The document summarizes a Total Economic Impact study conducted by Forrester Consulting on the Rocket Fuel Programmatic Marketing Platform. Key findings include:
1) Adopting the Rocket Fuel DMP led to improved media efficiency through reducing overfrequencing of ads by 20% for Organization A, saving $14 million, and avoiding targeting existing customers, saving 10% of annual media spend or $7 million.
2) Organization B realized $62.5 million in benefits from more effective site conversions through Rocket Fuel-powered optimization.
3) Overall the study found an 832% return on investment from media efficiency and 354% ROI from site optimization. Qualitative benefits also included improved customer experience and intelligence
Forrester Consultiung - TEI of Rocket Fuel Programmatic Marketing Platform
1. A Forrester Total Economic
Impact™ Study
Commissioned By
Rocket Fuel
Project Director:
Michelle S. Bishop
Project Contributor:
Rudy Hernandez
November 2015
The Total Economic
Impact™ Of The Rocket
Fuel Programmatic
Marketing Platform
Bringing Improved Media Efficiency
And Enabling More Effective
Conversions
3. 3
Executive Summary
Rocket Fuel commissioned Forrester Consulting to conduct a
Total Economic Impact™ (TEI) study and examine the
potential return on investment (ROI) enterprises may realize
by deploying the Rocket Fuel Programmatic Marketing
Platform. The purpose of this study is to provide readers with
a framework to evaluate the potential financial impact of the
Rocket Fuel Programmatic Marketing Platform, and most
specifically the Rocket Fuel DMP, on their organizations.
To better understand the benefits, costs, and risks associated
with a Rocket Fuel DMP implementation, Forrester
interviewed several customers with multiple years of experience using Rocket Fuel’s DMP solutions. The Rocket Fuel DMP
helps marketers centralize and activate data from different channels to build sophisticated audiences and inform next best
marketing actions across programmatic channels. The Rocket Fuel DMP provides capabilities around data capture,
audience creation, audience syndication, modeling, site optimization, cross channel execution and analytics, DSP
syndication, mobile SDK, email and call center integration, and persistent offline and CRM data link to online data.
Spurred by the adoption of digital technologies, media buying is changing dramatically. Using software to make data-driven
buying decisions, marketing leaders are embracing programmatic buying to improve transparency into media costs, mitigate
waste, buy more effectively, and drive better results. Today, a new generation of programmatic buying technology is helping
marketing leaders create and manage sophisticated campaigns that can adapt and be optimized to consumer behavior.
Savvy marketers are implementing data management platforms (DMPs) to holistically manage their audience targeting and
analytics, maximizing the value of multiple data sources.1
ROCKET FUEL DRIVES EFFICIENCY IN MEDIA SPEND AND ENABLES MORE EFFECTIVE CONVERSIONS
Our interviews with four existing, long-term customers and subsequent financial analysis found that composite organizations
based on these interviewed organizations experienced the risk-adjusted ROI and benefits shown in Figure 1.2 See Appendix
A for a description of the composite organizations.
The analysis for the first composite company, Organization A, points to media efficiency benefits of $21,262,585 versus
implementation costs of $2,281,521, adding up to a net present value (NPV) of $18,981,064. The analysis for the composite
company, Organization B, points to site optimization benefits of $62,539,444 versus implementation costs of $13,790,315,
adding up to an NPV of $48,749,129.
With the Rocket Fuel DMP, organizations saw improved media efficiency and more effective conversions as well as
additional benefits such as better customer experience, improved performance as a result of data aggregation across silos,
increased understanding of customer value, improved customer intelligence, and better reporting and visibility.
FIGURE 1
Financial Summary Showing Three-Year Risk-Adjusted Results
Media spend
efficiency ROI:
832%
Percentage media
spend saved:
at least 10%
Site optimization and
conversion ROI:
354%
Source: Forrester Research, Inc.
Based on the customers interviewed, the
quantified benefits of the Rocket Fuel
Programmatic Marketing Platform include:
$14 million in media efficiency savings from
reduction in overfrequencing.
$7 million saved from anti-targeting known
users.
$62.5 million from more effective conversions
with site optimization.
4. 4
› Benefits. The composite organizations experienced the following risk-adjusted present value benefits that represent those
reported by the interviewed companies:
• Improved media efficiency with reduction in overfrequencing of ads. Organizations reported increased media
efficiency, as the Rocket Fuel DMP gave them visibility into customer reach and frequency, enabling them to build
sophisticated audiences and optimize their media spend. The composite company Organization A coordinated its
media buys to reduce overfrequencing of ads, resulting in 20% savings on its annual media buy. Moment Scoring
Technology and 1st party data combined identify the right moment and the right message reducing overfrequency
and reduced spend resulting in ads being delivered to the moments where conversion or action will occur. This
benefit is quantified at $14.18 million over the three-year analysis.
• Savings of 10% of annual media buy with the ability to segment prospects from existing customers, and
message each accordingly. With the Rocket Fuel DMP, organizations were able to distinguish current customers
from prospects and avoid reaching existing customers with inappropriate messaging. This saved Organization A
10% of its annual media buy, resulting in $7.09 million in savings over three years.
• Revenue and savings from more effective conversions from site optimization. Rocket Fuel DMP was also
used by some of the organizations for site optimization. These organizations saw more effective conversions with
better targeting through Rocket Fuel. The composite company Organization B used Rocket Fuel to power all
marketing offerings on its main website and saw gains from conversions for new accounts, sales of additional
products and services to current customers, and savings from converting clients to paperless billing. The overall
value from site optimization through Rocket Fuel was quantified as $62.54 million over the three-year analysis.
• The organizations interviewed also experienced qualitative benefits such as:
o Improved customer experience through greater relevance.
o Better performance as a result of data aggregation across silos and groups.
o Increased understanding of customer value.
o Improved customer intelligence.
o Better reporting and improved visibility.
• Organizations also saw potential benefit with access to a full-featured DMP with the ability to make real-time
decisions across channels and integrate with a DSP for site optimization to improve programmatic
performance
› Costs. The costs quantified in the financial model consisted of the following components:
• Rocket Fuel DMP fees.
• Professional services fees.
• Internal labor for implementation and ongoing administration.
Disclosures
The reader should be aware of the following:
› The study is commissioned by Rocket Fuel and delivered by Forrester Consulting. It is not meant to be used as a
competitive analysis.
5. 5
› Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises
that readers use their own estimates within the framework provided in the report to determine the appropriateness of an
investment in Rocket Fuel/the Rocket Fuel DMP.
› Rocket Fuel reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its
findings and does not accept changes to the study that contradict Forrester's findings or obscure the meaning of the study.
