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    Turn: Forrester The Total Economic Impact Of Turn April 2013 Turn: Forrester The Total Economic Impact Of Turn April 2013 Document Transcript

    • A Forrester Total Economic Impact™ Study Prepared For TurnThe Total Economic Impact Of Turn Audience Suiteand Campaign SuiteProject Director: Michael SpeyerApril 2013
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 1TABLE OF CONTENTSExecutive Summary.................................................................................................................................................................................2 Factors Affecting Benefits And Costs.............................................................................................................................................3 Disclosures...........................................................................................................................................................................................4 TEI Framework And Methodology......................................................................................................................................................5 Analysis......................................................................................................................................................................................................7 Interview Highlights..........................................................................................................................................................................7 Costs....................................................................................................................................................................................................10 Benefits...............................................................................................................................................................................................13 Flexibility............................................................................................................................................................................................14 Risk......................................................................................................................................................................................................15 Financial Summary................................................................................................................................................................................17 Turn Audience Suite and Campaign Suite: Overview....................................................................................................................18 Appendix A: Total Economic Impact™ Overview ...........................................................................................................................19 Appendix B: Glossary............................................................................................................................................................................20 Appendix C: Endnotes..........................................................................................................................................................................21 © 2013, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources.Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and TotalEconomic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additionalinformation, go to www.forrester.com.About Forrester ConsultingForrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging inscope from a short strategy session to custom projects, Forrester’s Consulting services connect you directly with research analysts who applyexpert insight to your specific business challenges. For more information, visit www.forrester.com/consulting.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 2Executive SummaryIn April 2013, Turn commissioned Forrester Consulting to examine the total economic impact and potential return oninvestment (ROI) enterprises may realize by deploying Turn Audience Suite and Turn Campaign Suite. This platformincludes two web applications: Audience Suite, an enterprise data management platform, and Campaign Suite, a digitalmedia buying platform for video, mobile, social and display advertising. The purpose of this study is to provide readerswith a framework to evaluate the potential financial impact of utilizing both Audience Suite and Campaign Suite ontheir organizations.Forrester interviewed one company for this study. The company runs a website that is used by consumers to doresearch into high-value product purchases. The company can track consumers around the web after they leave thecompany’s website (i.e. go “offsite”) and serve advertisements to these consumers at different destination sites. Thecompany monetizes this by selling a range of digital marketing services to product manufacturers and distributors. Thisstudy focuses