the total economic impact™ of valassis digital...the valassis digital customer journey before and...

A Forrester Total Economic Impact™

Study Commissioned By Valassis Digital

September 2018

The Total Economic Impact™ Of Advertising With Valassis Digital

Cost Savings And Business Benefits Enabled By Valassis Digital For A Print Plus Digital Marketing Strategy

Table Of Contents Executive Summary 1

Key Findings 1

TEI Framework And Methodology 3

The Valassis Digital Customer Journey 4

Interviewed Organizations 4

Key Challenges 4

Solution Requirements 5

Key Results 6

Composite Organization 6

Analysis Of Benefits 7

New Marketing Response Leads To More In-Store Visits And More Sales 7

Unquantified Benefits 9

Flexibility 10

Analysis Of Costs 11

Digital Marketing Campaign Costs Including Valassis Digital Services To Augment Print Marketing Tactics 11

Financial Summary 13

Adjusted Financial Summary (With Removed Digital Coupon Costs) 14

Valassis Digital: Overview 15

Appendix A: Total Economic Impact 16

Appendix B: Endnotes 17

Project Director:

Sean Owens

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1 | The Total Economic Impact™ Of Valassis Digital

Executive Summary

Valassis Digital provides digital marketing services that help its customers

enhance product marketing campaigns and more precisely target

individuals for an offer or advertisement based on their past purchases

and browsing history. Valassis Digital commissioned Forrester Consulting

to conduct a Total Economic Impact™ (TEI) study and examine the

potential return on investment (ROI) enterprises may realize by leveraging

Valassis Digital services in addition to Valassis Print or other print services

in a holistic marketing campaign. The purpose of this study is to provide

readers with a framework to evaluate the potential financial impact of

adding Valassis Digital to their existing marketing strategy for their

organizations to drive in-store visits and sales.

To better understand the benefits, costs, and risks associated with this

investment, Forrester interviewed four customers with years of experience

working with Valassis Digital in a variety of marketing campaigns.

Interviewed organizations completed successful campaigns with high click-

through rates (CTR) from digital channels that led to more in-store visits

and sales. Interviewed organizations were able to identify a 30% lift from

these digital marketing efforts, meaning that about 30% of visits and sales

attributed to Valassis Digital efforts were not reached by any other

marketing channels.

Forrester’s Global Business Technographics Marketing Survey, 2017

asked more than 1,000 marketing professionals to identify their most

important demand management tactics; 25% named digital advertising —

which in fact, makes it one of the most important named tactics.1 The four

interviewed organizations also found digital marketing to be a valuable

strategy. Prior to using Valassis Digital, the organizations focused on print

marketing with some basic digital marketing efforts. These organizations

not only grew their digital marketing strategies through the years, but they

enabled additional benefits by: 1) leveraging the services of Valassis

Digital such as hyperlocal targeting and 2) focusing on omnichannel

marketing strategies across a variety of delivery types and channels such

as coupons and advertisements, web, and mobile.

Key Findings

Quantified benefit. The following risk-adjusted present value (PV)

quantified benefit is representative of that experienced by the companies

interviewed:

› A 30% lift from digital marketing efforts led to more than 9,000 new

sales from each campaign, adding up to nearly $3.2 million per year

(risk-adjusted). Based on interviewed organizations, this is

representative of how these organizations use Valassis Digital services

to deliver special offers or digital coupons to more people that are more

likely to be interested. They also use hyperlocal targeting to identify

likely buyers near a store and serve relevant mobile advertising or other

contact methods for store loyalty customers.

Unquantified benefits. The interviewed organizations experienced the

following benefits, which are not quantified for this study:

Benefits And Costs

New sales from added digital marketing strategies:

$3.2 million per year

Composite organization:

• Retailer with own brands and stores

• 25 campaigns per year

• Delivers coupon offers


› Valassis Digital targeted marketing services result in more than just

in-store visits. Valassis Digital services impacts online, mobile, and

phone sales as well as at the retailers’ or consumer goods producers’

own online and mobile-enabled stores, and through third-party

eCommerce sites. However, this analysis focuses on the impact of in-

store visits and sales due to a developed marketing strategy that

includes print and digital; those sales channels were certainly impacted,

but they were not included in this financial analysis.