› Rocket Fuel provided the customer names for the interviews but did not participate in the interviews.
6. 6
TEI Framework And Methodology
INTRODUCTION
From the information provided in the interviews, Forrester has constructed a Total Economic Impact (TEI) framework for
those organizations considering implementing the Rocket Fuel DMP. The objective of the framework is to identify the cost,
benefit, flexibility, and risk factors that affect the investment decision, to help organizations understand how to take
advantage of specific benefits, reduce costs, and improve the overall business goals of winning, serving, and retaining
customers.
APPROACH AND METHODOLOGY
Forrester took a multistep approach to evaluate the impact that Rocket Fuel Programmatic Marketing Platform and the
Rocket Fuel DMP can have on an organization (see Figure 2). Specifically, we:
› Interviewed Rocket Fuel product management, marketing, and sales personnel, along with Forrester analysts, to gather
data relative to the Rocket Fuel Programmatic Marketing Platform and the marketplace for the Rocket Fuel DMP.
› Interviewed four organizations currently using the Rocket Fuel DMP to obtain data with respect to costs, benefits, and
risks.
› Designed two composite organizations based on characteristics of the interviewed organizations (see Appendix A).
› Constructed financial models representative of the interviews using the TEI methodology. The financial models are
populated with the cost and benefit data obtained from the interviews as applied to the composite organizations.
› Risk-adjusted the financial models based on issues and concerns the interviewed organizations highlighted in interviews.
Risk adjustment is a key part of the TEI methodology. While interviewed organizations provided cost and benefit
estimates, some categories included a broad range of responses or had a number of outside forces that might have
affected the results. For that reason, some cost and benefit totals have been risk-adjusted and are detailed in each
relevant section.
Forrester employed four fundamental elements of TEI in modeling Rocket Fuel’s products: benefits, costs, flexibility, and
risks.
Given the increasing sophistication that enterprises have regarding ROI analyses related to IT investments, Forrester’s TEI
methodology serves to provide a complete picture of the total economic impact of purchase decisions. Please see Appendix
B for additional information on the TEI methodology.
FIGURE 2
TEI Approach
Source: Forrester Research, Inc.
Perform
due diligence
Conduct
customer
interviews
Design
composite
organization
Construct
financial
model using
TEI framework
Write
case study
7. 7
Market Overview
THE CURRENT STATE OF DMP SOLUTIONS IN THE MARKETPLACE
If you think that using a data management platform (DMP) is about audience segmentation, you are wrong.
Well, partly wrong. Advertisers today demand that their DMPs go beyond the management of third-party audiences and look-
alike modeling; those without this vision are living in a DMP 1.0 past. In order to better understand how leading advertisers
are using DMPs, Forrester conducted an online survey of 100 marketing decision-makers at organizations that utilize a DMP
in the US to better understand specifically how they are using them, what benefits they have experienced, and how their
DMP gets them closer to marketing nirvana. From the survey, we discovered:
› DMPs are crucial to truly and completely understanding your customer. Decision-makers indicated they are able
to use DMPs to create a holistic view of their customers. The top three responses to how organizations leverage DMPs
infer that decision-makers need technology that supports the collection of data across multiple touchpoints and allows
them to unify targeting across all marketing touchpoints, both on and offline (see Figure 3). Only 35% of the advertisers
we surveyed thought that managing third-party audiences was an important part of using a DMP today.
FIGURE 3
Organizations Use DMPs To Gain A Comprehensive View Of Their Customers Across Marketing Touchpoints
Base: 100 DMP decision-makers at the manager level or higher in B2C companies of 500 employees or more within the US
Source: A commissioned study conducted by Forrester Consulting on behalf of Rocket Fuel, November 2015
“In which of the following ways is your organization leveraging DMPs today?”
(Select all that apply)
35%
52%
56%
58%
58%
60%
61%
Managing third-party audience targeting
Audience discovery
Creation of audience segmentation
Use of data to cross- and upsell existing customers
Unifying audience targeting across all marketing touchpoints
(digital and offline)
Unifying audience targeting across all digital
marketing touchpoints
Use of data ingestion to support comprehensive data collection
across channels
8. 8
› Better knowing your customer naturally leads to more effective marketing. Three-quarters of decision-makers stated
that they have realized cross-channel execution and analytics benefits due to using a DMP (see Figure 4). Additionally, a
majority of decision-makers indicated gaining these insights has allowed them to advance more overarching marketing
initiatives: 58% increased overall user engagement and 57% increased brand consistency. Over half of decision-makers
reported more effective content and creative development and increased site optimization. This helps explain why over
half also reported more efficient budget allocation across vendors.
FIGURE 4
Three-Quarters Of Decision-Makers Report More Effective Cross-Channel Execution And Analytics Due To
Using A DMP
Base: 100 DMP decision-makers at the manager level or higher in B2C companies of 500 employees or more within the US
Source: A commissioned study conducted by Forrester Consulting on behalf of Rocket Fuel, November 2015
43%
51%
52%
52%
57%
58%
75%
“Which of the following benefits has your organization realized as a result of implementing your DMP?”
(Select all that apply)
Create a single point of entry for all marketing data
Increased site optimization
More efficient budget allocation across media and data vendors
More effective content/creative development
Increased brand consistency
Utilize data insights to increase user engagement
More effective cross-channel execution and analytics
9. 9
› DMPs today must help solve marketing problems, not just media problems. DMPs are not only useful in making
better use of the marketing department’s budget — they also help further other overall marketing goals. The information
gathered from using DMPs prompts decision-makers to indicate a high or extremely high impact on their ability to improve
customer experience (85%) and increase customer insight (77%) (see Figure 5). They can then leverage this advantage
toward the broader goals of improving customer loyalty (76%), customer acquisition (74%), and brand awareness (71%),
better positioning their organizations to achieve the overall business goals of increasing market share (65%), gaining
competitive advantage (72%), and moving into new markets (81%).
FIGURE 5
DMPs Have A High Impact On Numerous Marketing Initiatives
Base: DMP decision-makers at the manager level or higher in B2C companies of 500 employees or more within the US
Source: A commissioned study conducted by Forrester Consulting on behalf of Rocket Fuel, November 2015
“What level of impact has using a DMP had on your organization’s marketing goals?”