specifically on the company’s off-site behavioral-targeted advertising service. The consumer data that thecompany gathers from its website serves as the basis for this service, and Audience Suite and Campaign Suite are theapplications that power the service. The interviewed company has been using these web applications for more thanthree years.Based on our analysis, the company experienced the risk-adjusted ROI, costs, and benefits shown in Table 1.Table 1Composite Organization Three-Year Risk-Adjusted ROI1ROI Total benefits(PV)Total costs(PV)Net presentvalue49.7% $21,947,207 ($14,663,114) $7,284,093Source: Forrester Research, Inc. Benefits:o Ability to identify and create new audience segments. Using Audience Suite, the company is able to createnew audience segmentations that it was not able to do previously. This has enabled the company to createnew product offers based on these segments, which has contributed to the company’s top-line growth.Examples of these kinds of segments are “Gadget geeks” or “Hispanic”.o Increased potential number of ad impressions served. Using Campaign Suite and the ad exchanges Turnconnects to, the potential number of impressions that the company can serve by finding its own visitors onexternal sites increased from 250,000 into the billions, which has contributed to top-line growth.o Increased number of ad campaigns it can run. Before engaging with Turn, the company sold and executed100 ad campaigns for its customers. Two years later, the company executed 287 campaigns and is on track to
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 3deliver 350 to 400 campaigns in its third year. This represents a 187% growth in campaign volume over a twoyear period. The company was able to increase the number of ad campaigns because it was able to offer moreaudience segments to its customers and effectively reach them.o Improved click-through rates. The company found that average click-through on the campaigns it has runincreased between 25% and 35% over an 18 month to 36 month period when measured against its internalbenchmark.o Increased cost per action (CPA) efficiency. The company believes that the quality of its data allows it todeliver CPAs that are more efficient than its competitors’. This has directly contributed to competitiveadvantage and increased share of the behavioral-targeted ad market.o Increased agility to respond to customer needs. The dynamic nature of Audience Suite and CampaignSuite allows the company to easily accommodate and respond to how each client executes its behavioral-targeted campaigns, because each client has unique requirements that continue to evolve over time.o Improved campaign reporting and analysis. The reporting tools of Audience Suite and Campaign Suiteallow for sophisticated data analysis, which has strengthened the feedback that the company can provide toits data-hungry clients, and has enabled the company to tune and better understand performance acrosscampaigns. Costs:o Service fees paid to Turn. These fees cover the use of Audience Suite and Campaign Suite, it’s managedservices, and all ad impression purchases.o Labor costs. These are the salaries paid to employees that use Audience Suite and Campaign Suite andmanage the Turn relationship.Factors Affecting Benefits And CostsTable 1 illustrates the risk-adjusted financial results that were achieved by the interviewed company. The risk-adjustedvalues take into account any potential uncertainty or variance that exists in estimating the costs and benefits, whichproduces more conservative estimates. The following factors may affect the financial results that an organization mayexperience: The service fees paid to Turn can vary from month to month, based on platform usage, number of ads purchasedand served, use of managed services, and other factors. Improvements in click-through rates and CPA efficiency are largely driven by Turn algorithms, but they alsodepend on each marketer’s ability to measure the relevant KPIs and apply them to the Turn platform effectively. The ability to identify useful behavioral target audience segments will depend on the quality of each company’sdata and the use of external data sources to augment that data.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 4DisclosuresThe reader should be aware of the following: The study is commissioned by Turn and delivered by the Forrester Consulting group. Forrester makes no assumptions as to the potential return on investment that other organizations will receive.Forrester strongly advises that readers should use their own estimates within the framework provided in thereport to determine the appropriateness of an investment in Audience Suite and Campaign Suite. Turn reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study andits findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaningof the study. The customer names for the interviews were provided by Turn.