Commission Agenda Item No. 2
Exhibit A

PROMOTIONAL DRAWING RULES
PROPOSAL PREAMBLE

1.  Introduction.

         The Texas Parks and Wildlife Department (the department) proposes new §51.750, concerning Promotional Drawings. The proposed new rule would authorize the executive director of the department to approve drawings for promotional hunting, fishing, and special event packages among persons who provide the department with valid email addresses and satisfy certain additional conditions. The proposed new rule is intended to facilitate enhanced communication with members of the public in support of the department’s mission to manage and conserve the natural and cultural resources of Texas and to provide hunting, fishing, and outdoor recreation opportunities for the use and enjoyment of present and future generations.  See, Tex. Parks & Wild. Code §§1.011, 11.043(c)(6), 13.001, and 13.005.

         Under Parks and Wildlife Code, §11.0271, the department may conduct public drawings to select applicants for public hunting programs, packages, or events. Under Parks and Wildlife Code, §11.0272, the department may conduct public drawings to select applicants for special fishing or other special programs, packages, or events. Under Parks and Wildlife Code, §42.012, the commission may waive the fee for a hunting license for a resident who is participating in an event sponsored or co-sponsored by the department with the approval of the executive director. Under Parks and Wildlife Code, §46.002, a person who is participating in an event sponsored or co-sponsored by the department with the approval of the executive director is exempt from fishing license requirements. Under Parks and Wildlife Code, §50.001, the commission is required to establish combination licenses or license packages for hunting, fishing, or other activities and may establish fees for combination license or license packages, provided the fee is less than the fees for the individual components of the package. Under Parks and Wildlife Code, §13.015, the commission may establish park user fees. Under Parks and Wildlife Code, §81.403, the department may issue a permit authorizing access to public hunting land or for specific hunting, fishing, recreational, or other use of public hunting land or a wildlife management area and the commission is required to prescribe the fees and conditions for the issuance and use of such permits by rule.

         Email is one of the most effective and cost-efficient vehicles for increasing revenue and engagement, creating an avenue for ongoing communications with customers, and for reaching and recruiting new and diverse audiences to help achieve outreach goals. There are nearly three times as many email accounts as there are Facebook and Twitter accounts combined (http://emailcritic.com/wp-content/uploads/2011/09/the_value_of_email_marketing_large.jpg), which makes email the most widely-used digital channel, with 91% of all U.S. consumers using it daily (http://www.mckinsey.com/insights/marketing_sales/why_marketers_should_keep_sending_you_emails).

         The Direct Marketing Association estimates that for every dollar spent on email marketing, the average return on investment is $44.25 (http://keystoneclick.com/blog/infographics/value-email-marketing). Smart Insights research indicates that businesses experienced 20% higher daily revenue on days that they sent email marketing messages versus days that they did not (http://www.smartinsights.com/email-marketing/email-marketing-analytics/measuring-the-unmeasured-value-of-email-marketing/), and the McKinsey Research Study estimated that email drives purchases at a rate roughly three times higher than social media with an average order value that is 17% higher (http://www.mckinsey.com/insights/marketing_sales/why_marketers_should_keep_sending_you_emails). In light of these factors, email marketing strategies are a sound business practice.

         At the current time, the department has valid email addresses for only a small percentage of existing customers (for example, 5% of  recreational license purchasers, 23% of Texas Parks and Wildlife magazine subscribers, 24% of persons who registered boats, and 31% of State Park Pass purchasers).  In order to enhance its ability to create and sustain communications with customers, the department wishes to make a robust effort to gather valid email addresses. The intent of the department is to develop a reliable and effective communications link with customers and constituents who would like to know more about the department, what the department does, and opportunities to participate in activities central to the department’s mission, such as hunting and fishing, visiting state parks and participating in outdoor recreation and conservation practices.

         The department is charged with providing outreach and education regarding the wise use and conservation of fish and wildlife resources; with increasing participation in outdoor recreation; and, with providing education and information about a variety of topics regarding conservation and recreation. See, Tex. Parks & Wild. Code, §§11.0181, 11.033(a)(2), 11.035(b)(2), 11.054(a)(1), 13.017(a), 31.002, and 88.007(d).  As a result, the department currently produces a number of targeted e-newsletters and email updates to increase engagement and reach new audiences. For example, the State Parks Getaways e-newsletter, sent on a bi-monthly basis to more than 149,000 subscribers, provides information on upcoming park events, educates about conservation initiatives, and promotes park programs such as the Junior Ranger Program and Texas Outdoor Family.