(Rank on a 1-to-5 scale, from “no impact” to “extremely high impact”)
30%
41%
45%
33%
37%
40%
41%
43%
50%
35%
30%
27%
41%
39%
37%
38%
38%
35%
Increase market share (N = 46)
Build brand awareness (N = 44)
Improve competitive advantage (N = 44)
Improve customer acquisition (N = 46)
Improve customer loyalty (N = 49)
Increase organization’s use of data and analytics for
customer insight (N = 35)
Develop new products or services (N = 34)
Move into new markets (N = 37)
Increase use of customer interaction history to improve
customer experience (N = 40)
Extremely high impact High impact Total
85%
81%
79%
77%
76%
74%
72%
71%
65%
10. 10
Analysis
COMPOSITE ORGANIZATION
For this study, Forrester conducted a total of four interviews with representatives from the following companies, which are
Rocket Fuel customers:
› A Fortune 100 multinational banking and financial services corporation.
› A leading American gaming company with over $4 billion in revenue and 8,000 employees worldwide.
› One of the largest personal insurance companies in the United States, with over $35 billion in revenue.
› An American financial services company with over $6B in annual revenue.
Based on the interviews, Forrester constructed a TEI framework, two composite companies, and associated ROI analyses
that illustrate the financially affected areas. Forrester synthesized two composite organizations from these results:
› Organization A benefited from more efficient media spend as a result the ability to identify existing customers and avoid
serving them prospecting messages, as well as reduction in overfrequencing of customers. The composite organization
has the following characteristics:
• Is a US-based financial services firm.
• Has over $8 billion in annual revenue.
• Has an average annual digital media spend of $30 million
affected by Rocket Fuel.
Prior to the Rocket Fuel DMP, Organization A was running
campaigns but did not have insight into audience scale or
overlap. It implemented the Rocket Fuel DMP to enable
programmatic self-service and improve its ability to build and
analyze audiences, integrating first-party and third-party data to
syndicate audiences.
› Organization B benefited from improved customer conversion as
a result of site optimization. The composite organization has the
following characteristics:
o Is a leading insurance company based in the US.
o Has over $80 billion in revenue.
o Has an average digital media spend of approximately $75
million per year.
Prior to the Rocket Fuel DMP, Organization B’s main website did
not feature any targeted communications. Instead, messaging for
the different lines of business was run off a publishing calendar.
The goal of the central marketing organization was to manage
channels to optimize effectiveness to the whole company versus
specific products and lines of business. To this end, it deployed
the Rocket Fuel DMP as a media delivery vehicle for its main website and used it as a decision optimization platform to
balance and manage messaging to customer and site visitors.
“Rocket Fuel has always been
great at finding solutions for
the platform that helps our
overall needs. They have the
ability and hunger to
innovate. They adapted their
platform to help us target
better, and it drives
considerable value to our
organization.”
~ Managing director and head of digital channel
marketing, Fortune 100 banking and financial
services organization
11. 11
INTERVIEW HIGHLIGHTS
Situation
Highlights from discussions with the companies interviewed include:
› For a number of organizations interviewed, their initial deployment of
the Rocket Fuel DMP was to enable programmatic self-service, to
move all programmatic buying in-house from their previous agency
model. This evolved into using the Rocket Fuel DMP for audience
management to proactively manage suppression or serving of
media to audiences. Data from the Rocket Fuel DMP was also used
for advanced analytics, as these organizations built analytical
marketing solutions.
› One financial services organization interviewed evaluated its
company’s marketing capabilities around digital. It emerged that it
had a highly trafficked channel that was underutilized. It found that
the Rocket Fuel DMP’s decisioning capabilities were better than
classical CRM engines and wanted to use the Rocket Fuel DMP to
drive site optimization with a goal to increase audience penetration
and adoption rates as well as reach a broader audience for cross-
sell opportunities.
› Another organization also used the Rocket Fuel DMP for site-based
decisioning. It uses first-party data in the Rocket Fuel DMP to “drive
the right advertising decisions to our sites for existing card
members.”
› One gaming organization characterized its use of the Rocket Fuel DMP as part of its “shift from CRM marketing to
acquisition marketing with the goal to cultivate lifetime customers.” This organization also highlighted the importance of
first-party data to reach its ultimate goal of one-to-one marketing though emphasizing that in its industry, offline attribution
is still a challenge to achieving that goal.
Solution
The organizations interviewed used the Rocket Fuel DMP for audience management and targeting, site optimization, and
analytics. One organization noted that it was using the Rocket Fuel DMP as the central repository for actionable marketing
data. For most of these organizations, display was the main channel they were running through the Rocket Fuel DMP,
though a number of the companies interviewed were beginning to explore search and email.
Results
The interview revealed that several benefits drove the analysis:
› Improved media efficiency with audience management. The Rocket Fuel DMP drove more efficient media spend, as
the Rocket Fuel media platform and other organizations gained visibility into audience reach and frequency and were able
to address audience overlap among different campaigns. Organization A saw 20% of its annual media buy saved with
reduction in overfrequencing of ads and an additional 10% in media spend savings by suppressing certain messaging to
current customers to avoid wasted spend.
“In the old environment, we
weren’t able to connect
systems that easily. The Rocket
Fuel DMP really provided a
way to collect and feed
information from all these
systems into one central
repository to use first-party
data more efficiently.”
~ Global head of social media, financial services
company
12. 12
“The No. 1 benefit for us has been the ability to buy media based on first-party data. That is the beginning and end of
the conversation for us.”
— Director of marketing infrastructure and operations, leading gaming company
› More effective conversions with improved ability to do site optimization. By using the Rocket Fuel DMP to drive site-
based decisioning to customers on its main high-traffic website, Organization B saw an increase in customer conversions.
resulting in an increase in revenue from new accounts. It also saw increased revenue from cross-sell to current accounts,
as well savings from moving insurance customers to paperless billing.
› Improved customer experience. As organizations were able to manage their audiences better through the Rocket Fuel
DMP and DSP using Moment Scoring technology, customer messaging became more targeted and relevant.
Organizations were able to address overfrequencing of ads, resulting in a better customer experience. As one company
noted, “A message is not always good for prospecting versus current customers. Advertising should be seamless and
helpful. The Rocket Fuel DMP helps us create and manage that
experience better for our customers.”
› Better performance as a result of data aggregation across
silos and groups. By using the Rocket Fuel DMP as a single
repository for collecting and storing actionable marketing data,
customers reported that they were able to overcome
organizational silos to optimize performance. Data in silos from
the ad server, site behavioral data, cookie data, and other
sources could now be aggregated in the Rocket Fuel DMP.
“The Rocket Fuel DMP gave us clarity on how campaigns
were performing against each other. You could see where the
breakdowns were happening with the communication. And
this allowed us to optimize performance over time.”
— Managing director and head of digital channel marketing,
banking and financial services organization
› Increased understanding of customer value. Organizations
were now able to improve their ability to match campaigns back to existing customers, leading to better understanding of
customer value. One organization noted: “This is our primary use case. With the Rocket Fuel DMP, we can control the
audience. Our brand and acquisition teams now know when they are marketing only to customers.”