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 5TEI Framework And MethodologyIntroductionFrom the information provided in the interviews, Forrester has constructed a Total Economic Impact™ framework forthose organizations considering implementing Turn Audience Suite and Turn Campaign Suite. Audience Suite is theenterprise data management platform and Campaign Suite is the digital media buying platform for video, mobile,social, and display advertising. The objective of the framework is to identify the cost, benefit, flexibility, and risk factorsthat affect the investment decision.Approach And MethodologyForrester took a multistep approach to evaluate the impact that Audience Suite and Campaign Suite can have on anorganization (see Figure 2). Specifically, we: Interviewed Turn marketing/sales/consulting personnel and Forrester analysts to gather data relative to AudienceSuite and Campaign Suite and the marketplace for data management platforms (DMPs) and demand sideplatforms (DSPs) in general. Interviewed one company currently using Audience Suite and Campaign Suite to obtain data with respect tocosts, benefits, and risks. Constructed a financial model representative of the interviews using the TEI methodology. The financial model ispopulated with the cost and benefit data obtained from the interviews as applied to the composite organization.Figure 2TEI ApproachSource: Forrester Research, Inc.Forrester employed four fundamental elements of TEI in modeling Audience Suite and Campaign Suite:1. Costs.2. Benefits to the entire organization.3. Flexibility.4. Risk.Constructfinancialmodelusing TEIframeworkWrite casestudyPerform duediligenceConductcustomerinterviews
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 6Given the increasing sophistication that enterprises have regarding ROI analyses related to IT investments, Forrester’sTEI methodology serves the purpose of providing a complete picture of the total economic impact of purchasedecisions. Please see Appendix A for additional information on the TEI methodology.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 7AnalysisInterview HighlightsForrester interviewed a company that provides an online service that is used by consumers to do research into high-value products before making a purchase decision. The company offers a range of digital marketing services that it sellsto its customers (product manufacturers and distributors). The consumer data that it gathers from its website serves asthe basis for the digital marketing services that it offers.We interviewed the senior publishing manager, whose role is to manage his company’s off-site behavioral-targetedadvertising business. Audience Suite and Campaign Suite power this service. The functions that the service performsinclude: Creating audience segmentations based on behavioral, demographic and lifestyle data, which allows thecompany’s customers to target unique segments, such as “Gadget geeks” or “Hispanic.” Tracking consumers around the Web after they leave the company’s website (i.e., go “off-site”) so that ads can beserved to the prospect at different destination sites. Purchasing and serving digital ad impressions to consumers on behalf of its customers.Challenges Before Using TurnPrior to engaging with Turn, the company was limited in the volume and types of consumer data that it gathered andthe number of ads that it could serve. Its prior platform could reach only 5% of its customers’ potential buyers, limitingthe reach of the ad campaigns it could run. For example, if a customer wished to run a campaign that targeted a specificbehavioral profile in a specific metro area, the company would not be able to deliver the required number of adimpressions. Data limitations restricted its ability to create or identify new behavioral audience segments that itscustomers wanted. That platform was a fundamental inhibitor to product expansion and overall business growth.In order to diversify and grow, the company realized that it needed to change its underlying technology platform. Inresponse to its own business needs, broader industry changes, and shifts in its client marketing strategies, the companydecided to pursue a DMP model for data consolidation and market segmentation. At the same time it decided to adopta DSP model to execute digital ad campaigns for its customers.DSP And DMP Selection ProcessIn addition to the typical features and functionality that are found in DMPs and DSPs, the company had three criteriathat the platforms needed to satisfy: Have a strong account/campaign managed-service layer. At the time of product selection (late 2009), thecompany had a team of three people managing approximately 100 campaigns annually. To scale up the numberof campaigns it could manage without increasing its staff overhead, the company wanted a DSP vendor thatoffered sophisticated audience and data management services.