A Forrester Total Economic Impact Study Commissioned By NewsCred January The Total Economic Impact Of NewsCred

Transcription

1 A Forrester Total Economic Impact Study Commissioned By NewsCred January 2017 The Total Economic Impact Of NewsCred

2 Table Of Contents Executive Summary 1 TEI Framework And Methodology 3 The NewsCred Customer Journey 4 Interviewed Organization 4 Key Challenges 4 Solution Requirements 4 Key Results 4 Financial Analysis 5 Improved Productivity Of Team Managing Content Through Platform 5 Increased Efficiency Of Editing And Creating Briefs 6 Reduced Cost Of Writing And Commissioning Content 7 Costs Incurred Using NewsCred 8 Financial Summary 9 NewsCred: Overview 10 Appendix A: Total Economic Impact 11 Total Economic Impact Approach 11 ABOUT FORRESTER CONSULTING Project Director: Dean Davison January 2017 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. 2017, 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 forrester.com

3 Executive Summary Benefits Improved productivity of content marketing team: $564,300 Increased efficiency of editing: $505,400 Avoided cost of creating content internally: $494,775 NewsCred s content marketing suite provides enterprise businesses with strategy, professional services, a full suite of content, and a content marketing platform that helps organizations plan, create, manage, publish, and optimize content. NewsCred commissioned Forrester Consulting to conduct a Total Economic Impact (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying its content marketing platform. The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of NewsCred on their organizations. To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed an existing enterprise multinational management consulting customer with multiple years of experience working with NewsCred to develop its content marketing program. The NewsCred platform enables the organization to manage the pipeline of content across multiple business units and geographies. Prior to using NewsCred, the customer relied on subject matter experts within the company to author content. While the individuals are experts in their respective fields, the effort required to write and publish materials came at a high financial and time cost for the organization. Taking 10 to 20 hours of productivity for a consulting partner to write, edit, and publish an article removes that executive from billable work. The opportunity cost was significant. In addition, identifying the right target audience was a challenge. The global head of content for the organization told Forrester: Senior decisionmakers are difficult to reach and have very limited time. We wanted to give them value with insights while also engaging them in a way that extended beyond traditional advertising. With NewsCred, the organization increased the number of page views and unique visitors on social media sites. A marketing director told Forrester: The program is a very subtle marketing at the beginning of our funnel, focusing on brand awareness. We position our brand next to technology topics from big news websites. NewsCred led to a dramatic increase in our followers on social media sites. Over two years, we increased from a community of 20,000 followers to almost 650,000. Key Findings Quantified benefits. The following risk-adjusted quantified benefits are representative of those experienced by the company interviewed: Improved productivity of the team managing content through the platform. Using NewsCred improved the productivity of the organization s content marketing program and reduced the need to hire an additional four employees, resulting in a three-year savings of $564,300. Increased efficiency of editing and creating briefs. The organization found that NewsCred editors were more adept at handling the articles, blogs, and posts of a social media program, resulting in a savings of $505,400 over three years. Reduced cost of writing and commissioning content. The cost of paying subject matter experts to author content comes at the cost of removing them from doing billable work. Procuring third-party content avoided the cost of $494,775 over three years. 1 The Total Economic Impact Of NewsCred

4 Unquantified benefit. The interviewed organization experienced the following benefits that is not quantified for this study: ROI 201% Benefits PV $1,292,027 Payback 4.3 months Increased marketing-influenced revenue. Although more difficult to quantify in terms of conversions or increased revenue, the organization s content marketing program realized a significant boost in page views, sessions, and unique visitors. Specifically: o The organization increased page views by 53%, sessions by 59%, and unique visitors by 51%. o The average cost of views, sessions, and visitors decreased by more than 60%. Costs. The interviewed organization experienced the following costs: Subscribing to the NewsCred content marketing platform cost a total of $165,500 over three years. Using NewsCred editorial services totaled $48,000. Procuring third-party content cost $243,000. Paying for strategic advice to help develop the program and identify target reader segments cost a total of $60,000 over three years. Costs PV $428,903 Forrester s interview with an existing customer and subsequent financial analysis found that the interviewed organization experienced benefits of $1,292,027 over three years versus costs of $428,903, adding up to a net present value (NPV) of $863,124 and an ROI of 201%. Risk-Adjusted Financial Summary Risk Adjusted Financial Summary $465.1K Payback Period 4 months Total benefits, $1,564,475 $416.8K $410.1K Total costs, $516,500 INITIAL YEAR 1 YEAR 2 YEAR 3 Improved productivity of team managing content Improved efficiency of using editorial team Avoided cost of creating content internally 2 The Total Economic Impact Of NewsCred

