The Total Economic Impact Of Quantcast Advertise

Transcription

1 A Forrester Total Economic Impact Study Commissioned By Quantcast Project Director: Michael Speyer May 2015 The Total Economic Impact Of Quantcast Advertise

2 Table Of Contents Executive Summary... 3 Disclosures... 4 TEI Framework And Methodology... 5 Analysis... 6 Financial Summary Quantcast Advertise: Overview Appendix A: Total Economic Impact Overview Appendix B: Glossary ABOUT FORRESTER CONSULTING Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit forrester.com/consulting. 2015, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to

3 3 Executive Summary Quantcast commissioned Forrester Consulting to conduct a Total Economic Impact (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Quantcast Advertise. The purpose of this study is to provide readers with a framework to evaluate the potential financial impact that Quantcast Advertise may have on their organizations. Reduced conversion costs across the campaigns is the biggest benefit they bring to the table. ~Media analyst, agency To better understand the benefits, costs, and risks associated with Quantcast Advertise, Forrester interviewed three customers with extensive experience using Quantcast Advertise. The customers included two agencies working on behalf of specific clients and one advertiser. Prior to using Quantcast Advertise, the customers had experienced a variety of challenges in meeting their digital marketing objectives. Each of these companies had unique and specific audiences that they were targeting, with unique goals for their marketing campaigns. Their most prevalent challenges were reaching their target audiences and finding a sufficient volume of new targets in a cost-effective manner. This challenge resulted in cost per actions (CPAs) that were too high. QUANTCAST ADVERTISE DELIVERS IMPROVED CPA EFFICIENCY Our interviews revealed that Quantcast Advertise delivered CPAs that were 30% to 40% lower than the customers internal benchmarks. Based on the interviews, we modeled the financial analysis for two representative campaigns that represent: 1) a lead generation campaign aimed at a narrowly defined, hard-to-reach audience and 2) a customer acquisition campaign aimed at a broadly defined audience. The analysis yielded CPAs that were 39% and 31% lower than internal benchmarks, respectively (see Figure 1). Forrester recognizes that the financial results that Quantcast delivers on any campaign will vary with cost per thousand (CPM), click-through rate (CTR), conversion rates, the revenue contribution of each new customer, and other campaign attributes such as creative type and quality, landing page experience, and delivery platform. FIGURE 1 Financial Summary For Representative Campaigns CPA lead generation: Quantcast: $135 Benchmark: $220 Quantcast 39% below benchmark CPA customer acquisition: Quantcast: $38 Benchmark: $55 Quantcast 31% below benchmark Source: Forrester Research, Inc.

4 4 Benefits. The interviewed companies experienced the following qualitative benefits: Improved efficiency in capturing target audiences. The interviewed companies noted that Quantcast narrowed the audiences that were targeted, thus reducing the waste in ads served. Use of Quantcast s look-alike modeling to find new targets. Quantcast s look-alike modeling (Quantcast Prospecting) was found to be effective in finding new targets. Sometimes the client used Quantcast s audience profiling to redefine its targets, which would then be used by other partners to find new targets. Effective retargeting to move prospects through the sales funnel. In one instance, Quantcast used the long sales cycle (30 to 60 days) to retarget prospects in order to move them through the sales funnel. Use of Quantcast s split-funnel attribution to optimize partner selection. Obtaining improved attribution accuracy allowed one company to optimize partner selection across all partners. Use of Facebook to reach hard-to-find targets. Facebook was used to target audiences based on overall online behavior as opposed to using demographics or job function or placing ads on endemic sites with content that interested the audience. This resulted in new leads and lower conversion costs. Use of Quantcast to execute a change in strategy. Quantcast enabled customers to shift their marketing focus away from advertising specific products or placing ads on endemic websites to focus on finding specific targets that would be more likely to purchase. Costs. The interviewed companies experienced the following costs: Media purchased from Quantcast. The interviewed companies purchased ad inventory directly from Quantcast. Prices varied according to the type of media purchased. Disclosures The reader should be aware of the following: The study is commissioned by Quantcast 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 Quantcast Advertise. Quantcast 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. Quantcast provided the customer names for the interviews but did not participate in the interviews.