› Valassis Digital marketing services can impact brand lift and other

key metrics. Again, while only the impact from in-store visits and

purchases are measured in this study, a digital marketing strategy can

help strengthen brand awareness and advertising recall, which can

impact revenue, especially as more and more campaigns are completed.

› Valassis Digital’s tracking and measurement tools and services can

drive future campaign improvements. More accessible and detailed

data helps drive more sales, covered above, but this information can

help identify opportunities for future campaigns. The impact from a

digital campaign could be even greater if the detailed learnings from

each program are put into place and applied for future campaigns, in

addition to the brand awareness impact described in the previous point.

Cost. The interviewed organizations experienced the following risk-

adjusted PV cost:

› Investing $975,000 per year in new digital marketing efforts. Based

on the campaign scale detailed above, the addition of Valassis Digital

services to existing print strategy includes some Valassis Digital service

fees, additional internal resource time, and possibly some coupon-

related costs.

Forrester’s interviews with four existing Valassis Digital customers and

subsequent financial analysis found that an organization based on these

organizations experienced benefits of $7.9 million over three years versus

costs of $2.4 million, adding up to a net present value (NPV) of $5.4 million

and an ROI of 224%.

Total benefits PV, $7.9M

Total costs PV, $2.4M

Initial Year 1 Year 2 Year 3

Financial Summary

ROI 224%

Benefits PV $7.9 million

NPV $5.4 million


TEI Framework And Methodology

From the information provided in the interviews, Forrester has constructed

a Total Economic Impact™ (TEI) framework for those organizations

considering implementing advertising with Valassis Digital.

The objective of the framework is to identify the cost, benefit, flexibility, and

risk factors that affect the investment decision. Forrester took a multistep

approach to evaluate the impact that Valassis Digital can have on an

organization:

DUE DILIGENCE Interviewed Valassis Digital stakeholders and Forrester analysts to gather data relative to advertising with Valassis Digital.

CUSTOMER INTERVIEWS Interviewed four organizations using Valassis Digital to obtain data with respect to costs, benefits, and risks.

COMPOSITE ORGANIZATION Designed a composite organization based on characteristics of the interviewed organizations.

FINANCIAL MODEL FRAMEWORK Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewed organizations.

CASE STUDY Employed four fundamental elements of TEI in modeling Valassis Digital Valassis Digital’s impact: 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 A for additional information on the TEI methodology.

The TEI methodology

helps companies

demonstrate, justify,

and realize the

tangible value of IT

initiatives to both

senior management

and other key

business

stakeholders.

DISCLOSURES

Readers should be aware of the following:

This study is commissioned by Valassis Digital and delivered by Forrester

Consulting. It is not meant to be used as a competitive analysis.

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 Valassis Digital Advertising.

Valassis Digital 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.

Valassis Digital provided the customer names for the interviews but did not

participate in the interviews.


The Valassis Digital Customer Journey

BEFORE AND AFTER THE VALASSIS DIGITAL INVESTMENT

Interviewed Organizations

For this study, Forrester conducted four interviews with Valassis Digital

customers. Interviewed customers include the following:

