KELO-TV reports that the Department of Tourism has issued its big new contracts for luring visitors to South Dakota. All four contracts are going to out-of-state companies:
After a competitive request for proposal process (RFP), the South Dakota Department of Tourism has chosen to establish partnerships with four advertising and public relations firms beginning July 1, 2022. The following four agencies have been selected through the RFP process:
- Karsh Hagan for lead creative branding, traditional & digital media, and activations
- Love Communications for facilitating the cooperative marketing strategy and consumer insights
- Lou Hammond Group for public relations
- Two by Four for social media, email marketing, and website development
…The length of each contract is three years, with the option of two (2) one-year renewals [SD Department of Tourism, press release, 2022.05.19].
Karsh Hagen is a Denver company. Love HQ is in Salt Lake City. LHG is based in New York City and has offices in Atlanta, Charleston, Denver, Houston, and Tampa. Two by Four works in Chicago.
Rapid City marketer Robert Sharp tells KEVN-TV that he finds it (reporter’s words) “baffling that the state can’t find marketing talent in its own borders to promote what South Dakota has to offer.” But according to Senator Linda Duba (D-15/Sioux Falls), the state didn’t get much in-state interest: only one South Dakota company responded to Request for Proposals #2475, current contract-holder Lawrence and Schiller of Sioux Falls.
This is not the first time the state has contracted with out-of-state companies to market South Dakota’s tourism opportunities. When the state last bid out its major tourism marketing jobs in 2017, it selected three companies out of ten applicants. Three South Dakota companies applied; one, Lawrence and Schiller, got picked, along with MMGY Global of Kansas City, Missouri, and Miles Partnership of Lakewood, Colorado.
The contract amounts for Lawrence and Schiller grew from $4,885,750 in FY2018 to $5,000,000 this fiscal year, but federal Coronavirus Relief Funds bumped the FY2021 amount to $16,900,000. MMGY’s contract went from $4,615,000 in the first year, down to $4,400,000 in the second and third years, and up to $4,770,000 in this last year, with a coronavirus bump to $8,084,275 last year. Miles’s contract was relatively tiny: $400,000 each year for five years, except for FY2021, when CRF bumped their take to $425,000.
Lawrence and Schiller has lots of other state contracts—Public Safety, Labor and Regulation, Board of Regents, Governor’s Office of Economic Development…—but none of them are the multi-year eight-figure deals that the tourism contracts are. Lawrence and Schiller’s only current seven-figure state contract is this five-year $6,050,000 contract with Public Safety to remind us not to jerk and drive on our way to dying on Mars.
One could argue that the best people to tell the world what’s so great about South Dakota are the people who love it enough to live here every darn day. But then again, our market is people elsewhere. Those people may be looking for different things than South Dakotans would expect or grasp. Perhaps people from outside South Dakota can better understand the mindset of tourists elsewhere and help them connect those various desires with what they can find in South Dakota. The Department of Tourism has taken that outside-eyes approach with half of its marketing budget for the last five years; we’ll see what happens starting this July when they give outside eyes full responsibility for South Dakota’s tourism advertising.
Related Economic Reckoning: Hiring out-of-state firms, as Governor Kristi Noem did to tell the world that South Dakota is On Meth™, exports some of our tax dollars and denies us the chance to use our own ad spending to stimulate local business on Phillips Avenue and around Main Street Square. But research on advertising return on investment commissioned by SD Tourism from Longwoods International contends that the $4.3 million that South Dakota spent on an ad campaign in 2018 produces 1.3 million trips, $176 million in visitor spending, and $13.2 million in state and local taxes. Thus, each ad dollar, even if sent to New York City, may return $3 in taxes and $41 dollars in business activity.