5 5 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 Quantcast Advertise. The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. APPROACH AND METHODOLOGY Forrester took a multistep approach to evaluate the impact that Quantcast Advertise can have on an organization (see Figure 2). Specifically, we: Interviewed Quantcast marketing and sales personnel, along with Forrester analysts, to gather data relative to Quantcast Advertise and the marketplace for Quantcast Advertise. Interviewed three organizations currently using Quantcast Advertise to obtain data with respect to costs, benefits, and risks. Constructed a financial model representative of the interviews using the TEI methodology. The financial model is populated with the cost and benefit data obtained from the interviews as applied to the composite organization. Risk-adjusted the financial model 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 Quantcast s Advertise s service: 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. FIGURE 2 TEI Approach Perform due diligence Conduct customer interviews Construct financial model using TEI framework Write case study Source: Forrester Research, Inc.

6 6 Analysis INTERVIEW HIGHLIGHTS For this study, Forrester conducted a total of three interviews with representatives from the following companies, which are Quantcast customers based in the US and EU: A hotel and resort company. The company markets its unique entertainment offers to consumers. Decibel Media, an independent media planning and buying agency that works with a university. The university markets its executive education courses to professionals who work in nonprofit organizations, government workers, and NGOs on a global basis. They are always sharing information with me about what is going on in the market. It helps me in valuing them as a partner ~ Senior marketing manager, advertiser An agency that works with a telecommunications provider. The company markets to potential buyers of TV, Internet, and telephone services. The interviewed companies were targeting very specific audiences in their marketing campaigns, as shown in Table 1. TABLE 1 Interviewed Companies Target Audiences Company Product/Service Target Audience Resort (advertiser) Hotel, entertainment Consumers of 21+ years within their geographic market University (agency) Executive education programs NGO, nonprofit, and government executives Telecommunications Home movers, connected Phone, TV, Internet (agency) device purchasers Source: Forrester Research, Inc. The companies used both traditional and digital marketing strategies. Their digital marketing strategies employed a mix of technologies and partners to purchase and place digital advertisements, including site direct, demand-side platforms (DSPs), and ad networks. They delivered ads across a mix of platforms, including desktop, social, and . All the companies set thresholds for partner performance and had contractual language that allowed them to drop partners at will. Partner performance reviews were conducted on a weekly to monthly basis, and underperforming partners were removed from the plan. The interviewed companies faced a variety of marketing challenges in general, along with specific challenges associated with their digital marketing strategies. These challenges included: Difficulty in reaching target audiences. Each of the interviewed companies had very specific, niche target audiences that they wished to reach (see Table 1). While it was possible to reach audiences that generally fell into the target market, locating specific targets that matched their specifications within these general audiences was challenging. Inability to generate sufficient volume of new targets. For all the interviewed companies, finding and reaching sufficient volumes of new targets was a perennial challenge. They had found that the combination of simple market segmentation