› Improved customer intelligence. Another benefit of the Rocket Fuel DMP cited by the organizations interviewed was
improved customer intelligence, as marketing teams could now identify new audiences and segments and gain deeper
insights into these audiences. One insurance organization interviewed noted that with the Rocket Fuel DMP’s predictive
optimization engine module, it could see nontargeted audiences and also leverage third-party data from market providers
to gain new insights into its audiences.
› Better reporting and improved visibility. Most interviewees characterized better reporting and improved visibility as a
secondary but still valuable benefit of their Rocket Fuel DMP implementation. One organization even remarked that in its
initial deployment: “It was too much. We were getting individual campaign reports, and at the time we didn’t have the
organizational ability to take it in.” It also noted that it had a very short eight-week implementation period to stand up its
pilot Rocket Fuel DMP deployment. One digital analytics team lead noted, “We now have more transparency and
granularity around what you can do from a digital marketing standpoint.”
“The Rocket Fuel DMP brings
us large-scale media efficiency
that gives our customers a
better experience with display
advertising.”
~ Global head of social media, financial services
company
13. 13
ROI Analysis — Improved Media Efficiency
BENEFITS
The composite company Organization A experienced a number of quantified benefits in this case study:
› Improved media efficiency due to reduction in overfrequencing of customers.
› Media savings from anti-targeting known users.
Improved Media Spend Efficiency —– Reduction In Overfrequencing
Using the Rocket Fuel DMP has improved media spend efficiency for the organizations interviewed, as these
companies can now address overlap between different campaigns and implement more efficient optimization
strategies for media spend. Prior to their Rocket Fuel DMP implementation, these organizations did not have
visibility into campaign-wide customer reach and frequency. One large gaming company stated that its move to
one-to-one marketing, with the support of the Rocket Fuel DMP, has allowed it to be more efficient with its spend.
A director of marketing at this company estimated that it “saved tens of millions of dollars” by reducing
overmessaging of customers through not serving prospecting messaging to existing customers enabled by the
Rocket Fuel DMP and media platform. He further noted, “We were paying for everyone seeing those banners,
and that’s millions of dollars, and we probably wasted 75% of that spend.”
One organization interviewed characterized Rocket Fuel’s DMP as “a box to collect data and build a framework
to be able to make smarter decisions through demand-side platforms (DSPs) and media providers.” This financial
services organization reported that with the information from the Rocket Fuel DMP, it was able to better
coordinate media buys across the organization. For this company, the largest benefit of the Rocket Fuel DMP
was to implement frequency management and reduce overlap. To illustrate, it noted that certain media with
overlapping frequency of 15 to 30 impressions a week would be 200 impressions without the Rocket Fuel DMP.
Reviewing its overall portfolio, it estimated that without Rocket Fuel’s DMP, media served at a rate of 20x its
current average would potentially represent 20% to 30% of its overall media buy.
Organization A used the Rocket Fuel DMP for audience management and to drive media buying decisions for its
brand organization. The Rocket Fuel DMP enabled the composite organization to identify audience overlap
between different campaigns that resulted in overfrequencing customers with ads. As a result, Organization A
now orchestrated large media buys to avoid this overlap. This audience overlap represented at least 20% of its
overall media spend in its pre-Rocket Fuel DMP environment.
At an annual media spend of $30 million dollars a year, savings from reduction in overfrequencing ads to
customers represent media savings of $6 million dollars a year. To account for variability in organizations’
percentage of media spend representing addressable audience overlap, Forrester risk-adjusted this quantified
benefit down by 5%. The total media savings benefit resulting from more efficient media buys with reduction in
customer overfrequencing was $5.7 million per year.
14. 14
TABLE 1
Improved Media Spend Efficiency — Reduction In Overfrequencing
Ref. Metric Calculation Year 1 Year 2 Year 3
A1 Annual media buy $30,000,000 $30,000,000 $30,000,000
A2
Percentage media buy saved with reduction
in customer overfrequencing
20% 20% 20%
At
Improved media spend efficiency —
overfrequencing
A1*A2 $6,000,000 $6,000,000 $6,000,000
Risk adjustment 5%
Atr
Improved media spend efficiency —
overfrequencing (risk-adjusted)
$5,700,000 $5,700,000 $5,700,000
Source: Forrester Research, Inc.
Media Savings — Anti-Targeting Known Users
With the Rocket Fuel DMP, a number of the organizations interviewed noted that they are now able to
differentiate current customers from prospects and quickly decision media to serve the right message to their
audience. One financial services company noted: “We have increased our understanding of customer value. Our
brand and acquisition teams are using that information. With the DMP, we can now control our audience.” One
insurance firm estimated that given its share of the market, 10% to 11% of its impressions in display advertising
pre-Rocket Fuel were being served to its customers who did not need to see its customer acquisition messaging.
Reducing this wasted media spend by just 50% would already represent a 6x return on its Rocket Fuel DMP
investment.
Organization A used the Rocket Fuel DMP and first-party data to identify current customers and suppress
customer acquisition messaging to these customers. By doing so, it saved 10% of its overall media spend. At a
media spend of $30 million per year, this represents savings of $3 million. To account for the variability, this
benefit was risk-adjusted and reduced by 5%. The total benefit of media savings from customer suppression is
$2.85 million per year and $8.55 million over three years.
TABLE 2
Media Savings — Anti-Targeting Known Users
Ref. Metric Calculation Year 1 Year 2 Year 3
B1 Annual media buy $30,000,000 $30,000,000 $30,000,000
B2
Percentage media buy saved
with anti-targeting known users
10% 10% 10%
Bt
Media savings from anti-
targeting known users
B1*B2 $0 $3,000,000 $3,000,000 $3,000,000
Risk adjustment 5%
Btr
Media savings from anti-
targeting known users (risk-
adjusted)
$0 $2,850,000 $2,850,000 $2,850,000
Source: Forrester Research, Inc.
15. 15
Total Benefits
Table 3 shows the total of all benefits across the first two areas listed above, as well as present values (PVs) discounted at
10%. Over three years, the composite organization expects risk-adjusted total benefits to be a PV of approximately $21.26
million.
TABLE 3
Total Benefits (Risk-Adjusted)
Ref. Benefit Initial Year 1 Year 2 Year 3 Total
Present
Value
Atr
Improved media efficiency
— reduced
overfrequencing
$0 $5,700,000 $5,700,000 $5,700,000 $17,100,000 $14,175,056
Btr
Media savings from anti-
targeting known users
$0 $2,850,000 $2,850,000 $2,850,000 $8,550,000 $7,087,528
Total benefits $0 $8,550,000 $8,550,000 $8,550,000 $25,650,000 $21,262,585
Source: Forrester Research, Inc.