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 8 Have audience creation and optimization technology that would allow it to increase its sophistication inbehavioral segmentation. Offer a wide breadth of ad exchanges that the DSP could connect to so that it serves ads to as large an audience aspossible.The company went through a lengthy vetting program before adopting Audience Suite and Campaign Suite. Thevetting process included extensive product testing and running A/B comparisons between the contenders.Using Turn Audience Suite And Turn Campaign SuiteAudience Suite and Campaign Suite are the web applications that power the company’s behavioral-targeted marketingservices that it provides to its customers.Audience Suite gets audience data from the company’s own website, which is overlaid with demographic, lifestyle, andbehavioral data from the Turn ecosystem of integrated data partners. These combined data sources are used for allaudience segmentation work that underlies an ad campaign. Audience segments, created in Audience Suite are feddirectly into Campaign Suite for campaign execution.The company uses a combination of its own staff and managed services from Turn for campaign execution. Turnprovides day-to-day campaign optimization, management, and maintenance services. The company has created a set ofrepeatable business processes for interacting with Turn. The company described its working relationship as being veryclose, with daily discussions around campaign performance and management. The company has the option of in-sourcing the work that Turn does, which it estimates would require hiring three additional full-time staff.Improving Key Performance Indicators Drives The Company’s Financial Success“We have seen click-through rate improvement the longer we have worked with Turn.” - Senior publishingmanagerThe ad campaigns that the company runs on behalf of its customers fall into two basic categories, which have differentkey performance indicators (KPIs): Campaigns that are optimized for click-through rate. In these campaigns, the volume of ads delivered andclick-through rate percentage are examined. Click-through rates are optimized based on customer feedback, andthe company relies on Turn proprietary algorithms to perform the optimization. Campaigns that are optimized for cost per action (CPA). These campaigns require placing a tracking pixel onthe customer’s website. These campaigns are optimized around hitting a specified target CPA, such as $50 fordirections to a store. Using the tracking pixel allows for real-time visibility into campaign performance.According to the interviewee, Turn proprietary algorithms perform campaign optimization in real time, and“optimization happens automatically and campaign performance is always better.” The tracking pixel also allowsfor much richer data collection compared with campaigns that don’t use a tracking pixel (described to Forresteras “100 data points versus 12”), which provided deeper insight into campaign performance.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 9The overall financial success of the company’s behavioral targeted ad business fundamentally depends on improvingclick-through rate or optimizing CPA. We learned that the behavioral-targeted ad business is an incremental strategy;that is, customers will purchase services from the company for a short period, such as one month, and will make adecision to continue spending based on that month’s performance. The ability to optimize a campaign which is inprocess is intimately tied to the Turn platform, which influences the company’s success.Qualitative Benefits Of Using Audience Suite and Campaign SuiteSince using Audience Suite and Campaign Suite, the company has experienced a broad range of benefits. These benefitsinclude: Ability to identify new market segments. Using Audience Suite, the company is able to create new audiencesegments that it was not able to do previously. Examples of this are “soccer moms who live in Atlanta that areshopping for product x” or “Hispanics between the ages of 20 and 30 years.” This has enabled the company tocreate new product offers based on these segments, which has contributed to the company’s top-line growth. Increased potential number of impressions served. Using Campaign Suite and the real-time bidded (RTB) adexchanges that Turn connects to, the potential number of impressions that the company can serve increased from250,000 into the billions. This has allowed the company to exponentially increase campaign reach, which hascontributed to top-line growth. Increased number of ad campaigns it can run. In 2009, before engaging with Turn, the company was able toexecute 100 ad campaigns for its customers. In 2012, the company executed 287 campaigns and is on track todeliver 350 to 400 campaigns in 2013. During this period, it increased its headcount by two full-time employees. Improved click-through rates. The company found that average click-through increased between 25% and 35%over the past 18 to 36 months, when measured against its internal benchmark. According to the interviewee, “Themore campaigns that are run, the more the system can learn, which makes future campaigns run better.” More-efficient CPA. The company believes that the quality of