Kentucky Conversion Study

1
Kentucky Conversion Study

• Presentation to New West Advertising
• and the Kentucky Department of Tourism

Prepared by Jerry Henry Market Research Consulta
nt
Jerry Henry Associates August 2007
2
Purpose

• The purpose of the Kentucky Department of Tourism
  (KDT) Conversion Study is
  
• a) to determine what percentage of inquirers
  converted into actual visitors,
  
• b) to estimate the economic impact and return on
  investment those visitors generated,
  
• c) to provide a benchmark demographic
  behavioral profile of those visitors.

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Methodology

• The Kentucky Department of Tourism received
  62,976 direct inquiries in the 12 months running
  between June 2006 and May 2007. A simple list of
  physical addresses were provided and a reverse
  append process assigned telephone numbers to
  those direct inquiries in which a direct match
  was identified. This list in turn was used to
  conduct a telephone survey with respondents
  during the last week of July and first week of
  August 2007.
• A total of 1,280 personal interviews were
  conducted among inquirers, and from those
  interviews, a total of 500 converted visitors
  were surveyed. This size of sample provides for
  a maximum margin of error of /- 2.7 on the
  conversion rate and /- 4.4 on visitor trip
  characteristics, both at a 95 confidence
  interval.

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Executive Summary

• Kentuckys advertising efforts generated 62,976
  inquiries on a total media investment of 1.59
  million. This equates to a gross cost per
  inquiry of 25.30, which is somewhat higher than
  what we have experienced with other DMOs in the
  past. However, 980,000 was invested in
  television that likely did a great deal to help
  the states total visitation, brand awareness and
  intent-to-visit. But, it did not appear to
  deliver a comparable increase in inquiries and,
  therefore, the cost per inquiry appears a little
  high as a result.
• Based upon interviews conducted with those who
  inquired, 39.4 visited the State of Kentucky
  area between June 1, 2006 and May 31, 2007.

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Executive Summary

• These visitors reported spending 930 per party
  over the course of their 2.0 visits which
  averaged 2.8 nights each visit.
  
• Extrapolating these results to the entire list of
  62,976 inquiries provides a net converted visitor
  estimate of 24,803 and gross spending of 23.1
  million. This in turn produced a return of
  14.48 in visitor revenue for every 1.00
  invested in media placement.
• The KDTs fulfillment materials mailed to
  prospects persuaded many converted travelers to
  visit Kentucky. The vast majority (83) recalled
  receiving the materials in the mail and nearly
  two-thirds said they either somewhat or
  significantly influenced their decision to visit
  the state.

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Executive Summary

• These metrics are quite high compared to an
  industry average. Typically fewer than 60 will
  recall receiving the advertising materials, and
  of those who do, only about half generally say
  they influenced their decision to visit.
• Kentuckys average converted visitor was 52 years
  old, earned an annual household income of
  68,000, and spent 2.8 nights in the area on
  their most recent visit. In all, these travelers
  visited Kentucky an average of 2.0 times since
  inquiring and spent a total of 467 per visit,
  930 overall. Just over 30 were visiting for
  the first time and most stayed in Hotels/ Motels
  (64) but Campgrounds (14) posted a very strong
  showing in second place.

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Executive Summary

• Nearly one in three (29) converted visitor
  parties had children with them on their trip and
  the most popular activities were visiting
  historical attractions, participating in outdoor
  recreation state parks, visiting state park
  resorts and Mammoth Cave.
• Converted visitors came from a diverse geographic
  region. Top feeder markets in this study included
  Cincinnati, Louisville, Chicago, Indianapolis and
  Detroit. The top states were Ohio, Kentucky,
  Indiana, Michigan and Illinois.
• Interestingly, Kentucky residents comprised less
  than 12 of all converted visitors. Of course,
  residents are also much less likely to have
  needed to call for additional information too.

