mexico, where Brand USA ads did not seem to drive any notable increase in visitors to the U.S.

The report also included a survey conducted by Ipsos, a global market research company, which in August asked international travelers in Brazil and Mexico if they had recently seen a Brand USA ad and when, if ever, they planned on visiting U.S. destinations for an overnight trip.

In Brazil, 20% of respondents had seen the ad, and in Mexico, 26%. In Brazil, 66% of respondents who had seen the ad said they intend to visit the U.S. during the next 12 months, compared with 58% who had not seen the ad. In Mexico, however, 70% of respondents who had seen the ad said they intended to visit the U.S. in the next 12 months, compared with 71% who had not seen the ad.

"When you're deploying marketing resources around the world across many different cultures and many different mediums, we're learning every day," Thompson said. "We take our creative campaign and we determine how effective it is in speaking to those cultures and across those mediums, and we tweak it on a regular basis."

Armed with this new research, he said, Brand USA plans to focus its efforts in the 20 markets in which it already has a presence, including the eight core markets closely analyzed for the report.

"This year is going to be a year of getting caught up and getting fully deployed to the degree we think we need to be in all 20 of those markets," Thompson said.

Follow Michelle Baran on Twitter @mbtravelweekly.