Guidelines for Budget Planning: A Quick Guide for General Managers.
By Josiah Mackenzie
Wednesday, 22nd September 2010
What's the best way to budget for digital communications? That wording is important, because this topic covers more than just marketing.

It includes technology that touches other areas of your operation: customer service, branding, public relations, and most importantly, management efficiency.

Why should you listen to my thoughts in this article? When it comes to finances, it's natural for us to write off advice we see as biased – so I'll clarify my position at the outset. (Especially if you're a new reader here.) I work with a number of hotels in North America, South America and Europe in various advisory roles.

Whether sitting on their board or as a more informal member of the executive team, my job is helping managers such as yourself understand new technology and how to make the best use of the resources they have.

If I was limited to just one piece of advice, it would be:

Invest in people, not technology

The rapid rate of new technology evolution necessitates you invest in people who can understand the changes and apply them to your situation. I'd rather have a team of all-stars to select and use free technology than the best tools in the world and just a mediocre team to operate them. It's important to remember that good employees are always free: they earn your company more money than you pay them in salary.

I'd begin with hiring an impartial, outside advisor. Because this is the primary way I work, I don't expect you to take my word for it. Instead, you should listen to this industry analyst talk about how agencies rip their clients off….and why it's so important to have someone on your team who understands the technology, but has no financial interest in the outcome:

Listen to Patrick Bruce: www.hotelmarketingstrategies.com/pat-bruce-interview

(In other words, having someone like me on your team can help you get a better deal when it comes to negotiating contracts.)

Next, I'd be sure to have an internal champion that can work with this advisor on implementation. (My experience has taught me this external/internal relationship works better than having everything done by an agency or everything done in-house.)

When selecting a marketing ambassador, I look for someone with integrity that I can trust with making decisions without constantly checking in. Someone with strong project management skills to work with various members of your team to turn ideas into actions.

Once you get the right people on the bus, it's important to select the right mix of marketing technologies that fit your situation and will help you reach your goals. Just because a new tactic or social network is getting a lot of attention doesn't mean it will be a good fit for you.

Below is a quick overview of some major digital communications channels, and what you can expect from each. To keep things very practical, I've included major benefits and also the estimated costs for a mid-sized hotel property (in the US dollars).

Website optimization.

This is the art and science of turning more browsers into bookings. The vast majority of hotels have at least a halfway decent website up. The big challenge is making sure it sells well and is easy to find in search engines. It's an ongoing process, but your biggest investment will be at the start — having a professional analyze and make the changes.
  • Best for: Nearly all hotels, because it helps you improve overall profitability – regardless of the other marketing channels you choose.
  • Investment: Varies widely, depending on testing sophistication. Typically $200-700+ per page.
Search visibility improvement.

Attaining top rankings in search engine results is important for bringing new visitors to your website. It needs to be an ongoing part of your Internet marketing campaign: both to improve position and to keep up with competitors that are doing the same thing.
  • Best for: Anyone who wants to increase website visitors for more direct sales.
  • Investment: Usually a one-time fee of $1,000-5,000 for planning, then content development (mentioned below)
Pay-per-click advertising.

This is one of the only advertising methods I recommend, because it's easy to track effectiveness. The flexibility and return on investment can be impressive. You'll need to budget for campaign management, and the actual clicks that you purchase from search engines.
  • Best for: Encouraging direct bookings, especially in a non-competitive market
  • Investment: Usually between $1,000-3,000 monthly per property depending on your bidding aggressiveness; plus account management fees (usually 10-20% of ad spend, with $500 minimum)
    [Note: If you can't afford this, you may want to look into the commission-only PPC program I run: www.hotelmarketingstrategies.com/commission-only-ppc-offer ]
Online reputation management.

I tend to talk a lot about this on this blog, and you are probably aware, this falls into two major categories: monitoring your Web presence, and proactively encouraging positive content.
  • Best for: Hotels where managers care about their reputation in the market
  • Investment: Mostly a staff function, but you can save them time with good reputation monitoring software
E-mail communications.

E-mail software is usually a relatively small expense, so your investment in e-mail marketing will be in people. Specifically, two types of people: the content writers and the marketing specialists. E-mail is a writing-intensive medium, so you need to have someone spend the time to develop this content. The marketing expertise is important to make sure your communications are effective — reaching the right people and generating the right response.
  • Best for: Hotels willing and able to create sophisticated databases, and unique content for each segment of their guests and prospects
  • Investment: Most email software is priced on list size, expect to pay a few hundred dollars each month. Writing costs can be included in the category below.
Content development.

This includes all of the information you publish on and off the web. It includes blogs, websites, articles, and more. Many hospitality companies hire outside freelance journalists to help them with this. The good news is that much of it can be re-purposed for other formats.
  • Best for: Lifestyle hotels and destination resorts
  • Investment: $500-1,500 part-time, $3,000-6,000+ monthly for more intensive projects
Media production.

Producing high-quality photos and videos of your hotel is more or less a one-time expense, but very important for future marketing efforts. You can reuse great photography and videos in many ways, online and off.
  • Best for: Properties with unique design (but the reality is all guests want to look before booking)
  • Investment: $2,500-15,000 for the initial shoot, several thousand more for production
Press relations & media outreach.

This category includes outbound communications such as press releases and media kits, the development of content that interests the media, and relationship building with journalists and media outlets. Along with customers service, this is one of the best applications for social media. Even for mid-sized properties this can be a full-time job — but the return can be excellent. When your hotel gets positive coverage in the media, you get credibility and increased awareness that you cannot buy.
  • Best for: Organizations that can generate unique stories
  • Investment: I spend about 25% of my marketing budget on media relations and outreach (even more if I'm new)
Analytics analysis.

To keep track of the whole program, you need some type of measurement system in place. The good news is that this doesn't have to cost you anything extra. Any good marketing advisor will be able to look beyond the superficial numbers and give you solid strategy insights.
  • Best for: Everyone who cares about measuring their digital efforts.
  • Investment: Free with Google Analytics
Let me help you with this
Deciding on the right marketing mix can be overwhelming, and I'd like to help you. If you give me some background information below, I'll do a quick situation analysis, and then provide you with a complimentary 15-minute telephone consultation to identify opportunities and share a few ways you could implement them.


About the author
This blog is written by Josiah Mackenzie, who enjoys exploring the relationship between emerging technology and the hospitality industry. 

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