Key Challenges

The goal of any marketing effort is to drive product awareness and

sales, and all interviewed organizations have been and are still always

looking for new ways to reach new customers. According to the

Forrester Global Business Technographics Marketing Survey, 2017,

digital marketing is an important tactic; 25% of 1,039 respondents use

digital marketing as a strategy in the “awareness” stage and 22% use it

in the “consideration” stage — a top four strategies in both phases.2

Also, according to the Forrester Consumer Technographics® North

American Retail And Travel Benchmark Recontact Survey 1, Q3 2017,

more than 30% of 3,315 US consumers surveyed say they are

comfortable having product offers or discounts delivered to them while

shopping in that store in exchange for providing location information —

more than 60% including those in the middle (see Figure 1).3

INDUSTRY REGION INTERVIEWEE CAMPAIGNS

Consumer goods US national Shopper marketing manager

• Ongoing product campaigns

• Targeted reach based on past household purchases

• Digital coupons

Consumer goods US Midwest Digital media buyer and shopper marketing manager

• A large multi-month holiday campaign and shorter targeted campaigns

• Digital coupons

Retail US Northeast Senior marketing specialist

• 25 campaigns per year

• Targeted, hyperlocal advertising focus

Retail US West coast Marketing executive • Weekly campaigns

• Digital coupon delivery to augment print marketing

› Digital advertising is a

key tactic

› Many consumers are

comfortable receiving

useful information and

offers in-store.


Interviewed organizations have come to the same conclusion: digital

marketing is a valuable part of a complete marketing strategy:

› Print marketing is often “air cover.” While print can involve some

targeting, the delivery of many print marketing materials goes to

everyone that has a newspaper delivered, or every household in a zip

code, or ATZ (advertising targeting zone), with Valassis Print and

Valassis Digital sub-zip code targeting capabilities.

› Customer targeting is difficult. Any targeting or customization within

groups of consumers receiving mailers and circulars can be logistically

difficult and expensive. Several interviewed organizations did not use

Valassis’ print services (or use them all the time) so many print

campaigns were able to leverage the tools and features Valassis print

provides, such as leveraging hyperlocal targeting for customized print

mailers.

Solution Requirements

The interviewed organizations searched for a solution that could:

› Deliver increased store visits and sales across a variety of digital

channels. The digital media buyer as a Midwest consumer goods

producer said, “We’ve always been trying to seek digital solutions to

enhance the customer experience and deliver offerings and education

through digital as much as possible.”

› Add digital marketing to existing print marketing tactics. The

senior marketing specialist at a Northeast retailer said, “There was a

lack of understanding of digital on a local level.”

› Take advantage of digital marketing’s capability for granular

consumer targeting. There are more opportunities to customize

digital marketing efforts based on customer preferences, past

purchases, location, and more.

The interviewed organizations chose Valassis Digital as the best option

that met these requirements. Of particular value was Valassis Digital’s

rich consumer data set that includes customer profiles that identify

wants, past purchases, location, and other metrics, a large opt-in email

database, and integration with current loyalty programs.

› Consumer goods firms often work with retailers on marketing

campaigns. Their partner retailers often have preferred marketing

service providers. So, for the interviewed consumer goods

organizations, Valassis Digital is not used for all digital marketing

campaigns, even though they would like to. “I would say that I wish it

could happen with Valassis Digital more,” said the shopper marketing

manager at a national consumer goods firm.

› Retail firms have leveraged Valassis Digital’s hyperlocal targeting to be

able to focus on consumers that shop at a competitor, or that looked

online for a product they can now get at a nearby store. “Adding

Valassis Digital has been a very easy partnership,” said the marketing

executive at a West coast retailer.

› The two retail firms are also regular users of Valassis Print marketing

services; combining the digital marketing measurement capabilities

was an added value. The marketing executive at a West coast retailer

said: “Valassis is already handling our print circular ads. They know

exactly what households receive that ad and provide insights into who

“We’ve always been trying to

seek digital solutions to

enhance the customer

experience.”

Digital media buyer, Midwest

consumer goods firm

“Adding Valassis Digital has

been a very easy partnership.”

Marketing executive, West coast

retailer


those customers are, and pair that with digital to make sure that we’re

also targeting the right households.”

Key Results

The interviews revealed that key results from the Valassis Digital

investment include:

› Adding digital to the holistic marketing strategy has been

valuable in driving in-store visits. A more complete marketing

strategy includes multiple layers of digital marketing, including web

display ads, digital coupons, and mobile display ads and targeted

offers. An ad can be served that delivers an offer to a consumer that

has signaled interest in a product, highlighting a specific store they

shop at, and even serve that ad as they travel nearby the store while

browsing their phone or being sent a text or email as a member of a

loyalty program. “The number one KPI [key performance indicator] is

sales. What we look for are clicks through to either making a purchase

or clipping a [digital] coupon,” said the shopper marketing manager at

national consumer goods firm.