16. 16
COSTS
The composite company Organization A experienced a number of costs associated with the Rocket Fuel DMP solution:
› Rocket Fuel DMP fees.
› Implementation costs — internal labor.
Rocket Fuel DMP Fees
The composite organization paid an average of $750,000 per year in Rocket Fuel DMP fees. Readers are
encouraged to work with their Rocket Fuel account manager to understand what the estimated fees would be for
their environment and the size of their deployment. To account for variability, this cost was risk-adjusted up by
5%. The risk-adjusted present value cost of Rocket Fuel DMP fees was $787,500 per year. See the section on
Risks for more detail.
Implementation Costs — Internal Labor
To deploy the Rocket Fuel DMP in its environment, Organization A had two marketing personnel working for 15
months on the deployment at a fully loaded compensation of $95,000 per year. In addition to that, six resources
across the organization spent 10% of their time across those 15 months to support implementation of the Rocket
Fuel DMP. The average fully loaded compensation for these six resources was $75,000 per year. The total cost
of internal labor for the Rocket Fuel DMP implementation was $293,750. This cost was risk-adjusted up by 10%
to $323,125. See the section on Risks for more detail.
TABLE 4
Implementation Costs — Internal Labor
Ref. Metric Calculation Initial
D1 Number of people 2
D2 Yearly rate per person $95,000
D3 Years 15 months/12 1.25
D4 Number of people 6
D5 Yearly rate per person $75,000
D6 Years (15 months/12)*10% 0.125
Dt Implementation costs — internal labor
D1*D2*D3 +
D4*D5*D6 $293,750
Risk adjustment 10%
Dtr Implementation costs — internal labor (risk-adjusted) $323,125
Source: Forrester Research, Inc.
17. 17
Total Costs
Table 5 shows the total of all costs as well as associated present values, discounted at 10%. Over three years, the
composite organization expects total costs to amount to a net present value of approximately $2.28 million.
TABLE 5
Total Costs (Risk-Adjusted)
Ref. Cost Category Initial Year 1 Year 2 Year 3 Total
Present
Value
Ctr
Rocket Fuel DMP
fees
$0 $787,500 $787,500 $787,500 $2,362,500 $1,958,396
Dtr
Implementation —
internal labor
$323,125 $0 $0 $0 $323,125 $323,125
Total costs (risk-
adjusted)
$323,125 $787,500 $787,500 $787,500 $2,685,625 $2,281,521
Source: Forrester Research, Inc.
18. 18
ROI Analysis — Site Optimization
BENEFITS
The composite organization Organization B uses the Rocket Fuel DMP for site optimization. The Rocket Fuel DMP is the
media delivery vehicle for its main website with over 30 million monthly visitors. Organization B experienced the following
quantified benefits in this case study.
Value From More Effective Conversions
The Rocket Fuel DMP was used by a number of the organizations interviewed to drive site optimization. These
organizations were able to improve their ability to identify and target prospects and enable more effective
conversions through better targeting. As the head of digital channel marketing for one financial services
organization remarked, “With Rocket Fuel, we took our channel from something that had next to no value to
something that was driving quite a bit of value.”
Organization B used the Rocket Fuel DMP as the primary decision platform to serve owned media to its main
website. Prior to Rocket Fuel, it was serving ad impressions on this website based on a publishing calendar, for
approximately 50 different lines of business. This model was basically a “one size fits all” approach. With its
Rocket Fuel DMP implementation, Organization B was able to target communications to specific audiences. It
was also able to optimize messaging based on campaign objectives and results, tracking actions and measuring
value. Using information from the Rocket Fuel DMP, the digital channel marketing team could now provide
different messaging over multiple visits, thus providing multiple offers or multiple ways of presenting the same
offer. This resulted in more effective conversions and increased engagement, as it could now target messaging
to current customers to increase the benefits of products it already had. Organization B is currently serving 1.5
billion ad impressions per month on its site.
The composite organization’s digital channel marketing team, together with its analytics team, measured the
value produced by Rocket Fuel DMP on the site based on conversion metrics for the number of accounts driven
post-implementation. These accounts included new customer acquisitions as well as cross-sells. In addition to
that, Organization B also saw savings from converting its customers to paperless billing. In the first year of
implementation, the site powered by the Rocket Fuel DMP generated approximately $50 million in value, and
then $120 million and $160 million in subsequent years. Sixty percent of this benefit was from an increase in new
accounts, measured in terms of lifetime value. As the composite organization saw the importance of the channel
in generating new accounts, it also improved ad placements over time to make them more visible on the site to
drive more conversions. Approximately 30% of the benefit was from improved lifetime value from deeper
engagement, as Organization B measured the incremental improvement on the product level for current
customers who bought additional products. The remaining 10% of the benefit was generated from customers
accepting the option to go paperless for their insurance billing and other forms.
When quantifying the value generated from using the Rocket Fuel DMP for site optimization for this particular
digital channel, Forrester also considers the cost of driving people to the site. In this analysis, Forrester uses
annual digital media spend to represent this cost. We recognize that readers of this study may have other factors
or components when considering these costs in their particular organization.
At an annual digital media spend for the composite organization of approximately $65 million, $88 million, and
$73 million, respectively, the benefit of more effective conversions as a result of the Rocket Fuel DMP is
quantified as $78,174,305 over the three-year analysis. To account for variability in the estimates, this benefit
was risk-adjusted down by 20%. The total benefit from more effective conversions with site optimization through
the Rocket Fuel DMP is quantified as $62,539,444 over three years.
19. 19
TABLE 6
Value From More Effective Customer Conversions
Ref. Metric Calculation Year 1 Year 2 Year 3
E1 Lifetime value of new accounts $30,000,000 $72,000,000 $96,000,000
E2 Improved customer lifetime value $15,000,000 $36,000,000 $48,000,000
E3
Cost savings from alternative
delivery choice (paperless)
$5,000,000 $12,000,000 $16,000,000
E4 Annual digital media spend ($65,000,000) ($88,000,000) ($73,000,000)
Et
Value from more effective
conversions
(E1+E2+E3)-E4 ($15,000,000) $32,000,000 $87,000,000
Risk adjustment 20%
Etr
Value from more effective
conversions (risk-adjusted)
($12,000,000) $25,600,000 $69,600,000
Source: Forrester Research, Inc.
Total Benefits
Table 7 shows the total of all benefits listed above, as well as present values (PVs) discounted at 10%. Over three years,
Organization B expects risk-adjusted total benefits to be a PV of approximately $62.54 million.