its data allows it to deliver CPAs that are moreefficient than its competitors’. This has directly contributed to competitive advantage and increased share of thebehavioral-targeted ad market. In one example, a new client gave the company a single chance valued at $100,000to work on its behavioral-targeted campaign. The efficiency of the CPA led to a $1 million full-year engagement. Increased agility to respond to customer needs. The dynamic nature of Audience Suite and Campaign Suiteallows the company to easily accommodate and respond to how each client executes its behavioral-targetedcampaigns, because each client utilizes unique KPIs. Improved campaign reporting and analysis. Turn real-time applications provide reporting tools forsophisticated data analysis, which has strengthened the feedback that the company can provide to its data-hungryclients. The company believes that the strength and quality of its reporting are competitive differentiators thatallows it to compete more effectively.Framework AssumptionsTable 2 provides the model assumptions that Forrester used in this analysis.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 10Table 2Model AssumptionsRef. Metric Calculation ValueA1 Entry-level annual salary $35,000A2 Salesperson total annual salary $55,000A3 Salary overhead multiplier 1.2Source: Forrester Research, Inc.The discount rate used in the PV and NPV calculations is 10% and time horizon used for the financial modeling is threeyears. Organizations typically use discount rates between 8% and 16% based on their current environment. Readers areurged to consult with their respective company’s finance department to determine the most appropriate discount rateto use within their own organizations.CostsWe learned that the costs the company incurred to deploy and operate Audience Suite and Campaign Suite were: Monthly service fees paid to Turn. Incremental labor costs as a result of business growth.No specific startup costs such as data conversion and cleaning or user training were incurred.Service Fees Paid To TurnThe monthly service fees paid to turn cover the following: Platform fees for use of Turn Audience Suite. Service fees for Turn Campaign Suite and managed services. Costs for purchasing ad impressions.The fees the company pays vary with the amount of media purchased, managed services delivered, and various otherfactors. The company’ monthly platform fees typically average between $50,000 and $60,000, but may be as high as$150,000 when very large campaigns are being run. Ad impressions are purchased from the ad exchanges on a CPMbasis at the final auction price per impression.For this analysis, we assume average monthly fees of between $50,000 and $60,000, depending on business volume. Wealso assume additional ad hoc fees of $30,000 annually, for periods of higher campaign volume. We discount the initialyear’s expense by five-twelfths to reflect the partial year’s engagement with Turn. The company pays an average $2
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 11CPM for ad impressions. The company’s total three-year costs are of $15.5 million (see Table 3). Forrester encouragesreaders to consult with Turn to determine what their fees would be, as these can be highly variable depending on theproducts and services purchased, and impression volume.Table 3Service Fees Paid To TurnRef. Metric Calculation Initial Year 1 Year 2 Year 3 TotalB1Monthly platform feepaid to Turn($20,833) ($50,000) ($55,000) ($60,000)B2Annual platform paid toTurnB1*12 ($250,000) ($600,000) ($660,000) ($720,000)B3Ad hoc expenses forlarge campaigns($15,000) ($30,000) ($40,000) ($60,000)B4 Costs for ad impressions (1,500,000 (3,120,000) (3,300,000) (5,250,000Bt Service fees paid to Turn B2+B3+B4 ($1,765,000 ($3,750,000) ($4,000,000) ($6,030,000)Bto Total (original) ($1,765,000) ($3,750,000) ($4,000,000) ($6,030,000) ($15,545,000)Source: Forrester Research, Inc.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 12Labor CostsOver the three years of working with Turn, the interviewed company experienced incremental business growth. Inaddition to its existing employees, the company hired two additional employees to manage this additional business. Forthis analysis, we assume an associate employee annual salary of $35,000 and an account manager salary level of $55,000.We also assume that new employees were hired at the beginning of Year 2. Assuming a salary overhead of 20%, the totallabor expense over the 3 year period is $728,500 (see Table 4). Note that that the initial-year salaries are discounted byfive-twelfths to reflect the partial year that Turn was used.Table 4Labor CostsRef. Metric Calculation Initial Year 1 Year 2 Year 3 TotalC1Number of existingassociates2 2 2 2C2 Number of new associates 1 1C3Associate fully loadedsalaryA1*A3 ($42,000) ($42,000) ($42,000) ($42,000)C4 Subtotal: associate salaries C3*(C1+C2) ($35,000) ($84,000) ($126,000) ($126,000)C5Number of existingaccount managers1 1 1 1C6Number of new accountmanagers1 1C7Salesperson fully loadedcompensationA2*A3 ($66,000) ($66,000) ($66,000) ($66,000)C8 Subtotal: sales salaries C7*(C5+C6) ($27,500) ($66,000) ($132,000) ($132,000)Ct Labor costs C4+C8 ($62,500) ($150,000) ($258,000) ($258,000)Cto Total (original) ($62,500) ($150,000) ($258,000) ($258,000) ($728,500)Source: Forrester Research, Inc.