Composite Organization

Based on the interviews, Forrester constructed a TEI framework, a

composite company, and an associated ROI analysis that illustrates the

areas financially affected. The composite organization is representative

of the four companies that Forrester interviewed and is used to present

the aggregate financial analysis in the next section. The composite

organization that Forrester synthesized from the customer interviews has

the following characteristics:

› Description. The composite organization is a retailer that supports its

own brands and other brands sold in physical stores and online. It

conducts many campaigns each year to drive product awareness and

incentivize purchases through advertising and discount offers. It uses

Valassis Digital for all of its digital campaigns.

• As mentioned above consumer goods firms interviewed for this

study did not use (and actually were not able to use) Valassis

Digital for every campaign.

• For simplicity of benefit and cost modeling, the composite

organization is more closely based on the interviewed retail

organizations, as they use Valassis Digital for virtually all

campaigns, as the only digital marketing service provider, and they

have more visibility of the process, starting with the campaign

through to the sale.

• Even so, the costs and benefits apply the same to consumer

goods organizations, except that readers may want to adjust

estimates based on a lower number of digital campaigns that

leverage Valassis Digital, campaigns that use multiple digital

marketing providers, and other considerations related to through-

retailer selling.

› Deployment. The organization uses Valassis Digital services in 25

campaigns each year, as the only digital advertising service provider,

to deliver advertising and offers targeted to consumers with a likely

interest in the product.

“The number one KPI is sales.

What we look for are click-

throughs to either making a

purchase or clipping a [digital]

coupon.”

Shopper marketing manager,

national consumer goods firm


The table above shows the total of all benefits across the areas listed below, 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 nearly $7.9 million.

Analysis Of Benefits

QUANTIFIED BENEFIT DATA AS APPLIED TO THE COMPOSITE

New Marketing Response Leads To More In-Store

Visits And More Sales

The composite organization has leveraged Valassis Digital services to

reach more consumers, generate more interest and bring more people to

physical stores — all resulting in new sales.

For the composite organization, each campaign reaches an average of

16 million consumers, and these targeted digital marketing tactics are

expected to result in a 3.5% average click-through rate (CTR), based on

best practices and marketing tactics reported by interviewed

organizations. While interviewed organizations saw their own individual

results, overall they realized new opportunities and sales leveraging

Valassis Digital capabilities:

› The Northeast retailer uses Valassis Digital as a key digital marketing

channel using location services to help target the right people at the

right times. They can deliver mobile advertising and other content via

loyalty program opt-in communications. “We are able to identify

consumers closer in the purchase funnel, with higher purchase intent,

than just with print,” said the senior marketing specialist at a northeast

retailer.

With this solution, the firm, with Valassis Digital, can target a consumer

interested in a product, then serve an ad or message as they walk near

their retail location. “So, now we can not only see how many people

were served ads and how many times that was clicked on, we can tell

how many people actually went into a physical store location. And with

Valassis Digital’s help we are able to measure implied sales,”

continued the senior marketing specialist.

› The West coast retailer uses Valassis Digital services to deliver digital

coupons to augment existing mailer and circular print strategies.

“Digital allows us to expand that reach and deepen the relationship

with customers,” said the marketing executive of a West coast retailer.

While there’s a large amount of repeated contact across print and

digital, that helps with brand recognition. And digital marketing reaches

many people that don’t subscribe to a physical newspaper and

immediately recycle mailers. “It’s layered on top of what we’re getting

in print,” added the marketing executive for the retailer.

› The Northeast consumer goods producer uses Valassis Digital to

target consumers for digital coupon campaigns, augmenting their

own loyalty program. “Valassis Digital’s ability to very specifically

target the right people at the right time is where they bring a ton of

value,” said the digital media buyer at a Midwest consumer goods firm.