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Study Results
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39.4 Conversion Rate

• Between June 2006 and May 2007, 39.4 of the
  direct inquiries made to the Kentucky Department
  of Tourism converted into visitors. This is
  slightly better than the industry average. DMOs
  tend to see conversion rates vary widely from
  destination to destination, but they typically
  fall in the 25 to 60 range and average around
  39.

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June 2006-May 2007 Conversion Rate
Nearly four in ten of those who inquired
indicated that they ultimately visited the State
of Kentucky between June 2006 and May 2007.
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Distribution of Total Direct Inquiries
Inquiries were received from all over the
country, but the majority came from within 600
miles of Kentucky. Interestingly, however, more
were received from DMAs north of Kentucky than
from the South.
12
DMAs Producing the Most Direct Inquiries
13
Conversion Rate by DMA
As one might expect, the highest conversion rates
also tended to come from those DMAs nearest to
Kentucky. Louisville, Nashville and Lexington pos
ted some of the highest conversion rates in the
Kentucky. But, other DMAs further from Kentucky
also did comparatively well, e.g. Milwaukee,
Minneapolis, New York.
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DMAs with the Highest Conversion Rates
Of those markets that produced 10 or more
inquiries
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Cost Per Inquiry

• The Kentucky Department of Tourisms advertising
  investment between June 2006 and May 2007 was
  1.59 million. Spread across all 62,976 inquiries
  that were generated, this equates to an average
  cost of 25.30 per inquiry.
• This is on the high side because 980,000, or
  more than half, of Kentuckys advertising
  investment was devoted to television commercials.
  Most experts believe that television advertising
  helps drive visitation, improve brand awareness
  and visitors intent-to-return but, it is not
  particularly efficient at generating inquiries.

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Financial Information

• Nearly four in ten (39.4) of those who inquired
  directly with the KDT converted into visitors and
  spent an average of 467 per party on each trip
  to Kentucky, and the average converted party
  traveled to Kentucky 2.0 times since making their
  initial inquiry for a total spending per part of
  930.
• Extrapolated to the entire list of 62,976
  inquiries, it is estimated that gross direct
  spending was 23.1 million and that the combined
  campaigns generated with a return on investment
  of 14.48 which is very good, but not great by
  comparison.

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Summary Data
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Visitor Profile

• The following charts graphs are representative
  of inquirers who converted to visitors.

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Most Recall Receiving Fulfillment Materials
Nearly 85 of respondents recalled receiving the
advertising materials mailed to them after they
inquired at the KDT. This is significantly
higher than average which typically runs just
under 60.
20
The Advertising Materials Influenced Visits
Nearly two-thirds (63) of respondents indicated
the advertising materials either somewhat or
significantly influenced their decision to visit.
This is comparatively high relative to the
industry average which runs around 50.
21
Season of Most Recent Visit
The majority (59) of converted visitors traveled
to Kentucky in the summer months.
22
Party Composition

• Nearly one-third (30) of the households who
  contacted the Kentucky Department of Tourism were
  families with children, slightly higher than the
  U.S. average of 28. Adult couples comprised 70
  of the total parties who visited.
• First-time visitors, summer travelers and
  residents tended to skew more toward families
  with children than did other types of inquiries.

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Age of Visitors

• The average adult age of converted visitors was
  52.1 years, about 10 years older than the average
  visitor overall. This indicates that the type of
  person responding to the states advertising tend
  to be somewhat older than average visitor
  overall.
• First-time visitors, summer travelers and
  residents tended to be a little younger than
  average.
  

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Prior Visitation

• Nearly one-third of converted respondents said
  they were visiting the State of Kentucky for the
  first time. Repeat visitation accounted for the
  remaining balance.
• Out-of-state visitors and those visiting
  Louisville and/or Lexington tended to be somewhat
  more likely to be visiting Kentucky for the first
  time.