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 13Total CostsThe total costs incurred by the company are $16.2 million (see Table 5).Table 5Total CostsRef. Cost category Initial Year 1 Year 2 Year 3 TotalBto Service fees paid to Turn ($1,765,000) ($3,750,000) ($4,000,000) ($6,030,000) ($15,545,000)Cto Labor costs ($62,500) ($150,000) ($258,000) ($258,000) ($728,500)Total costs (original) ($1,827,500) ($3,900,000) ($4,258,000) ($6,288,000) ($16,273,500)Source: Forrester Research, Inc.BenefitsThe company experienced numerous benefits after adopting Audience Suite and Campaign Suite, as described in theInterview Highlights section. Two quantifiable benefits — improved click-through rates and increased CPA efficiency— were fundamental to the company’s overall business growth.Forrester notes that improved click-through rates and increased CPA efficiency are important to the company’scustomers or any company that may wish to use Audience Suite and Campaign Suite, because improvements in theseareas may result in greater efficiency of advertising spend.Incremental Revenue Growth Attributable To TurnThe benefits described in the Interview Highlights section collectively contributed to the revenue growth that thecompany experienced in its behavioral-targeted marketing business. Neither Forrester nor the company was able toattribute a percentage of revenue growth to each specific benefit. Overall revenue was the only financially quantifiablebenefit that the company described to Forrester. The company attributes 80% of its revenue growth to Turn.In the first five months of using Audience Suite and Campaign Suite, revenues were $4.5 million. By the second full yearof using Turn, revenues had grown to $8.2 million, and the company was projecting revenues of $10 million to $11million by the end of the third year. The average revenues experienced by the company are shown in Table 6.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 14Table 6Incremental Revenues Attributable To TurnRef. Metric Calculation Initial Year 1 Year 2 Year 3 TotalD1 Revenues $4,500,000 $9,400,000 $8,200,000 $10,500,000D2Percentage revenuesattributable to Turn80% 80% 80% 80% 80%DtIncremental revenuesattributable to TurnD1*D2 $3,600,000 $7,520,000 $6,560,000 $8,400,000Dto Total (original) $3,600,000 $7,520,000 $6,560,000 $8,400,000 $26,080,000Source: Forrester Research, Inc.Total BenefitsThe total benefits are $26.1 million (see Table 7).Table 7Total BenefitsRef. Benefit category Initial Year 1 Year 2 Year 3 TotalDtoIncremental revenues attributable toTurn$3,600,000 $7,520,000 $6,560,000 $8,400,000 $26,080,000Total benefits (original) $3,600,000 $7,520,000 $6,560,000 $8,400,000 $26,080,000Source: Forrester Research, Inc.FlexibilityFlexibility, as defined by TEI, represents an investment in additional capacity or capability that could be turned intobusiness benefit for some future additional investment. This provides an organization with the “right” or the ability toengage in future initiatives but not the obligation to do so. There are multiple scenarios in which a customer mightchoose to implement Audience Suite and Campaign Suite and later realize additional uses and business opportunities.Flexibility would also be quantified when evaluated as part of a specific project (see Appendix A).The company anticipates that its use of Turn services will increase with business growth. The company had no concreteplans to adopt any other Turn products or services.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 15RiskForrester defines two types of risk associated with this analysis: implementation risk and impact risk. “Implementationrisk” is the risk that a proposed investment in Audience Suite and Campaign Suite may deviate from the original orexpected requirements, resulting in higher costs than anticipated. “Impact risk” refers to the risk that the business ortechnology needs of the organization may not be met by the investment in Audience Suite and Campaign Suite,resulting in lower overall total benefits. The greater the uncertainty, the wider the potential range of outcomes for costand benefit estimates.Quantitatively capturing investment and impact risk by directly adjusting the financial estimates results in moremeaningful and accurate estimates and a more accurate projection of the ROI. In general, risks affect costs by raisingthe original estimates, and they affect benefits by reducing the original estimates. The risk-adjusted numbers should betaken as “realistic” expectations since they represent the expected values considering risk.The following implementation risk that affects costs is identified as part of this analysis: The service fees paid to Turn can vary from month to month, based