Total Benefits

REF. BENEFIT YEAR 1 YEAR 2 YEAR 3 TOTAL PRESENT VALUE

Atr Revenue from net new in-store sales via digital marketing to drive in-store traffic

$3,158,513 $3,158,513 $3,158,513 $9,475,538 $7,854,753

“We are able to identify

consumers closer in the

purchase funnel, with higher

purchase intent, than just with

print. We can tell how many

people actually went into a

physical store location.”

Senior marketing specialist,

Northeast retailer


It can target shoppers that: 1) show interest in a particular product to

print a coupon at home or add it to their loyalty card app; 2) shop at a

particular store (the target store, or even a competitor); or 3) are

close to the target store and then deliver coupons in real time. Many

other parameters are also available to help target consumers more

likely to be interested in an offer.

› The national consumer goods producer also distributes coupons.

Valassis Digital provides value by making sure messages are

reaching the right audiences, such as targeting consumers that

shop at key retailers. The shopper marketing manager for a national

consumer goods firm said, “With digital, we want to amplify our

coupons and really target shoppers who shop at a specific store, who

are close to that store and have bought a product in the same

category.”

The composite organization has leveraged Valassis Digital for specific

campaigns and can attribute new in-store sales to the addition of digital

marketing:

› The organization estimates 25 campaigns that annually leverage

Valassis Digital.

› Each campaign reaches an average of 16 million consumers.

› These campaigns, including coupon-led campaigns, estimate a 3.5%

average CTR, or 560,000 clicks per campaign. In coupon-led

campaigns, CTR can be measured differently. “We measure clips

which is showing intent to buy, to take advantage of the offer,” said the

digital media buyer at a Midwest consumer goods firm.

› It’s expected that about 5.5% of consumers that click on the

advertisement or digital coupon will act on that information — in other

words, 31,000 consumers go to a store because they saw an

interesting advertisement or to redeem the coupon.

› Many of these 31,000 consumers were reached in other ways, or

perhaps would have come in to the store anyway, but the composite

organization has attributed a 30% lift due to digital marketing efforts.

“Valassis can do a good job following advertising to clipping, and to

actual redemption of a particular coupon,” said the shopper marketing

manager at a national consumer goods firm. More than 9,000 new

sales are specifically attributed to digital marketing per campaign.

› As mentioned above, a 3.5% CTR and a 5.5% redemption rate are

assumed, based on interview feedback and are reflective of campaigns

including digital coupons. The marketing executive at a West coast

retailer said “Digital is more measurable. So, it’s a win, win, win.”

› A basket size is estimated to be $14.30 — that may be lower for a

grocery retailer distributing a digital coupon for a specific product, or

higher for a more specialty retailer advertising higher-priced items, or

when including additional items added to the cart.

Some potential risks can impact this benefit. While in most cases the

reader can reduce this risk by using his or her own marketing campaign

data, the assumptions and metrics for the composite organization may

be overestimated:

› CTR and redemption rates were lower for some interviewed

organizations.

› Basket size is highly variable based on campaign and retailer type.

› 25 campaigns

› 16 million impressions

per campaign

› 3.5% CTR – 560,000

clicks

› 5.5% redemption –

31,000 sales

› 30% lift – 9,300 sales

attributed to digital

marketing

“Valassis can do a good job

following advertising to

clipping, and to the actual

redemption of a particular

coupon.”

Shopper marketing manager,

national consumer goods firm

“Digital is more measurable.

So, it’s a win, win, win.”

Marketing executive, West coast

retailer


Impact risk is the risk that the business or technology needs of the organization may not be met by the investment, resulting in lower overall total benefits. The greater the uncertainty, the wider the potential range of outcomes for benefit estimates.

› Note that campaign size is not at risk of overestimation — while the

total benefit amount would raise or lower, costs would as well, resulting

in the same or nearly the same ROI.

