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In-depth Analysis on Operation Trends and Financial Structure of DMOs 4. Size of Budget Expenditure and Detailed Expenditure Structure

4. Size of Budget Expenditure and Detailed Expenditure Structure
As of 2013, the total budget expenditure of DMOs in North America was about 5.8 million US dollars. To be specific, DMOs spend 49.6% (3.2 million US dollars) of their budget expenditure on marketing and advertisement expenses. 38.9% (2 million US dollars) are allocated to personnel expenses and 11.5% (0.61 million US dollars) to administration. This trend appears commonly regardless of DMO size. The bigger a DMO is, the less the administration costs and personnel expenses but the higher marketing expenses are. It demonstrates that a large DMO tends to promote marketing activities more lively.

Personnel Expenses: The Administration Division and Sales/Marketing Division Allocate Relatively More Budget to Personnel Expenses

According to the survey results, more than a quarter of DMOs hired more employees for permanent positions in 2013 while only 10% of respondents had a personnel reduction. Overall, the number of DMO personnel has increased. On average, there are 13 (median) permanent workers and 14 (median) full-time workers working in a DMO. An analysis on personnel expenses by division shows that the administration division (finance & personnel) has personnel expenses of 26.75%, which is the highest. Convention sales and marketing division has 23.5%, and leisure division has 13.1%. On the other hand, the membership division and IT/technology management division have low percentages of 3.3% and 2.1% respectively.

Marketing/PR Expenses: 21% of Marketing/PR Expenses are Spent in Advertisement

Upon analyzing marketing/PR expenses by division, most marketing expenses are spent by the leisure marketing division (27.0%), followed by the convention sales and marketing division (22.9%) and the communications and PR division (10.5%). When these outcomes are compared with personnel expenses, for example, the leisure marketing division spends personnel expenses of 13.1% and marketing/PR expenses of 27.0%, which means marketing/PR spending is higher than personnel spending. On the other hand, the convention sales and marketing division spend personnel expenses of 23.5% and marketing expenses of 22.9%, suggesting that this division is more labor-intensive than the leisure marketing division. Subsections of expenditures related with DMO marketing/PR activities indicate that spending in an advertisement is dominant (21.0%). The remainders are printing (3.3%), participating in industrial exhibitions (2.7%), and travel and entertainment (2.6%). Besides, administration costs account for 11.5% ($600thousand) of the total expenditure.

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