TABLE 7
Total Benefits (Risk-Adjusted)
Ref. Benefit Initial Year 1 Year 2 Year 3 Total
Present
Value
Etr
Value from more
effective conversions
$0 ($12,000,000) $25,600,000 $69,600,000 $83,200,000 $62,539,444
Total benefits $0 ($12,000,000) $25,600,000 $69,600,000 $83,200,000 $62,539,444
Source: Forrester Research, Inc.
COSTS
The composite company Organization B experienced a number of costs associated with the Rocket Fuel DMP solution:
› Rocket Fuel DMP fees.
› Professional services fees.
› Implementation costs — internal labor.
20. 20
Rocket Fuel DMP Solution And Implementation Fees
The composite organization paid an average of $2.75 million per year in Rocket Fuel DMP fees. Readers are
encouraged to work with their Rocket Fuel account manager to understand what the estimated fees would be for
their environment and the size of their deployment. To account for variability, this cost was risk-adjusted up by
5%. The risk-adjusted present value cost of Rocket Fuel DMP fees was $2,887,500 per year. See the section on
Risks for more detail.
Professional Services Fees
The digital channel marketing team of Organization B had a mandate to complete initial deployment of the
Rocket Fuel DMP on the organization’s main site within eight weeks. This project also required extensive
customizations of the Rocket Fuel solution to integrate with its internal systems. It relied heavily on the Rocket
Fuel team for execution and incurred $3.5 million in professional services fees. This cost was risk-adjusted up by
10%. The risk-adjusted present value cost of professional services fees was $3.85 million over the three-year
analysis. See the section on Risks for more detail.
Implementation And Administrative Costs — Internal Labor
Organization A had 10 FTEs allocated to the initial deployment of eight weeks at a fully loaded compensation of
$95,000 per year. In addition to that, the organization has these 10 FTEs allocated to ongoing administration of
the Rocket Fuel DMP and this channel. The total cost of internal labor for the Rocket Fuel DMP implementation
was $146,154, while ongoing administration costs of the channel and the solution are $950,000 per year. These
costs were risk-adjusted up by 10% to $160,769 and $1,045,000, respectively. See the section on Risks for more
detail.
TABLE 8
Implementation And Administrative Costs — Internal Labor
Ref. Metric Calculation Initial Year 1 Year 2 Year 3
H1 Number of people 10 10 10 10
H2 Yearly rate per person $95,000 $95,000 $95,000 $95,000
H3 Years 8 weeks 0.15 1 1 1
Ht
Implementation and
ongoing administrative
labor costs
H1*H2*H3 $146,154 $950,000 $950,000 $950,000
Risk adjustment 10%
Htr
Implementation and
ongoing administrative
costs (risk-adjusted)
$160,769 $1,045,000 $1,045,000 $1,045,000
Source: Forrester Research, Inc.
Total Costs
Table 8 shows the total of all costs as well as associated present values, discounted at 10%. Over three years, the
composite organization expects total costs to amount to a net present value of approximately $13.79 million.
21. 21
TABLE 9
Total Costs (Risk-Adjusted)
Ref. Cost Category Initial Year 1 Year 2 Year 3 Total
Present
Value
Ftr
Rocket Fuel DMP
fees
$0 $2,887,500 $2,887,500 $2,887,500 $8,662,500 $7,180,785
Gtr
Professional services
fees
$3,850,000 $0 $0 $0 $3,850,000 $3,850,000
Htr
Implementation and
ongoing labor costs
$160,769 $1,045,000 $1,045,000 $1,045,000 $3,295,769 $2,759,530
Total costs (risk-
adjusted)
$4,010,769 $3,932,500 $3,932,500 $3,932,500 $15,808,269 $13,790,315
Source: Forrester Research, Inc.
FLEXIBILITY
Flexibility, as defined by TEI, represents an investment in additional capacity or capability that could be turned into business
benefit for some future additional investment. This provides an organization with the “right” or the ability to engage in future
initiatives but not the obligation to do so. There are multiple scenarios in which a customer might choose to implement the
Rocket Fuel DMP and later realize additional uses and business opportunities. Flexibility would also be quantified when
evaluated as part of a specific project (described in more detail in Appendix B).
A number of the organizations interviewed were considering or beginning to undertake projects to expand use of the Rocket
Fuel DMP to other channels such as search and email. One organization remarked, “There are opportunities to expand use
of the Rocket Fuel DMP as we look at our own channels, and we are definitely interested in one platform that can manage all
of them.” It also noted that the Rocket Fuel DMP plays really well in the media space, since it has data sitting in the DMP and
is currently testing what it can do, with a trading desk being one of the areas to consider.
One financial services organization had recently engaged a newly formed data science group to work with the Rocket Fuel
DMP to deploy this group’s optimization models on its site. One pilot resulted in a 50% to 70% increase in conversion.
One organization interviewed also discussed the potential advantage of using the combined Rocket Fuel DSP and DMP in
its company, as it now had access to a full-featured DMP with the ability to make real-time decisions across channels and
integrate with a DSP for site optimization. This company’s global head of social media noted, “In the future, we’ve got this
potential improved programmatic performance, as you have the first-party knowledge in the DMP, and it’s a decision point to
layer into media buying.” He added that in the next few months, his team would be able to influence media buying decisions
and bridge the gap between what media has been bought and prospect’s visit to the site with full control over that experience
with the Rocket Fuel DMP. Another organization’s digital analytics team lead observed: “We think there is tremendous
value there with the notion of a single stack. Theoretically, with a unified stack, you are working off a unified cookie pool and
there is some benefit in prevention of cookie loss. There’s also the consolidation of media buying across channels.”
As these organizations implement new use cases for the Rocket Fuel DMP, extend use of the Rocket Fuel DMP to additional
channels, and increase adoption within the organization, future benefits could include additional media spend savings from
improved efficiency, higher conversion rates, increased revenue, and savings.
22. 22
RISKS
Forrester defines two types of risk associated with this analysis: “implementation risk” and “impact risk.” Implementation risk
is the risk that a proposed investment in the Rocket Fuel DMP may deviate from the original or expected requirements,
resulting in higher costs than anticipated. Impact risk refers to the risk that the business or technology needs of the
organization may not be met by the investment in the Rocket Fuel DMP, resulting in lower overall total benefits. The greater
the uncertainty, the wider the potential range of outcomes for cost and benefit estimates.
TABLE 10
Benefit And Cost Risk Adjustments
Benefits Adjustment
Improved media efficiency — reduced overfrequencing 5%
Media savings from anti-targeting known users 5%
Value from more effective conversions 20%
Costs Adjustment
Rocket Fuel fees 5%
Professional services fees 10%
Implementation costs — internal labor 10%
Source: Forrester Research, Inc.