› To account for these risks, Forrester adjusted this benefit downward by

5% for the organization, yielding a three-year risk-adjusted total PV of

$7.9 million.

Unquantified Benefits

Additional benefits were discussed but not included in this analysis, or

not available for measurement at this time.

› First, this analysis focuses on in-store visits impacted by adding digital

marketing tactics to a campaign. Digital coupons and advertisements

also impact web, mobile, and phone sales, but was not part of this

study.

› Digital campaigns can help improve brand recognition and advertising

recall, meaning CTR and/or the number of in-store visits may improve,

especially as more and more campaigns are completed.

› Interviewed organizations have also highlighted the value enabled by

Valassis Digital’s tracking and measurement tools and services. This

has been seen to help drive new sales, as measured above. This

information also helps identify areas of improvement or opportunity in

future campaigns. While not quantified yet, organizations plan to

measure this in the future. “Valassis Digital’s ability to very specifically

target the right people at the right time who shop at the retailer that

we’re trying to support is where they bring a ton of value,” said the

digital media buyer at a Midwest consumer goods firm. The impact

from a digital campaign could be even greater if the detailed learnings

from each program are put into place and applied for future

campaigns.

New Marketing Response Leads To More In-Store Visits And More Sales

REF. METRIC CALC. YEAR 1 YEAR 2 YEAR 3

A1 Digital impressions per campaign 16,000,000 16,000,000 16,000,000

A2 Clicks on digital impressions About 3.5% CTR 560,000 560,000 560,000

A3 Physical store visits and sales due to clicks About 5.5% response

31,000 31,000 31,000

A4 Incremental store visits and sales (lift) 30% lift 9,300 9,300 9,300

A5 Average basket size $14.30 $14.30 $14.30

A6 Number of campaigns per year 25 25 25

At Revenue from net new in-store sales via digital marketing to drive in-store traffic

A4*A5*A6 $3,324,750 $3,324,750 $3,324,750

Risk adjustment ↓5%

Atr Revenue from net new in-store sales via digital marketing to drive in-store traffic (risk-adjusted)

$3,158,513 $3,158,513 $3,158,513

Additional sales from

phone, mobile, and web

channels are also

expected by all

interviewees.


Flexibility, as defined by TEI, represents an investment in additional capacity or capability that could be turned into business benefit for a 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.

Flexibility

The value of flexibility is clearly unique to each customer, and the

measure of its value varies from organization to organization. There are

multiple scenarios in which a customer might choose to implement

Valassis Digital and later realize additional uses and business

opportunities, including:

› One organization highlighted video as a new marketing channel

to explore. The national consumer goods company has started to

leverage Valassis Digital’s services for video marketing. “We want to

expand our advertising into targeted introductory commercials,” said

the shopper marketing manager for a national consumer goods firm.

Flexibility would also be quantified when evaluated as part of a specific

project (described in more detail in Appendix A).


The table above shows the total of all costs across the areas listed below, as well as present values (PVs) discounted at 10%. Over three years, the composite organization expects risk-adjusted total costs to be a PV of less than $2.5 million.

Analysis Of Costs

QUANTIFIED COST DATA AS APPLIED TO THE COMPOSITE

Digital Marketing Campaign Costs Including

Valassis Digital Services To Augment Print

Marketing Tactics

For the 25 digital marketing campaigns described in the Benefits section,

some investment is required:

› Valassis Digital services are estimated to be $25,000 per campaign, as

part of digital marketing services to existing advertising and marketing

efforts, including print campaigns.

› These campaigns are specifically described as primarily print

campaigns in the past, that have now matured into print plus digital

campaigns. That means a lot of the planning and overhead costs for a

campaign (especially if adding digital marketing to an existing print

campaign) are already part of the past scenario, so only a small

amount of incremental internal resource costs is assumed to be

required.