7 7 techniques and purchasing ad inventory via site direct or DSPs did not deliver a sufficient number of click-throughs and conversions. This drove the companies to seek more sophisticated technologies for identifying new targets and retargeting previous customers. High cost associated with display ads on endemic sites. While endemic sites had relevant content for their target audiences, the companies found that the overall number of visitors to these sites was too low, resulting in a too-high CPM for a relatively low volume of impressions. Ineffectiveness and high cost of using direct mail to reach targets globally. One organizaton, whose target audience was in every part of the world, found it too difficult to identify and reach targets on a global basis using direct mail. It was also wasteful, especially when returned mail was factored in. This was a primary driver for this company to pursue a digital strategy that used advanced targeting capabilities. Need to optimize campaign spend. Optimizing CPA or maximizing the efficiency of their campaign spend was an everpresent need with the organizations that we interviewed. Solution In order to improve the possibility of reaching their target audiences and generating more conversions, the interviewed companies engaged with Quantcast. In all cases, Quantcast was engaged for a limited test period (e.g., 60 days), which was then converted to a more permanent engagement. At the time of the interviews, all of the companies had been using Quantcast Advertise for 6 to 12 months, and none of the companies had dropped Quantcast from their partner mix. The interviewed companies typically used between three and 15 partners in their digital marketing efforts. Campaign durations varied from months to evergreen (i.e., always running). Quantcast Advertise was used in a mix of prospecting and retargeting campaigns, ranging from 70% (new) to 30% (retargeting). Quantcast Advertise ads were served predominantly on desktop and social platforms. Quantcast has a great offering in their look-alike targeting that allowed us to tag the site and focus it on the actions of visitors. ~Director of digital media, agency Results After engaging with Quantcast, the interviewed companies experienced numerous quantitative and qualitative benefits that had an impact on their digital marketing campaigns. The qualitative benefits included: Improved efficiency in capturing target audiences. According to one interviewee, With Quantcast we ve been able to narrow the focus, so we re really hitting the people that we should be hitting and not getting a lot of waste. A lot of the conversions that we are seeing from Quantcast are true conversions. ~Media analyst, agency Use of prospecting models to effectively find new targets. All of the interviewed companies used Quantcast s prospecting models to find new targets, based on the demographic profile of the audiences that had converted or viewed ads. This was essential in allowing the companies to find net-new targets in larger volumes than they were able to previously.

8 8 Use of Facebook to reach hard-to-find targets. Facebook allowed one company to reach new targets based on overall online behavior rather than by serving ads on endemic sites with content that interested the audience. This was a key tactic in increasing net-new leads and reducing the cost of conversions. Effective retargeting to move prospects through the sales funnel. In one instance where the purchase cycle was long (30 to 60 days), Quantcast was able to effectively retarget prospects during the purchase cycle to help move them along the sales cycle, which ulimately increased conversions. Use of split-funnel attribution modeling to optimize partner selection. After piloting Quantcast s split-funnel attribution solution, one interviewed company decided to use it to optimize partner selection across all of the partners that it used. Being able to capture this audience in such an efficient manner is something we ve never been able to do before. ~Director of digital media, agency Use of Quantcast to execute a change in strategy. After using Quantcast Advertise, two of the interviewed companies changed their marketing strategies to focus on finding specific target audiences that were more likely to purchase, as opposed to marketing the products themselves or placing ads on specific websites. In one instance, the company went from promoting 35 individual products to focusing on finding six or seven key audiences. Fast responsiveness as a service provider. The interviewed companies noted that Quantcast was quick to respond to their requests and was proactive in keeping them abreast of industry trends and bringing new ideas to the table.

9 9 BENEFITS Framework Assumptions For this analysis, we assume a fictitious US agency working on two representative campaigns. The campaign attributes are shown in Table 2. TABLE 2 Campaign Assumptions Attribute Lead Generation Campaign Customer Acquisition Campaign Campaign focus Lead generation Customer acquisition Target audience Narrowly defined, hard to reach, high value Number of impressions 2 million 4 million CPA definition Prospect demonstrates strong intention to purchase (e.g., requests a quote or to be contacted) Ad platform Display Display Broadly defined, average value Prospect makes a purchase from customer website Source: Forrester Research, Inc. For both campaigns, we assume: The campaigns are run on an evergreen (ongoing) basis. The media buy shown in Table 2 reflects the buy for a limited time period, e.g., four to six weeks. Quantcast represents approximately 20% to 25% of the total campaign spend. Multiple partners are used on both campaigns. All partners performance ramps up over time, and the lowest CPAs are achieved some time into the campaign. The data shown in this analysis reflects maximum Quantcast performance. Forrester anticipates that generally a point of diminishing returns will be reached after a sufficient volume of impressions have been served and conversions have occurred. At this point, all partners will begin to see similar performance. We review them every month, and they have been the top performer every month.... They have been consistent. ~Media analyst, agency Partner performance will vary, with many factors not associated with media acquisition, such as landing page experience and creative type and quality. Multiple tactics are employed in the campaigns, such as predictive targeting, retargeting, creative rotation, and real-time bidding.