5 TEI Framework And Methodology From the information provided in the interview, Forrester has constructed a Total Economic Impact (TEI) framework for those organizations considering implementing NewsCred. 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 NewsCred can have on an organization. Specifically, we: The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders. DUE DILIGENCE Interviewed NewsCred stakeholders and Forrester analysts to gather data relative to NewsCred. CUSTOMER INTERVIEWS Interviewed an organization using NewsCred to obtain data with respect to costs, benefits, and risks. 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 organization. CASE STUDY Employed four fundamental elements of TEI in modeling NewsCred 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. DISCLOSURES Readers should be aware of the following: This study is commissioned by NewsCred 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 NewsCred. NewsCred 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. NewsCred provided the customer name for the interview but did not participate in the interview. 3 The Total Economic Impact Of NewsCred

6 The NewsCred Customer Journey BEFORE AND AFTER THE NEWSCRED INVESTMENT Interviewed Organization For this study, Forrester conducted an interview with a NewsCred customer that experienced the following results and benefits. Key Challenges The organization provides strategic and technical consulting to its client base. The content marketing program: Created awareness of the organization s capabilities while building positive brand equity with a broader audience. The program functioned as a brand-building campaign by drawing readers to articles, blogs, and posts of interest and established a connection between thought leadership on the subject and the organization itself. Required significant time and energy from internal subject matter experts. Executives within the company are subject matter experts who consult and deliver solutions in their respective fields. The executives are not experienced authors. The cost of time required to write blogs, post on social media, and author full articles was time taken away from billable work with clients, which resulted in a high opportunity cost. Solution Requirements The interviewed organization engaged NewsCred to determine the right content that would attract readers, procure third-party content that met the program requirements, and write and publish articles. The NewsCred platform managed and measured results throughout the entire program life cycle. Key Results The interview revealed that key results from the NewsCred investment include the organization s ability to: Leverage its expertise to outline content that will resonate with target readers. The organization was looking for content and channels that would resonate with desired readers. This included a combination of posts on social media, blog posts, and longer articles to spark the interest of readers and get them to subscribe. Procure third-party content. NewsCred managed the logistics of defining and procuring content from on-brand third-party sources that met the organization s need. This service allowed the organization to convey its key messages without consuming the time of internal executives to continually source, create, and approve. Track content across business units and geographies. Before NewsCred, we managed a lot of content and assignments using , which had very little tracking. We now use NewsCred to manage a great deal of our content pipeline and metadata. We need to know where the content came from, who s in charge of next steps, and how it lines up with our brand goals. Senior decision-makers are difficult to reach and have very limited time. We wanted to give them value with insights while also engaging them in a way that extended beyond traditional advertising. Global head of content NewsCred led to a dramatic increase in our followers on social media sites. Over two years, we increased from a community of 20,000 followers to almost 650,000. Global head of content 4 The Total Economic Impact Of NewsCred

7 Financial Analysis QUANTIFIED BENEFIT AND COST DATA Total Benefits REF. BENEFIT YEAR 1 YEAR 2 YEAR 3 TOTAL Atr Btr Ctr Improved productivity of team managing content through platform Increased efficiency of editing and creating briefs Reduced cost of writing and commissioning content Total benefits (risk-adjusted) PRESENT VALUE $171,000 $188,100 $205,200 $564,300 $465,079 $153,425 $171,475 $180,500 $505,400 $416,804 $164,925 $164,925 $164,925 $494,775 $410,144 $489,350 $524,500 $550,625 $1,564,475 $1,292,027 Improved Productivity Of Team Managing Content Through Platform The organization started with a team that invested the effort of four full-time equivalents (FTEs) to manage the procurement and flow of content for the program. The effort increased 10% per year. Employees used the NewsCred platform to help plan, procure, produce, and manage content, which improved the productivity of these four employees by 50%, according to the executives. To accomplish the same work without NewsCred, the organization would have needed to hire additional staff. Four employees with a 50% improvement in productivity at an average burdened salary of $95,000 results in a total of $627,000 over three years. Forrester risk-adjusted this benefit down by 10% to account for the variations that readers will experience in managing similar programs, resulting in a risk-adjusted total benefit of $564,300 over three years. Impact risk is the risk that the business or technology needs of the organization may not be met by the investment in NewsCred, resulting in lower overall total benefits. The greater the uncertainty, the wider the potential range of outcomes for benefit estimates. Total of all benefits across the areas listed below, as well as present values (PVs) discounted at 10%. Over three years, the organization expects riskadjusted total benefits to be a PV of more than $1.2 million. Improved Productivity Of Team Managing Content Through Platform REF. METRIC CALC. YEAR 1 YEAR 2 YEAR 3 A1 Number of FTEs who manage content A2 Productivity improvement 50% 50% 50% A3 Annual burdened salary $95,000 $95,000 $95,000 At Improved productivity of team managing content through platform Risk adjustment 10% A1*A2*A3 $190,000 $209,000 $228,000 Atr Improved productivity of team managing content through platform (risk-adjusted) $171,000 $188,100 $205,200 5 The Total Economic Impact Of NewsCred