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Household Income

• Average household income among respondents was
  68,000 with 52 earning between 50,000 and
  100,000. This is slightly higher than the
  states overall visitor average of 60,000.
• First-timers, those visiting Louisville/
  Lexington, and out-of-state travelers tended to
  have slightly higher household incomes than other
  traveler segments.

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Where Did You Visit?
The most popular destinations in Kentucky were
Lexington and Louisville. However, Kentuckys
smaller destinations accounted for well over half
of the states visitation generated from these
ads.
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Accommodations
Hotels/ Motels accounted for nearly two-thirds of
the accommodations used by converted respondents.
Campgrounds were also strong at 14.
28
Length of Stay
Over 80 of converted visitors say they spent the
night in Kentucky on their recent visit. Of
those, nearly half (46) spent 2-3 nights while
another 30 spent 4-7 nights in Kentucky.
Average length of stay was 2.8 nights, higher
than the states overall average of 2.46.
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Decision Time
Over half (56) of the respondents reported that
they had been planning their trip to Kentucky for
2 weeks or less before actually traveling. This
is a comparatively short planning window and
underscores the need to get information in
prospects hands as quickly as possible.
30
Activity Participation
Visiting historical attractions and participating
in outdoor recreation dominated the activities
most frequently participated in by converted
visitors. Activities also posting strong results
included State Park Resorts, Mammoth Cave, and
visiting the Kentucky Horse Park.
31
Origin DMAs Where the Converted Visitors Live
The top origin markets for KDTs converted
visitors included Louisville, Nashville and
Indianapolis.
32
Converted Visitors by DMA
This map examines where, by DMA, converted
visitors live. And, similar to the Conversion
Rate map DMAs closest to Kentucky tended to
generate the largest number of visitors.
Louisville, Nashville and Indianapolis generated
some of the largest numbers of visitors.
33
Very Strong Intent to Return
Nearly 90 of respondents indicated they were
very likely to return to the State of Kentucky
over the next three years.
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Summary

• Nearly 40 of the KDTs direct inquiries
  converted into visitors in 2006-2007. Kentuckys
  conversion rate is slightly better than the
  aggregate industry average and indicates that the
  states marketing efforts are doing a good job of
  converting inquiries into visitors.
• In future efforts, if the publication that
  generated the inquiry were tracked in the inquiry
  record conversion rates could also be reported by
  source in addition to the geographic breakdown
  provided. Having a better understanding of
  conversion rates by publication may help decision
  makers improve their media purchase efficiency in
  the future.
• Kentuckys fulfillment materials are doing a very
  good job. The vast majority (83) recalled
  receiving the information mailed to them and
  nearly two-thirds indicated it was somewhat or
  very influential in their decision to visit.

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Summary

• However, the fact that well over half (56) say
  they made their decision to visit within 2 weeks
  of the actual trip underscores the need to get
  the fulfillment materials into the hands of these
  prospects as soon as possible. Materials that
  arrive after the trip has occurred have little
  impact.
• It is also worth noting that converted visitors
  who responded to the KDTs advertisements tend to
  look somewhat different than the states average
  visitor in general. Converted visitors tend to
  stay longer, have higher incomes, be somewhat
  older and are significantly more likely to visit
  in the summer months.
• Lastly, because 980,000 of television
  advertising was included in the 1.59 million
  total ad investment KDTs cost per inquiry
  (25.30) appears a little high and the return on
  investment (14.48) is on the low side. However,
  it is important to note that the television
  advertising served more than one function here.

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Summary

• Television ads are not particularly adept at
  generating inquiries per se, but can typically
  drive visitation, brand awareness and intent to
  return. Hence, the performance represented by
  the cost per inquiry and ROI metrics may be
  somewhat misleading by themselves.

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• Jerry Henry
• Marketing Research Consultant
• Jerry Henry Associates
• 509 Hawthorne Drive
• Nixa, MO 65714
• Office 417.877.1492
• Fax [phone]
• Email jhenry_at_jerryhenry.net
• Website www.jerryhenry.net