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
2 | The Total Economic Impact™ Of Valassis Digital
› 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
3 | The Total Economic Impact™ Of Valassis Digital
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.
4 | The Total Economic Impact™ Of Valassis Digital
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.
5 | The Total Economic Impact™ Of Valassis Digital
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
6 | The Total Economic Impact™ Of Valassis Digital
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
7 | The Total Economic Impact™ Of Valassis Digital
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
8 | The Total Economic Impact™ Of Valassis Digital
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
9 | The Total Economic Impact™ Of Valassis Digital
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.
10 | The Total Economic Impact™ Of Valassis Digital
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).
11 | The Total Economic Impact™ Of Valassis Digital
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
12 | The Total Economic Impact™ Of Valassis Digital
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.
13 | The Total Economic Impact™ Of Valassis Digital
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
Initial Year 1 Year 2 Year 3
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%
14 | The Total Economic Impact™ Of Valassis Digital
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
Initial Year 1 Year 2 Year 3
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%
15 | The Total Economic Impact™ Of Valassis Digital
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.
16 | The Total Economic Impact™ Of Valassis Digital
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.
17 | The Total Economic Impact™ Of Valassis Digital
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).