on platform usage, number of adimpressions purchased and served, use of managed services, and other factors.The following impact risks that affect benefits are identified as part of the analysis: Improvements in click-through rates and CPA efficiency are largely driven by Turn algorithms but also dependon underlying data quality and each marketer’s ability to measure these KPIs and apply Turn technologyeffectively. The ability to identify useful behavioral target audience segments will depend on the quality of each company’sdata and the use of external data sources to augment that data.The company noted that its close working relationship with Turn and use of Turn’s managed services has been criticalto its success. Other organizations that wish to engage with Turn should factor this into their decision-making process.Table 8 shows the values used to adjust for risk and uncertainty in the cost and benefit estimates. The TEI model uses atriangular distribution method to calculate risk-adjusted values. To construct the distribution, it is necessary to firstestimate the low, most likely, and high values that could occur within the current environment. The risk-adjusted valueis the mean of the distribution of those points. Readers are urged to apply their own risk ranges based on their owndegree of confidence in the cost and benefit estimates.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 16Table 8Cost And Benefit Risk AdjustmentsCosts LowMostlikelyHigh MeanService fees paid to Turn 100% 100% 125% 108%Labor costs 98% 100% 105% 101%Benefits LowMostlikelyHigh MeanIncremental revenues attributable to Turn 92% 100% 105% 99%Source: Forrester Research, Inc.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 17Financial SummaryThe financial results calculated in the Costs and Benefits sections can be used to determine the return on investment,net present value for the organization’s investment in Audience and Campaign suites. These are shown in Table 9below.Table 9Cash Flow — Non-Risk-AdjustedCash flow — Original estimatesInitial Year 1 Year 2 Year 3 Total Present valueCosts ($1,827,500) ($3,900,000) ($4,258,000) ($6,288,000) ($16,273,500) ($13,616,230)Benefits $3,600,000 $7,520,000 $6,560,000 $8,400,000 $26,080,000 $22,168,896Net benefits $1,772,500 $3,620,000 $2,302,000 $2,112,000 $9,806,500 $8,552,665ROI 62.8%Source: Forrester Research, Inc.Table 10 below shows the risk-adjusted ROI and NPV values. These values are determined by applying the risk-adjustment values from Table 9 in the Risk section to the cost and benefits numbers in Tables 5 and 7.Table 10Cash Flow — Risk-AdjustedCash flow — Risk-adjusted estimatesInitial Year 1 Year 2 Year 3 Total Present valueCosts ($1,969,325) ($4,201,500) ($4,580,580) ($6,772,980) ($17,524,385) ($14,663,114)Benefits $3,564,000 $7,444,800 $6,494,400 $8,316,000 $25,819,200 $21,947,207Net benefits $1,594,675 $3,243,300 $1,913,820 $1,543,020 $8,294,815 $7,284,093ROI 49.7%Source: Forrester Research, Inc.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 18Turn Audience Suite and Campaign Suite: OverviewTurn Audience Suite, is a data management web application that unifies all available customer data (online or offline,first-party or third-party) to make it digitally meaningful. This allows for a more complete picture of a marketersaudience groups and a better understanding of their motivations, which enables them to deliver a consistent, targetedpresence across channels and devices. They can also track their audience1s changing behaviors and attributes in realtime and continually refine their segmentation and their messaging accordingly.Turn Campaign Suite, is a demand-side platform that connects a marketer to virtually every available online impressionacross video, display, mobile, and social inventory sources, as well as to direct publisher sites. The Turn algorithmscombine this with real-time campaign data, thereby equipping a marketer with the tools to build and execute theirstrategies, and to learn from the results. At the same time, Campaign Suite gives a marketer the ability to plan andcontrol their campaigns across multiple channels and direct publishers from a single dashboard.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 19Appendix A: Total Economic Impact™ OverviewTotal Economic Impact is a methodology developed by Forrester Research that enhances a company’s technologydecision-making processes and assists vendors in communicating the value proposition of their products and servicesto clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives toboth senior management and other key business stakeholders.The TEI methodology consists of four components to evaluate investment value: benefits, costs, risks, and flexibility.BenefitsBenefits represent the value delivered to the user organization — IT and/or business units — by the proposed productor project. Often product or project justification exercises focus just on IT cost and cost reduction, leaving little room toanalyze the effect of the technology