Total Costs

REF. COST INITIAL YEAR 1 YEAR 2 YEAR 3 TOTAL PRESENT VALUE

Btr Valassis Digital marketing costs as part of print + digital campaign strategy

$0 $975,188 $975,188 $975,188 $2,925,563 $2,425,147

Valassis Digital Marketing Costs As Part Of Print Plus Digital Campaign Strategy: Calculation Table

REF. METRIC CALC. INITIAL YEAR 1 YEAR 2 YEAR 3

B1 Number of campaigns per year A6 25 25 25

B2 Average Valassis services fees per campaign

$25,000 $25,000 $25,000

B3 Average other marketing costs per campaign

$7,500 $7,500 $7,500

B4 Average digital coupon offer value $0.50 $0.50 $0.50

B5 Average digital coupon redemption costs per campaign

A4*B4 $4,650 $4,650 $4,650

B6 Total Valassis services fees and other marketing costs per year

(B2+B3)*B1 $812,500 $812,500 $812,500

B7 Total coupon redemption costs per year

B5*B1 $116,250 $116,250 $116,250

Bt Valassis Digital marketing costs as part of print + digital campaign strategy

B6+B7 $0 $928,750 $928,750 $928,750

Risk adjustment ↑5%

Btr Valassis Digital marketing costs as part of print + digital campaign strategy (risk-adjusted)

$0 $975,188 $975,188 $975,188


Implementation risk is the risk that a proposed investment may deviate from the original or expected requirements, resulting in higher costs than anticipated. The greater the uncertainty, the wider the potential range of outcomes for cost estimates.

› And most interviewed organizations included digital coupons in their

digital marketing campaign. While the redeemable value of this coupon

is often not paid from the same department, it is still often a cost that

the organization may need to consider, so to provide a conservative

estimate a relatively small coupon amount (50 cents) is included in the

costs.

› However, one organization did not offer digital coupons. Another

pointed out that often coupons are sponsored by another organization

in the sales and marketing chain and would not be considered a cost

for digital marketing investment for the composite retail firm. The risk-

adjusted amount with no added coupon costs for this category is

$853,125 per year adding up to a present value of $2.1 million. A

second Financial Summary is provided below with NPV and ROI

results for the Benefits listed above versus the Costs estimated here,

without the coupon offer value lost revenue.

Costs are measured on a per-campaign basis, adding up to full-year cost

estimates. Coupon investment has already been covered above, but

other costs may be underestimated, and Forrester adjusted this cost

upward by 5%, yielding a three-year risk-adjusted total PV of $2.4

million.


The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the composite organization's investment. Forrester assumes a yearly discount rate of 10% for this analysis.

Financial Summary

CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

Cash Flow Chart (Risk-Adjusted)

-$2.0 M

-$1.0 M

$1.0 M

$2.0 M

$3.0 M

$4.0 M

$5.0 M

$6.0 M

$7.0 M

$8.0 M


Cashflows

Total costs

Total benefits

Cumulative net benefits

These risk-adjusted ROI,

NPV, and payback period

values are determined by

applying risk-adjustment

factors to the unadjusted

results in the Benefit and

Cost sections.

Cash Flow Table (Risk-Adjusted)

INITIAL YEAR 1 YEAR 2 YEAR 3 TOTAL PRESENT VALUE

Total costs $0 ($975,188) ($975,188) ($975,188) ($2,925,563) ($2,425,147)

Total benefits $0 $3,158,513 $3,158,513 $3,158,513 $9,475,538 $7,854,753

Net benefits $0 $2,183,325 $2,183,325 $2,183,325 $6,549,975 $5,429,606

ROI 224%


As mentioned in the Cost section, some organizations did not include coupons in their digital marketing campaigns, or the reduced revenue due to the coupon discount was sometimes picked up by another organization (such as a supermarket chain instead of the product manufacturer). For readers expecting a similar situation, a second financial summary is included here. Forrester assumes a yearly discount rate of 10% for this analysis.

