Forrester Consultiung - TEI of Rocket Fuel Programmatic Marketing Platform

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

Table Of Contents

Executive Summary .................................................................................... 3

Disclosures .................................................................................................. 4

TEI Framework And Methodology ............................................................ 6

Market Overview .......................................................................................... 7

Analysis ...................................................................................................... 10

ROI Analysis — Improved Media Efficiency .......................................... 13

ROI Analysis — Site Optimization ........................................................... 18

Financial Summary ................................................................................... 24

Rocket Fuel Programmatic Marketing Platform: Overview ................. 27

Appendix A: Composite Organization Description .............................. 28

Appendix B: Total Economic Impact™ Overview ................................. 29

Appendix C: Forrester And The Age Of The Customer ....................... 30

Appendix D: Glossary ............................................................................... 31

Appendix E: Endnotes .............................................................................. 32

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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.

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› 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.

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› 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.

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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


Perform due diligence

Conduct customer interviews

Design composite

organization

Construct financial

model using TEI framework

Write case study

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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

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› 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


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

› 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


“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%

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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

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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

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“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

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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.

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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


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


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


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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


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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


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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


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

TABLE 6

Value From More Effective Customer Conversions


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


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


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

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


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

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


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

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%


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

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

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


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


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


FIGURE 6

Organization A Cash Flow Chart (Risk-Adjusted)


($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

Cas

h f

low

s

Financial Analysis (risk-adjusted)

Total costs Total benefits Cumulative total

26

FIGURE 7

Organization B Cash Flow Chart (Risk-Adjusted)


($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

Ca

sh

flo

ws

Financial Analysis (risk-adjusted)

Total costs Total benefits Cumulative total

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

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

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

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

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



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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.

Forrester Consultiung - TEI of Rocket Fuel Programmatic Marketing Platform

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