Quantitatively capturing implementation risk and impact risk by directly adjusting the financial estimates results provides
more meaningful and accurate estimates and a more accurate projection of the ROI. In general, risks affect costs by raising
the original estimates, and they affect benefits by reducing the original estimates. The risk-adjusted numbers should be taken
as “realistic” expectations since they represent the expected values considering risk.
The following impact risks that affect benefits are identified as part of the analysis:
› Media efficiency benefits could vary depending on a customer’s pre-Rocket Fuel environment, the particular use cases of
the customer’s Rocket Fuel DMP deployment, and the size of the media spend affected.
› Site optimization benefits may vary depending on how extensively the Rocket Fuel DMP was deployed within a particular
site, the number of visitors, and the number of impressions served. Variability in organizations’ customer lifetime values will
also be a factor, as well as what metric organizations may use to measure the cost of directing visitors to the site.
The following implementation risks that affect costs are identified as part of this analysis:
› Rocket Fuel fees may vary depending on the size of the implementation, the usage on the different channels implemented,
and the extent of professional services required at implementation and for ongoing consulting.
› Organizations may have varying requirements for professional services and internal labor at implementation, depending on
the size and complexity of the deployment.
23. 23
Table 10 shows the values used to adjust for risk and uncertainty in the cost and benefit estimates for the composite
organization. Readers are urged to apply their own risk ranges based on their own degree of confidence in the cost and
benefit estimates.
24. 24
Financial Summary
The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback
period for the composite organizations’ investment in the Rocket Fuel DMP.
TABLE 11
Results (Risk-Adjusted)
Improved Media Spend
Efficiency
Organization A
More Effective Conversions
From Site Optimization
Organization B
Costs ($2.28 million) ($13.79 million)
Benefits $21.26 million $62.54 million
Net benefits $18.98 million $48.75 million
ROI 8.3x 3.5x
Source: Forrester Research, Inc.
Tables 12 and 13 below show the risk-adjusted ROI, NPV, and payback period values for Organization A and Organization
B. These values are determined by applying the risk adjustment values from Table 10 in the Risks section to the unadjusted
results in each relevant cost and benefit section.
TABLE 12
Organization A Cash Flow (Risk-Adjusted)
Initial Year 1 Year 2 Year 3 Total Present Value
Costs ($323,125) ($787,500) ($787,500) ($787,500) ($2,685,625) ($2,281,521)
Benefits $0 $8,550,000 $8,550,000 $8,550,000 $25,650,000 $21,262,585
Net benefits ($323,125) $7,762,500 $7,762,500 $7,762,500 $22,964,375 $18,981,064
ROI 832%
Payback period
Almost
immediate
Source: Forrester Research, Inc.
25. 25
TABLE 13
Organization B Cash Flow (Risk-Adjusted)
Initial Year 1 Year 2 Year 3 Total Present Value
Costs ($4,010,769) ($3,932,500) ($3,932,500) ($3,932,500) ($15,808,269) ($13,790,315)
Benefits $0 ($12,000,000) $25,600,000 $69,600,000 $83,200,000 $62,539,444
Net benefits ($4,010,769) ($15,932,500) $21,667,500 $65,667,500 $67,391,731 $48,749,129
ROI 354%
Payback period 23 months
Source: Forrester Research, Inc.
FIGURE 6
Organization A Cash Flow Chart (Risk-Adjusted)
Source: Forrester Research, Inc.
($5,000,000)
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
Initial Year 1 Year 2 Year 3
Cashflows
Financial Analysis (risk-adjusted)
Total costs Total benefits Cumulative total
26. 26
FIGURE 7
Organization B Cash Flow Chart (Risk-Adjusted)
Source: Forrester Research, Inc.
($30,000,000)
($20,000,000)
($10,000,000)
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
Initial Year 1 Year 2 Year 3
Cashflows
Financial Analysis (risk-adjusted)
Total costs Total benefits Cumulative total
27. 27
Rocket Fuel Programmatic Marketing Platform: Overview
The following information is provided by Rocket Fuel. Forrester has not validated any claims and does not endorse Rocket
Fuel or its offerings.
ROCKET FUEL PROGRAMMATIC MARKETING PLATFORM
In a world of ever-proliferating data and increasing pressure to create more conversions with less budget, Rocket Fuel's
Programmatic Marketing Platform helps marketers and their agencies connect with consumers at key moments of influence,
across channels, on any device to achieve their marketing objectives, inclusive of direct-response performance,
engagement, and brand lift.
The platform centers around a combined Data Management Platform (DMP) and Demand Side Platform (DSP) solution,
which learns from each moment of customer interaction to deliver and optimize media spend across addressable channels
and devices —simultaneously. The result is personalized marketing at every customer touchpoint.
With Rocket Fuel’s software as a service (SaaS) platform, marketers can take Rocket Fuel technology into their own hands
to measure consumer responses and interactions to optimize the frequency, accuracy, and relevancy of their messages.
Rocket Fuel’s SaaS DMP connects all customer data—CRM, loyalty programs, website, social, impression—to create a
complete view of each customer and better predict the moment of influence required for each individual brand’s product.
Our SaaS DSP then optimizes media placement by determining the likelihood of any consumer engaging with any media, on
any device, at any time.
In addition to the SaaS products, Rocket Fuel also deploys Managed Services, offering fully managed media buys to
customers who want to leverage Rocket Fuel’s tech stack, without the resources to self-serve. Customers can gain the
intelligence and best-in-class efficiency against stated objectives for both DR or Brand initiatives, by allowing our models and
team of experts to do all the work.
Everything in the Programmatic Marketing Platform is powered by Moment Scoring™, going beyond merely buying media to
finding the absolute best impression opportunities for any campaign objective, on any device, across all digital channels at a
precise moment in time. Rocket Fuel optimizes each moment of engagement by media channel and, over time, improve to
drive the most powerful performance toward specific campaign goals.
HIGHLIGHTS ON THE ROCKET FUEL DATA MANAGEMENT PLATFORM TECH
The Rocket Fuel DMP is the core that collects data from all of a brand’s marketing efforts—data from your website, email
marketing programs, digital advertising, and even offline channels. First-party data is enriched by blending in third-party data
from the most reliable sources, resulting in the most detailed, persistent picture of a customers’ journey across all
addressable touch points. With the Rocket Fuel DMP, start seeing results immediately. Start increasing share of wallet,
improving the frequency and relevance of messaging, and using first-party data to better inform an ad spend.
