Question

ROI Case Study – Teams of Two are assigned

The office of Tourism in Maine reported that in 2015 visitors increased by 2.9% (33,853,851 total visitors) and nearly 13% were first-time visitors. The estimated economic impact to Maine is over $8.2 billion, with 98,932 jobs supported by Maine tourism! Total expenditures was $5.6 billion. In addition, 71% of Mainers took a vacation in their home state and 89% recommended Maine as a vacation destination.

Based on the Maine’s Tourism Department summarizing direct response evaluations from visitors, first-time visitors attributed Maine’s ad campaign drawing them to Maine for their vacation. The total print ad campaign expenditure was: $200,000.00, which included four single-page, bleed ads placed throughout the year in key city Sunday newspapers throughout New England: Massachusetts, New Hampshire, Vermont, Rhode Island, and Connecticut. One of their ads from this campaign can be viewed in the link provided. The advertising rate for a full-color, full-page ad is $10,000.00.

Please calculate the following and show your work:

1. What is the overall profit for Maine during 2015?

2. What is the revenue per visitor?

3. What is the profit per visitor?

4. What is the number of first-time visitors?

5. What is the total revenue from first-time visitors?

6. What is the profit per first-time visitor?

7. Based on the advertising rate for a full-page ad, how many more new visitors would they need to cover the cost of a fifth ad, throughout New England States?

Answer 1

1. Overall profit

= Total Earning - Total Expenditures = $ 8.2 bn - $ 5.6 bn = $ 2.6 bn

2. Revenue per Visitor

= Total Revenue/ Total Visitors = $ 8.2 bn / 33,853,851 = $242.22

3. Profit Per Visitor

= Total Profit/ Total Visitors = $ 2.6 bn/ 33,853,851 = $ 77.42

4. No. of First Time Visiotrs

= Total Visitors * Rate = 33,853,851 * 13% =4,401,000

5.Total Revenue from First Time Visitors

= No. of First Time Visitor * Revenue per visitor = 4,401,000 * $242.. = 1.065 bn

6.Profit per First Time Visitors = $ 77.42

7. New Visitor to Cover the Cost of Fifth Add

= cost of advertising/profit per new visitor = 50000/ 77.42 = 646 Visitors