NEW YORK (AdAge.com) -- Hey, ad-industry executive: Uncle Sam wants you.
The U.S. is getting into the business of marketing itself with the Senate's passage Thursday night of the Travel Promotion Act, which will create a federal agency with up to a $200 million annual advertising budget to spend on luring more international travelers to the U.S.
An 11-member non-profit board with an executive marketing director will be created to run the program, under the purview of the Department of Commerce, and the group is expected to reach out to the ad community for help.
"There will be ample opportunity for folks in the advertising industry to contribute to this program," said Geoff Freeman, senior VP-public affairs for the Washington-based U.S. Travel Association, the lobbying group for the $740 billion U.S. travel industry. "This corporation will seek advice from the best minds inside and out of the travel community on how to market the United States."
It's not yet determined whether it will put the account up for review for ad agencies.
Lost travel
Unlike many other countries, the U.S. does not have a dedicated
agency to market itself abroad, leaving that to individual states,
cities and tourist attractions such as New York, Las Vegas or Walt
Disney World. That, in part, has contributed to lost tourism
revenue. An independent analysis by Oxford Economics entitled "The
Lost Decade" showed a 23% increase in the growth of international
travel, but a 10% decrease in international travel to the U.S. from
2000-2009. Each traveler spends more than $4,000 per visit.
The new program is estimated to create 40,000 U.S. jobs and drive $4 billion in new consumer spending, according to Oxford Economics, and reduce the federal budget deficit by $425 million in the next 10 years, according to the Congressional Budget Office.
According to the World Travel Organization, Greece spends more than $151 million to promote the travel industry. Spain sends nearly $120 million, Australia over $113 million and the United Kingdom more than $89 million. The United States spends approximately $6 million.
The U.S. Travel Association will present a strategic plan to Commerce Secretary Gary Locke next week that includes suggestions for board members, fundraising and marketing ideas.
The marketing budget will be provided by a matching program of private sector contributions and a $10 fee levied on foreign travelers from 35 countries, mostly in Europe, where $131 for a visa to enter the U.S. is waived. The fee will be collected once every two years in conjunction with the Department of Homeland Security's Electronic System for Travel Authorization.
Capped budget
"If the travel industry only raises one dollar, we only get one
dollar" from the fee program, said Roger Dow, CEO of the U.S.
Travel Association. "We've done the math, and a $10 charge every
two years per person would raise $100 million a year. The industry
must come up with the matching funds, but if it does, that's a $200
million budget."
The ad budget is capped at $200 million per year, no matter how much money the visa fee raises.
It is estimated it will take anywhere from five months to a year to implement the program and begin advertising travel to the U.S. in foreign markets. When it does start, it is expected to be a comprehensive campaign, including TV, print, radio, online and social media. "The experts will come together and say what the most effective way to get the word out it is," Mr. Dow said. "But e-marketing is extremely effective, and I'm certain that's going to be a good-sized component of what's done. But, again, that's up to the people on the board."
The House passed the bill in October 2009, and President Barack Obama has already said he will sign it into law.
Jim DeMint, R-S.C., was one of 18 senators, all Republicans, who voted "no" on the Travel Promotion Act.
Writing in an op-ed piece in the Washington Post, Mr. DeMint said: "The advertising fund would be controlled by leaders of America's tourism industry -- giant corporations such as Disney, Loews and Marriott. Keep in mind, those companies are not in distress -- they're thriving. Disney, for instance, posted profits of $4.4 billion (in 2008) and bought Marvel Entertainment for $4 billion (in 2009). The American travel industry already spends billions every year on advertising, with tens of millions focused on international marketing. The purpose of the Travel Promotion Act is to subsidize that advertising. No thanks."