10 10 Last-click attribution is used to determine partner performance. This reflects what we learned from the organizations that we interviewed. We recognize that other organizations may use alternate attribution methods like last-touch attribution or Quantcast s split-funnel attribution. For Quantcast, we assume: Quantcast s CPMs come at a premium relative to other partners because of the advanced technology and services that it offers. CPMs are not reflective of what actual media costs but show what is sold through to the client. Forrester recognizes that CPMs can vary widely, depending on the creative type that is used (e.g., rich media, banner) and the platform on which the ad is served (e.g., display, social, or mobile). For Quantcast, the best performance was achieved after prospect modeling was deployed and optimized. We recognize that prospect modeling needs to be constantly monitored and tuned to maintain optimal performance. Quantcast s conversion rates are higher than benchmarks or other partners because it can locate target audiences more effectively. We note that view-through rate (VTR) or view conversions are becoming a more commonly accepted measure of campaign performance. At the time of writing, VTR data was unavailable from the interviewees and was not factored into the analysis, and we defaulted to using CTR. BENEFITS All the companies and agencies that we interviewed noted that Quantcast Advertise delivered CPAs that were 30% to 40% lower than their internal benchmarks, and often below those delivered by other partners. These CPAs where achieved over variable periods of time, ranging from weeks to months. Other technologies/partners were reported to deliver CPAs that were 10% to 20% below benchmark. Improved CPA Compared With Internal Benchmarks Lead Generation Campaign This campaign targets a narrowly defined audience that is difficult to reach. The purpose of the campaign is lead generation for a high-value service. From a CPA perspective, they drove the best results by far. ~Media analyst, agency The performance results shown in Table 3 are optimal results and were achieved after Quantcast s prospecting models were optimized and its inventory was still fresh. Quantcast s CPA is $135, versus $220 for the benchmark, which is 38.6% lower than the benchmark. Quantcast s performance is a result of its ability to locate and serve ads to the target audience more effectively, which results in higher conversions. Forrester urges readers to consult with Quantcast for CPM pricing and to make their own estimates for CTR and conversion rates in order to determine their own CPA.

11 11 TABLE 3 Lead Generation Campaign Ref. Metric Calculation Quantcast Client Benchmark A1 Impressions 2 million 2 million A2 CPM $3.50 $2.00 A3 Campaign spend A1*A2/1,000 $7,000 $4,000 A4 Average CTR 0.288% 0.101% A5 Percent conversions 0.90% 0.90% A6 Conversions A1*A4*A A7 CPA A3/A6 $135 $220 A8 Percentage improvement 38.6% Source: Forrester Research, Inc. Customer Acquisition Campaign This campaign targets a broad audience for the purpose of generating online sales. Examples of these are online retailers or hotel bookings. The performance results shown in Table 4 are optimal results and were achieved after Quantcast s prospecting models had been optimized and its inventory was still fresh. Quantcast s CPA is 31% lower than the benchmark. Quantcast s performance is a result of its ability to locate and serve ads to the target audience more effectively, which results in higher conversions. Quantcast return on ad spend (ROAS) is 50%, which is 46% higher than the benchmark results. We note that ROAS is strongly influenced by revenues per conversion, or customer spend. Forrester urges readers to consult with Quantcast for CPM pricing and to make their own estimates for CTR and conversion rates in order to determine their own CPA. We also urge readers to apply their own revenues per conversion in order to determine their own potential ROAS.

12 12 TABLE 4 Customer Acquisition Campaign Ref. Metric Calculation Quantcast Client Benchmark B1 Impressions 4 million 4 million B2 CPM $2.50 $2.00 B3 Campaign spend B1*B2/1,000 $10,000 $8,000 B4 Average CTR 0.188% 0.104% B5 Percent conversions 3.50% 3.50% B6 Conversions B1*B4*B B7 CPA B3/B6 $38 $5 B8 Percentage improvement 30.9% B9 Revenues per conversion $57 $57 B10 Revenue impact B9*B6 $15,000 $8,291 B11 Profit B10-B3 $5,000 $291 B12 ROAS B11/B3 50% 4% Source: Forrester Research, Inc.