         The department has conducted email marketing tests on a limited basis; in every case, the use of email by itself or in conjunction with direct mail has resulted in increased revenue. In 2013, monthly renewal reminder emails sent to State Park Pass holders throughout the year resulted in a 3% increase in sales ($56,420) compared to customers who received no email reminder. In 2012, the department employed email marketing to solicit donations for state parks with an email sent to state park visitors, resulting in more than $32,000 in donations within a 24-hour period. And for the past several years, Texas Parks & Wildlife magazine has conducted successful email marketing efforts during the holidays that have resulted in increased subscriptions and net revenue.

         Using email in combination with direct mail has also proven to be effective. In 2013 the department partnered with the Recreational Boating and Fishing Foundation on a fishing license marketing effort. Anglers who received both a direct mail postcard and an email reminder exhibited the highest response rate, resulting in a 1.91% increase in sales (more than enough to cover the cost of the campaign).  In 2012, the department partnered with the National Shooting Sports Foundation to test the effectiveness of renewal marketing to hunters. Sending a direct mail postcard in combination with email proved to be the most effective strategy, resulting in a 1.29% increase in sales and a positive return on investment. Similarly, in 2013, the response rate of customers who received both direct mail and email for the Big Time Texas Hunts Program (a department drawing for a suite of premium hunting opportunities) was 33%, double the response rate of people who received only direct mail (16%).

         Other state agencies have proven the effectiveness of email coupled with social media at retaining existing customers and generating additional revenue. For example, a pilot study conducted by the Florida Fish and Wildlife Conservation Commission and evaluated by Southwick Associates in 2011 demonstrated that email together with social media can reduce “churn” (the tendency of some persons to purchase licenses irregularly, rather than annually) of hunting license purchasers. As a result of their efforts, nearly 6,400 more people bought a hunting license than would have without the marketing strategy, generating more than $300,000 in additional revenue (http://www.southwickassociates.com/wp-content/uploads/downloads/2014/06/July2014Newsletter_Long_PH.pdf).

         The department’s current contract with its email service provider allows for an unlimited amount of emails to be sent for an annual fee of $25,389.  Collecting additional email addresses will enable the department to communicate with customers and constituents in a manner that is efficient, sustainable and fiscally sound in order to educate, inform and engage Texas citizens in support of conservation and recreation, thus fulfilling the department’s mission and the goals of the department’s Land and Water Resources Conservation and Recreation Plan. See, Tex. Parks & Wild. Code, §11.104.

         The email addresses collected by the department under the provisions of the proposed new section would be protected from public disclosure under the provisions of Government Code, §552.137, and would be used only for department purposes and would not be publicly disclosed.  The department also stresses that customers will easily be able to opt out of participation.

         Proposed new §51.750(a) would authorize the executive director of the department to approve specific promotional event packages to be made available to individual members of the public by means of random drawing. The department believes that that it is prudent to establish reasonable limitations on the scope and frequency of drawings for promotional event packages. Therefore, the proposed new subsection would stipulate that the aggregate value of the components of event packages (not including goods or services provided or paid for by third parties) not exceed $5,000 for any fiscal year; that the projected value or benefit to the department of any specific promotional event package equal or exceed the costs of the components of the package (not to include package components provided or paid for by third parties); and that the terms and conditions of each drawing for a promotional event package covered by the proposed section be enumerated.

         Proposed new §51.750(b) would set forth the various types of goods and services that could be included in packages authorized by the executive director pursuant to the proposed new section.

         Proposed new §51.750(c) would provide that a person who gives the department a valid email address and purchases an item listed in the rule (recreational hunting, fishing, or combination license; state parks annual entrance permit; entry and/or lodging at a state park, state natural area, wildlife management area, or other facility owned, leased, or operated by the department; one-year subscription to Texas Parks & Wildlife magazine); or who subscribes to one or more of the department’s email subscription topics or pays a specified entry fee not to exceed $25 may be entered into a specified drawing for a promotional event package. Promotional event packages would consist of a specified combination of a recreational hunting, fishing, or combination hunting and fishing license (stamp endorsements included); a state parks annual entrance permit; a one-year subscription to Texas Parks and Wildlife magazine;  entry and/or lodging at a state park, state natural area, wildlife management area, or other facility owned, leased, or operated by the department; hunting or fishing privileges (including all necessary permits) on lands owned or leased by the department, including a state park, wildlife management area, or state natural area; or goods, products, or services provided to the department by a third party.

