Industry sources question Mantana’s decision to award $7M tourism contract to Wisconsin agency
Steve’s breakdown: This is more of a cautionary tale than a lead – unless you’re in Montana. Anyway, as with any Government RFP, the first question you have to ask is whether they would consider hiring an out-of-region agency. You’ll save a lot of time with the answer.
HELENA, MT: After a decade-long partnership with Bozeman advertising agency MercuryCSC, Montana’s Office of Tourism and Business Development recently awarded the state’s $7 million annual marketing contract to a company based in Wisconsin.
The department awarded the contract to Milwaukee agency Hoffman York at the beginning of August using a point system it says is objective to evaluate bidders. But several agencies involved in and familiar with the bidding argue that the process is far from scientific and that the state demonstrated strange behavior bordering on favoritism.
In April, the state received 11 applications, including two from Montana agencies Brickhouse Creative in Bozeman and The Wendt Agency in Great Falls. The applicants were put through a competitive bidding process by a committee that included Jennifer Pelej, bureau chief for the tourism department’s marketing office.
Questions arose early on when officials unexpectedly extended the deadline for the agencies to submit their first response — a 100-plus page document that applicants had weeks to prepare — five hours before it was due. When asked by an applicant about the reason for the extension, Procurement Unit Supervisor Tia Snyder wrote that the state wanted “to give all Offeror’s (sic) a chance to better prepare their response to this solicitation.”
More than a month into the selection process, Pelej also disclosed that her cousin, Jaime Hutchings, works for Hoffman as a VP account supervisor. State procurement officials found no issue with the potential conflict of interest, Pelej told the Chronicle this week.
The committee evaluated bids on criteria from “appropriate skill set and capabilities” to “experience with tourism clients.”
The decision to award the contract came down to agency presentations, which included several categories such as “Understanding of the Montana brand” and “Highly credentialed and qualified staff.” Brickhouse, the points leader after the first two rounds of evaluation, received failing scores in all seven categories, while Hoffman received the highest score of “superior” in all seven. Only one other agency received a single superior score.
“This is a process that is designed to be unbiased and it worked as it is meant to be,” said Pelej. “We couldn’t judge based on preference.”
But several agencies argued that the numerical scoring system hides the inherent subjectivity of the process.
“When you’re talking about more subjective things like marketing it can’t just boil down to numbers,” said Carol Kruger, senior vice president of The Wendt Agency. “There are all sorts of things that come into play.”
According to Pelej, Hoffman won because it fulfilled all the tourism department’s requirements as part of its new “integrated approach” to marketing. The approach includes folding about $500,000 worth of work on the department’s various websites — work that had previously been contracted to a separate company — into the Wisconsin agency’s contract.
“We were looking for brand marketing and destination marketing,” she said. “It’s a combination of the integration of content, that big brand and destination experience that will allow us to do our job better by bringing tourism in this state.”
However, the state itself admitted that the winning agency had little to no experience in destination or tourism marketing. In its scoring, the procurement committee wrote that Hoffman has “no DMO (destination marketing organization) experience.” The company did not return multiple requests from the Chronicle for comment.
“Personally, I would have placed a little more value on their knowledge in the travel and tourism industry,” said Steve Wahrlich, president of the Montana Lodging and Hospitality Association and member of the state’s Tourism Advisory Council.
Several industry members also expressed concern about an out-of-state agency representing the state of Montana.
Part of the state’s requirements for its new agency of record included “Deep knowledge and understanding of the Montana brand, consumer segments, and travel experience,” as well as “Account representation in Montana with additional key staff available for meetings in Helena as needed.”
“For me, the thing that is a bit dismaying is thinking how long it’s taken for me and my staff to ‘get Montana,’” said David Thompson, founder of Brickhouse Creative in Bozeman. “It really is a special thing, and I get worried when someone else not from here is in charge of it. That’s the part that makes me scratch my head a little bit.”
The department also recently issued a $150,000 contract to San Francisco-based marketing research firm Destination Analysts to “identify and provide suggestions on (Montana’s) optimal tourism promotions target audience and overall brand.”
“I think everybody would prefer to have a local agency,” added Wahrlich.
To fulfill the local requirement, Hoffman plans to use Shortgrass Web Development in Great Falls as its representative in Montana, responsible for making trips to Helena to meet with tourism officials. But in its evaluation, the procurement committee noted that the partnership with Shortgrass was insufficient. “Lack depth and breadth of experience we need,” it wrote.
The inclusion of the Great Falls company will inject money into the local economy and add jobs in-state, Pelej said.
“We are supporting a local business that is going to be growing because of this,” she said.
As a result of the loss of its contract with the tourism office, Mercury, the state’s marketing agency of record since 2006, was forced to let go of six employees, about a third of its workforce. The company also moved in May from its location on South Grand Avenue to a new space next to Comma-Q Architecture on Rouse Avenue, though CEO Jeff Welch said the transition was a “normal business move.”
“There’s an impact to us financially, as there is with any contract we lose. That does affect some people’s employment. That’s the way it goes sometimes in our business,” he said.
With other large clients that include Orvis and First Interstate Bank, the CEO said the loss of the tourism contract, while a blow, won’t knock Mercury out.
“It’s not easy to lose an account like that, because it’s significant, but I don’t want to look like we’re dying on the vine here, because we’re not,” Welch said.
During its time contracted with the state, Mercury created strategies for branding and selling Montana to travelers and driving tourism through advertising like the “Get Lost” campaign, as well as through promotional materials, public relations and social media efforts like the hashtag MontanaMoment.
In its proposals to renew Mercury’s contract, which it has done several times over the last 10 years, tourism officials praised the Bozeman agency.
“By applying their expertise in the research, planning, and execution of marketing strategies, (the tourism department) and the State of Montana are meeting tourism marketing goals and continue to increase the rate of the visitation to the state,” Pelej wrote in an email in December 2015.
“Mercury has done an outstanding job with this public relations contract…and we feel it is in the best interest of the state to continue with Mercury. Our media exposure has continued to grow as a result of Mercury’s work on our behalf,” administrator Jeri Duran wrote in 2012.
During Mercury’s tenure, Montana added 1.5 million annual nonresident visitors, whose travel expenditure increased about $500 million during the same period — winning the agency several marketing awards in the process. The various efforts also tripled the state’s return on investment. In 2011, for every dollar invested in the campaign, visitors to Montana spent $157.
“We’ve worked with the state for years, and I stand by the quality of the work we’ve done. The tourism industry is by most measures the strongest it’s been in Montana ever and I think we’ve played a significant role in that,” Welch said.
But despite the apparent success of Mercury’s performance, the tourism department was unhappy with the agency, Welch said.
“They were dissatisfied with our work,” said Welch, noting that the Bozeman agency is still technically under contract until October. “Client agency relationships sometimes go wrong.”
Mercury did not reapply for the new contract because it believed it could not win the bidding process in light of the degraded relationship between itself and the the state, Welch added.
“I don’t have any beef to report on them,” said Pelej. “They did great work with us for a number of years. We had a need to go and find efficiencies and have services that are best in class, and they definitely could have (bid) for that.”
The next few months, as the state transitions to its contract with Hoffman, will be indicative of what to expect in the Wisconsin company’s tenure, industry members said. If and how the agency learns about Montana, not only larger cities like Bozeman, Helena and Billings, will determine its success and the success of the tourism program, Wahrlich added.
“The proof is in the pudding,” he said. “And a lot of people will be watching.”