13 13 COSTS The cost of Quantcast Advertise is based on a negotiated CPM for each campaign. The CPMs used in this analysis were Forrester estimates based on data provided to us by the interviewed customers and Quantcast. These CPMs do not represent those of any of the interviewed organizations. Forrester urges readers to obtain CPM pricing from Quantcast as applicable to their campaign needs. 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 Quantcast Advertise 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 A. None of the interviewed organizations were planning to change their use of Quantcast Advertise. 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 Advertise 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 Quantcast Advertise, resulting in lower overall total benefits. The greater the uncertainty, the wider the potential range of outcomes for cost and benefit estimates. The following impact risks that affect benefits are identified as part of the analysis: The CPA delivered by Quantcast will vary with conversion rates. ROAS will vary with CPA and the revenue contribution of each new customer. In general, performance will vary with many factors not associated with media acquisition, such as landing page experience, creative type, and quality. The following implementation risk that affects costs is identified as part of this analysis: CPMs may affect CPA.

14 14 Financial Summary The economic analysis indicates that an investment in Quantcast Advertise increases campaign ROAS. The interviewed companies indicated that Quantcast provided numerous nonquantifiable benefits, including keeping them abreast of industry trends and improving marketing effectiveness. Table 5 below summarizes the CPAs for Quantcast versus internal benchmarks for representative campaigns designed for lead generation and customer acquisition. Forrester urges readers to use this representative analysis to evaluate the potential financial impact on their own organization. TABLE 5 Quantcast Versus Benchmark CPA Results Metric Quantcast CPA Benchmark CPA Lead generation campaign $135 $220 39% improvement Customer acquisition campaign $38 $55 31% improvement Source: Forrester Research, Inc.

15 15 Quantcast Advertise: Overview The following information is provided by Quantcast. Forrester has not validated any claims and does not endorse Quantcast or its offerings. QUANTCAST TECHNOLOGY Quantcast utilizes data and computing algorithms to solve complex marketing challenges. It has spent almost 10 years developing and refining a combination of intelligent machines and algorithms that are optimized for rapid experimentation and modeling. Because of this, Quantcast s systems are capable of running multiple simultaneous experiments to find actionable insights at scale, whether the data comes from its clients or its own data pools. Its systems and software are purpose-built and designed to help its clients draw value that is otherwise hidden from within the data its consumers and audiences generate on a daily basis. Quantcast utilizes those insights to help its clients find new customers and readers where they never would have looked before. QUANTCAST DATA Quantcast is able to work with almost any data its clients want to provide, and it has also built a direct measurement data source for capturing real-time anonymized online behaviors. Working with more than half of the top 1,000 digital publishers and across more than 100 million digital destinations, Quantcast sees real-time consumer activity online at scale, resulting in a unique understanding of consumer intent and behavior in the digital world. Its data is built from real observation of ongoing digital activity and is not from historic models. Quantcast solutions include: Quantcast Complete Targeting. Combines prospecting and retargeting to achieve a higher concentration of netnew converters with fewer wasted dollars. Quantcast Personalized Retargeting. Creative with customized messages and product recommendations. Quantcast Brand Targeting. Improve brand metrics by targeting precise audiences with fewer impressions and more relevancy. Quantcast Search Prospecting. Finds specific audiences at scale leveraging the intent and interest signals of search. By acting on behaviors leading to search, Quantcast reaches people when they are most interested and receptive to your brand. SCALE ACROSS SCREENS AND CHANNELS Drive performance anytime, anywhere across all major programmatic channels, including display, mobile, video, Facebook, and Twitter.

16 16 Appendix A: Total Economic Impact Overview Total Economic Impact is a methodology developed by Forrester Research that enhances a company s technology decisionmaking 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. 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.

17 17 Appendix B: 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.