The Rocket Fuel DMP provides a full view of customers by seeing consumers beyond just one channel, and allows
marketers the ability to build qualified audiences based on this custom first-party data taxonomies and assign the
comprehensive audiences to hundreds of attributes. Clients can then syndicate them over a spectrum of channels, including
all the top DSPs, DMPs, walled gardens such as Facebook, and other addressable channels, both online and offline.
28. 28
Appendix A: Composite Organization Description
For this TEI study, Forrester has created two composite organizations to illustrate the quantifiable benefits and costs of
implementing the Rocket Fuel DMP.
The composite organization, Organization A, benefited from more efficient media spend as a result of customer suppression
and reduction in overfrequencing of customers. The composite organization has the following characteristics:
› Is a US-based financial services firm.
› Has over $8 billion in annual revenue.
› Has an average annual digital media spend of $30 million affected by Rocket Fuel.
Prior to the Rocket Fuel DMP, Organization A was running campaigns but did not have insight into audience scale or
overlap. It implemented the Rocket Fuel DMP to enable programmatic self-service and improve its ability to build and
analyze audiences, integrating first-party and third-party data to syndicate audiences.
Organization B benefited from improved customer conversion as a result of site optimization. The composite organization
has the following characteristics:
› Is a leading insurance company based in the US.
› Has over $80 billion in revenue.
› Has an average digital media spend of approximately $75 million per year.
Prior to the Rocket Fuel DMP, its main website did not feature any targeted communications. Instead, messaging for the
different lines of business was run off a publishing calendar. The goal of the central marketing organization was to manage
channels to optimize effectiveness to the whole company versus specific products and lines of business. To this end, it
deployed the Rocket Fuel DMP as a media delivery vehicle for its main website and used it as a decision optimization
platform to balance and manage messaging to customer and site visitors.
FRAMEWORK ASSUMPTIONS
The discount rate used in the PV and NPV calculations is 10%, and the time horizon used for the financial modeling is three
years. Organizations typically use discount rates between 8% and 16% based on their current environment. Readers are
urged to consult with their respective company’s finance department to determine the most appropriate discount rate to use
within their own organizations.
29. 29
Appendix B: Total Economic Impact™ Overview
Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-
making processes and assists vendors in communicating the value proposition of their products and services to clients. The
TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior
management and other key business stakeholders. TEI assists technology vendors in winning, serving, and retaining
customers.
The TEI methodology consists of four components to evaluate investment value: benefits, costs, flexibility, and risks.
BENEFITS
Benefits represent the value delivered to the user organization — IT and/or business units — by the proposed product or
project. Often, product or project justification exercises focus just on IT cost and cost reduction, leaving little room to analyze
the effect of the technology on the entire organization. The TEI methodology and the resulting financial model place equal
weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on
the entire organization. Calculation of benefit estimates involves a clear dialogue with the user organization to understand
the specific value that is created. In addition, Forrester also requires that there be a clear line of accountability established
between the measurement and justification of benefit estimates after the project has been completed. This ensures that
benefit estimates tie back directly to the bottom line.
COSTS
Costs represent the investment necessary to capture the value, or benefits, of the proposed project. IT or the business units
may incur costs in the form of fully burdened labor, subcontractors, or materials. Costs consider all the investments and
expenses necessary to deliver the proposed value. In addition, the cost category within TEI captures any incremental costs
over the existing environment for ongoing costs associated with the solution. All costs must be tied to the benefits that are
created.
FLEXIBILITY
Within the TEI methodology, direct benefits represent one part of the investment value. While direct benefits can typically be
the primary way to justify a project, Forrester believes that organizations should be able to measure the strategic value of an
investment. Flexibility represents the value that can be obtained for some future additional investment building on top of the
initial investment already made. For instance, an investment in an enterprisewide upgrade of an office productivity suite can
potentially increase standardization (to increase efficiency) and reduce licensing 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. However, having the ability to capture that benefit has a PV that can be
estimated. The flexibility component of TEI captures that value.
RISKS
Risks measure the uncertainty of benefit and cost estimates contained within the investment. Uncertainty is measured in two
ways: 1) the likelihood that the cost and benefit estimates will meet the original projections and 2) the likelihood that the
estimates will be measured and tracked over time. TEI risk factors are based on a probability density function known as
“triangular distribution” to the values entered. At a minimum, three values are calculated to estimate the risk factor around
each cost and benefit.
30. 30
Appendix C: Forrester And The Age Of The Customer
Your technology-empowered customers now know more than you do about your products and services, pricing, and
reputation. Your competitors can copy or undermine the moves you take to compete. The only way to win, serve, and retain
customers is to become customer-obsessed.
A customer-obsessed enterprise focuses its strategy, energy, and budget on processes that enhance knowledge of and
engagement with customers and prioritizes these over maintaining traditional competitive barriers.
CMOs and CIOs must work together to create this companywide transformation.
Forrester has a four-part blueprint for strategy in the age of the customer, including the following imperatives to help
establish new competitive advantages:
Transform the customer experience to gain sustainable competitive advantage.
Accelerate your digital business with new technology strategies that fuel business growth.
Embrace the mobile mind shift by giving customers what they want, when they want it.
Turn (big) data into business insights through innovative analytics.
31. 31
Appendix D: Glossary
Discount rate: The interest rate used in cash flow analysis to take into account the time value of money. Companies set
their own discount rate based on their business and investment environment. Forrester assumes a yearly discount rate of
10% for this analysis. Organizations typically use discount rates between 8% and 16% based on their current environment.
Readers are urged to consult their respective organizations 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 (the
discount rate). A positive project NPV normally indicates that the investment should be made, unless other projects have
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 NPV of cash flows.
Payback period: The breakeven point for an investment. This is 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 by dividing
net benefits (benefits minus costs) by costs.
A NOTE ON CASH FLOW TABLES
The following is a note on the cash flow tables used in this study (see the example table below). The initial investment
column contains costs incurred at “time 0” or at the beginning of Year 1. Those costs are not discounted. All other cash flows
in years 1 through 3 are discounted using the discount rate (shown in the Framework Assumptions section) at the end of the
year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations are not calculated until the
summary tables are the sum of the initial investment and the discounted cash flows in each year.
Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as
some rounding may occur.
TABLE [EXAMPLE]
Example Table
Ref. Metric Calculation Year 1 Year 2 Year 3
Source: Forrester Research, Inc.
32. 32
Appendix E: Endnotes
1 Source: “The Future of Digital Media Buying,” Forrester Research, Inc., December 2, 2014.
2 Forrester risk-adjusts the summary financial metrics to take into account the potential uncertainty of the cost and benefit
estimates. For more information, see the section on Risks.