on the entire organization. The TEI methodology and the resulting financial modelplace equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect ofthe technology on the entire organization. Calculation of benefit estimates involves a clear dialogue with the userorganization to understand the specific value that is created. In addition, Forrester also requires that there be a clear lineof accountability established between the measurement and justification of benefit estimates after the project has beencompleted. This ensures that benefit estimates tie back directly to the bottom line.CostsCosts represent the investment necessary to capture the value, or benefits, of the proposed project. IT or the businessunits may incur costs in the form of fully burdened labor, subcontractors, or materials. Costs consider all theinvestments and expenses necessary to deliver the proposed value. In addition, the cost category within TEI capturesany incremental costs over the existing environment for ongoing costs associated with the solution. All costs must betied to the benefits that are created.RiskRisk measures the uncertainty of benefit and cost estimates contained within the investment. Uncertainty is measuredin two ways: 1) the likelihood that the cost and benefit estimates will meet the original projections, and 2) the likelihoodthat the estimates will be measured and tracked over time. TEI applies a probability density function known as“triangular distribution” to the values entered. At minimum, three values are calculated to estimate the underlyingrange around each cost and benefit.FlexibilityWithin the TEI methodology, direct benefits represent one part of the investment value. While direct benefits cantypically be the primary way to justify a project, Forrester believes that organizations should be able to measure thestrategic value of an investment. Flexibility represents the value that can be obtained for some future additionalinvestment building on top of the initial investment already made. For instance, an investment in an enterprisewideupgrade of an office productivity suite can potentially increase standardization (to increase efficiency) and reducelicensing costs. However, an embedded collaboration feature may translate to greater worker productivity if activated.The collaboration can only be used with additional investment in training at some future point in time. However,
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 20having the ability to capture that benefit has a present value that can be estimated. The flexibility component of TEIcaptures that value.Appendix B: GlossaryDiscount rate: The interest rate used in cash flow analysis to take into account the time value of money. Although theFederal Reserve Bank sets a discount rate, companies often set a discount rate based on their business and investmentenvironment. Forrester assumes a yearly discount rate of 10% for this analysis. Organizations typically use discountrates between 8% and 16% based on their current environment. Readers are urged to consult their respectiveorganization to determine the most appropriate discount rate to use in their own environment.Net present value (NPV): The present or current value of (discounted) future net cash flows given an interest rate (thediscount rate). A positive project NPV normally indicates that the investment should be made, unless other projectshave higher NPVs.Present value (PV): The present or current value of (discounted) cost and benefit estimates given at an interest rate(the discount rate). The PV of costs and benefits feed into the total net present value of cash flows.Payback period: The breakeven point for an investment. The point in time at which net benefits (benefits minus costs)equal initial investment or cost.Return on investment (ROI): A measure of a project’s expected return in percentage terms. ROI is calculated bydividing net benefits (benefits minus costs) by costs.A Note On Cash Flow TablesThe following is a note on the cash flow tables used in this study (see the example table below). The initial investmentcolumn contains costs incurred at “time 0” or at the beginning of Year 1. Those costs are not discounted. All other cashflows in Years 1 through 3 are discounted using the discount rate (shown in Framework Assumptions section) at theend of the year. Present value (PV) calculations are calculated for each total cost and benefit estimate. Net present value(NPV) calculations are not calculated until the summary tables and are the sum of the initial investment and thediscounted cash flows in each year.Table [Example]Example TableRef. Category Calculation Initial cost Year 1 Year 2 Year 3 TotalSource: Forrester Research, Inc.
    • Forrester ConsultingThe Total Economic Impact Of Turn Audience Suite and Campaign SuitePage 21Appendix C: Endnotes1Forrester risk-adjusts the summary financial metrics to take into account the potential uncertainty of the cost andbenefit estimates. For more information on Risk, please see page 15.