         Proposed new §51.750 (d) would stipulate that the department notify drawing winners via the email address provided at the time of entry. Since the point of conducting the drawings is to encourage customers to furnish the department with a reliable email address for future communications efforts, notification via valid email address will discourage the use of spurious email addresses simply to obtain a benefit. The proposed new subsection also would stipulate that persons who satisfy an entry requirement by subscribing to the department’s email updates must be subscribed at the time of the drawing in order to win. If the means of entry for the promotional event package is a subscription to one or more of the department’s email topics (the only option that does not involve the payment of an entry fee or purchase of a license, park visitation, or magazine subscription), the entrant would be required to be subscribed at the time the drawing is conducted in order for the department to be able to notify them should they be selected.

         Proposed new §51.750(e) would require the department to publish specific information regarding each promotional event package drawing on the department’s website. Because each special promotional event will be unique, the department considers that it is impractical to exhaustively delineate the many possible permutations of drawing requirements by rule. The proposed new rule would set forth the most important components of the process and the department will provide detailed information on each drawing by means of the department’s website.

         Proposed new §51.750(f) would provide that a person who is selected to receive a magazine subscription, state parks annual pass, or recreational hunting, fishing, or combination hunting and fishing license that the person already holds will be issued the subscription, pass, or license at no cost valid at the time of renewal or for the following year. Obviously, it would be redundant and counterproductive to award a magazine subscription, parks pass, or recreational hunting or fishing license to a person who already possesses one of those items (in the case of recreational licenses, the issuance of more than one of any license in any license year is prohibited by statute); therefore, the proposed new rule would allow the issuance of the drawn item for the following year.

         Proposed new §51.750(g) would stipulate that a promotional event package may not be sold, exchanged for anything of value, or transferred to another person. The department believes that only the person who enters a drawing should be able to receive a promotional event package.

2. Fiscal Note.

         Darcy Bontempo, Director of Marketing, has determined that for each of the first five years the rule as proposed is in effect, there will be minimal fiscal implications to state government as a result of enforcing or administering the rule. The department notes that the inherent difficulty in quantifying the monetary value of enhanced communication with customers influences this analysis; however, it is the intention of the department that the proposed rule be revenue neutral or revenue positive. The value of the licenses, passes, permits, entry fees, lodging fees, and magazine subscriptions to be offered at no charge as part of promotional drawings is therefore to be capped at $5,000 per fiscal year. Based on response rates from examples noted earlier in this preamble, the department could realize additional revenue from targeted marketing efforts that utilize email addresses collected as a result of these promotional drawings. Additionally, there is the potential for the promotional drawings themselves to generate increased sales should the means of entry require the purchase of department products; however, the department has no relevant historical data upon which to base an estimate.  Additionally, there could be increased revenue to the department in the form of a participation fee of $25 or less per person per drawing; however, because it is likely that the preponderance of participants will be entered by virtue of either having subscribed to the email updates or purchasing a license, pass, or magazine subscription, the department believes that revenue implications, although positive, will be slight.

         Additionally, the department notes that the proposed new rule will be implemented using existing personnel and systems; thus there will be no costs above current operational costs that will be incurred.

         There will be no fiscal implications to other units of state or local governments as a result of enforcing or administering the rule.

3. Public Benefit/Cost Note.

         Ms. Bontempo also has determined that for each of the first five years the rule as proposed is in effect:

         (A) The public benefit anticipated as a result of enforcing or administering the rule as proposed will be the enhanced ability of the department to communicate with the public and disseminate information of interest to the public as well as to encourage and solicit public participation in the department’s important conservation and recreation mission.

         (B) Under the provisions of Government Code, Chapter 2006, a state agency must prepare an economic impact statement and a regulatory flexibility analysis for a rule that may have an adverse economic effect on small businesses and micro-businesses. As required by Government Code, §2006.002(g), the Office of the Attorney General has prepared guidelines to assist state agencies in determining a proposed rule’s potential adverse economic impact on small businesses. Those guidelines state that an agency need only consider a proposed rule’s “direct adverse economic impacts” to small businesses and micro-businesses to determine if any further analysis is required. The department considers “direct economic impact” to mean a requirement that would directly impose recordkeeping or reporting requirements; impose taxes or fees; result in lost sales or profits; adversely affect market competition; or require the purchase or modification of equipment or services. The department has determined that the rule does not directly affect any small business or microbusiness; therefore, neither the economic impact statement nor the regulatory flexibility analysis described in Government Code, Chapter 2006, is required.

         There also will be no adverse economic effect on persons required to comply with the rule as proposed.

         (C) The department has not filed a local impact statement with the Texas Workforce Commission as required by Government Code, §2001.022, as the department has determined that the rule as proposed will not impact local economies.

         (D) The department has determined that there will not be a taking of private real property, as defined by Government Code, Chapter 2008, as a result of the proposed rule.

4. Request for Public Comment.