Audit says $211 million contract for NY economic development ads shows no tangible results

Markets Associated Press

The $211 million state advertising contract intended to help boost the economy has shown no tangible results, New York auditors reported Monday.

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The Empire State Development Corp. in 2011 awarded the contract to BBDO USA LLC, an advertising and marketing agency, for up to $50 million and has increased it four times.

In their report, state comptroller's auditors looked at the program from December 2011 to November 2014, concluding that ESDC got the advertising services it paid for at a fair price, but it wasn't able to quantify and assess tangible results effectively.

"In terms of validating the payback and benefit of advertising, specifically with the Start-Up Program, we think that shows a very weak connection, not the kind of return one might have thought," Comptroller Thomas DiNapoli said. His office also reviewed the contract and amendments in advance.

Of the total, $36.5 million was to promote tourism and business following Hurricane Sandy, while $175 million was to promote the Cuomo administration's Start-Up NY economic program, as well as tourism, Taste NY and Masterbrand initiatives for New York products and services.

Empire State Development spokesman Jason Conwall said the audit ignored metrics in place to measure the effectiveness of multiple ad campaigns. Independent research has shown "great strides in improving perceptions of New York State, creating greater awareness of our economic development programs, increasing the perception that New York is a good or excellent place to do business by 122 percent among executives from out of state, as well as attracting more tourists to spend their vacations here," he said.

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DiNapoli said his auditors will continue to examine the state's economic programs and is currently looking at the earlier Excelsior jobs program providing tax credits for biotechnology, pharmaceutical, financial services and other companies that create and maintain new jobs or make signification investments. In 2010, it replaced the previous Empire Zones tax incentives for businesses and was amended in 2013.

The report recommended the economic development agency set specific target outcomes to monitor performance, go beyond small focus groups to measure effectiveness, and that ESDC agreed to have its marketing agency report on performance measurements in future contracts.

The agency said its aims included increasing traffic to state websites to learn more about New York, improving the state's ratings as a tourist destination and increasing its consideration as a place for people to move or expand a business.

ESDC said indicators of the marketing effect included a 530 percent increase in traffic to StartUpNY.gov when the ads are on television, 52 percent of New York-based executives and 26 percent from out of state had seen at least one commercial and more than half the executives in both groups said they believe the state is a good place to do business, both numbers up substantially since 2013.