Adjusted Financial Summary (With Removed

Digital Coupon Costs)

CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

Cash Flow Chart (Risk-Adjusted)

-$2.0 M

-$1.0 M

$1.0 M

$2.0 M

$3.0 M

$4.0 M

$5.0 M

$6.0 M

$7.0 M

$8.0 M


Cashflows

Total costs

Total benefits

Cumulative net benefits

These risk-adjusted ROI,

NPV, and payback period

values are determined by

applying risk-adjustment

factors to the results in the

Benefit section, plus the

Cost section results minus

coupon discount costs.

Cash Flow Table (Risk-Adjusted)

INITIAL YEAR 1 YEAR 2 YEAR 3 TOTAL PRESENT VALUE

Total costs $0 ($853,125) ($853,125) ($853,125) ($2,559,375) ($2,121,596)

Total benefits $0 $3,158,513 $3,158,513 $3,158,513 $9,475,538 $7,854,753

Net benefits $0 $2,305,388 $2,305,388 $2,305,388 $6,916,163 $5,733,157

ROI 270%


Valassis Digital: Overview

The following information is provided by Valassis Digital. Forrester has not validated any claims and does not

endorse Valassis Digital or its offerings.

DIGITAL MARKETING INTELLIGENCE

Valassis Digital is a leading digital marketing intelligence company, providing a best-in-class data management

platform and online and offline targeting capabilities that fuel superior display advertising and media

offerings. Through proprietary technology and the Valassis Consumer Graph™, we power the life cycle of

marketing campaigns — from planning to activation and measurement. In fact, 19 of 20 leading brands work

with Valassis Digital to drive better campaign performance.

UNPARALLELED ONLINE AND OFFLINE INTELLIGENCE

Every path-to-purchase is unique and understanding diverse consumer signals is in our DNA. Our proprietary

technology continually connects billions of consumer, digital, and real-world behaviors, bridging disjointed data

sets and building a single identity to intelligently target across channels. By merging exclusive offline and online

data, we create a powerful view of each consumer to anticipate behavior and determine optimal targeting.

TRANSLATING KNOWLEDGE TO ACTION

We use our intelligence to engage consumers with consistency and precision across print and digital channels to

drive results. The scale of our quality media portfolio allows us to coordinate delivery to reach consumers in

moments of need and in channels they expect. Our diversity of channels also gives us flexibility to align the right

media and deliver based on what works and doesn’t work.

MEASURING REAL-WORLD IMPACT

With a fully connected platform, we are able to understand who is responding and what is driving response to

optimize performance. With our robust insight and measurement, you are able to truly understand how your

media impacts results from foot traffic to sales.

https://www.valassisdigital.com/us/


Appendix A: Total Economic Impact

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.

Total Economic Impact Approach

Benefits represent the value delivered to the business by the

product. The TEI methodology places 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.

Costs consider all expenses necessary to deliver the

proposed value, or benefits, of the product. The cost category

within TEI captures incremental costs over the existing

environment for ongoing costs associated with the solution.

Flexibility represents the strategic value that can be

obtained for some future additional investment building on

top of the initial investment already made. Having the ability

to capture that benefit has a PV that can be estimated.

Risks measure the uncertainty of benefit and cost estimates

given: 1) the likelihood that estimates will meet original

projections and 2) the likelihood that estimates will be

tracked over time. TEI risk factors are based on “triangular

distribution.”

The initial investment column contains costs incurred at “time 0” or at the

beginning of Year 1 that are not discounted. All other cash flows are discounted

using the discount rate at the end of the year. PV calculations are calculated for

each total cost and benefit estimate. NPV calculations in 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.

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.

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.

Return on investment (ROI)

A project’s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits less costs) by costs.

Discount rate

The interest rate used in cash flow analysis to take into account the time value of money. Organizations typically use discount rates between 8% and 16%.

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.


Appendix B: Endnotes

1 Source: “Global Business Technographics® Marketing Survey, 2017,” Forrester Research, Inc., September 2017. 2 Ibid. 3 Source: Forrester Analytics Consumer Technographics North American Retail And Travel Benchmark Recontact Survey 1, Q3 2017 (US).

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