8 Increased Efficiency Of Editing And Creating Briefs Simply put, the organization discovered that the editorial team employed by NewsCred was far more efficient at managing marketing and online content than the internal editing team. The organization found that: Its internal editors, who were accustomed to working on other types of materials, averaged 2.6 articles per day. The NewsCred editors averaged 14.7 articles per day. For the financial model, the organization: Publishes 3,380 articles per year. Pays editors an average burdened salary of $95,000. Describes the content as articles even though the materials took several different formats (e.g., blogs, social media posts, and subject matter articles) and were published in different channels (e.g., social media and professional forums). The savings from using NewsCred s editorial team are $532,000 over three years. Given that the productivity of editorial teams will vary, Forrester adjusted this benefit downward by 5%, yielding a three-year risk-adjusted total of $505,400. $465,079 Three-year Total Benefits 32% Benefit of using NewsCred editiorial team Increased Efficiency Of Editing And Creating Briefs REF. METRIC CALC. YEAR 1 YEAR 2 YEAR 3 B1 Number of documents published annually 3,380 3,718 4,090 B2 Editors who would have been required B1/(5 per day*260 days) B3 NewsCred editors required B1/(14.7 per day*260 days) B4 FTE savings B2-B B5 Average burdened salary per editor $95,000 $95,000 $95,000 Bt Increased efficiency of editing and creating briefs B4*B5 $161,500 $180,500 $190,000 Risk adjustment 5% Btr Increased efficiency of editing and creating briefs (risk-adjusted) $153,425 $171,475 $180,500 6 The Total Economic Impact Of NewsCred

9 Reduced Cost Of Writing And Commissioning Content The purpose of the content marketing program was to draw attention to the organization s subject matter expertise. The organization told Forrester: Ideally, experts within the organization write blogs, post on social media, and author articles that demonstrate their expertise for a community of readers. The opportunity cost is high for leading consultants to break away from billable work to publish and author. Although the executives are subject matter experts, few are as efficient and prolific as others in the market, with both subject matter knowledge and experience as professional writers. Based on these statements, Forrester used the following assumptions to calculate this benefit: The average subject matter executive requires a total of 20 hours to plan, write, and hone an article. Each article required an additional 3 hours of editing. Based on the respective costs shown in the table below, the organization avoided a cost of $183,250 by using NewsCred. The total avoided cost over three years was $549,750. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year risk-adjusted total of $494,775. Allows subject matter experts to continue doing billable work for 20 hours at $175/hour Reduced Cost Of Writing And Commissioning Content REF. METRIC CALC. YEAR 1 YEAR 2 YEAR 3 C1 Average time required for internal executive to author content (hours) C2 Hours required for editors C3 Cost per hour of executive time $175 $175 $175 C4 Cost per hour of editorial team $55 $55 $55 C5 Number of third-party pieces Ct Reduced cost of writing and commissioning content ((C1*C3)+ (C2*C4))*C5 $183,250 $183,250 $183,250 Risk adjustment 10% Ctr Reduced cost of writing and commissioning content (risk-adjusted) $164,925 $164,925 $164,925 7 The Total Economic Impact Of NewsCred

10 Total Costs REF. COST YEAR 1 YEAR 2 YEAR 3 TOTAL Dtr Subscription cost of NewsCred platform PRESENT VALUE $50,000 $55,000 $60,500 $165,500 $136,364 Etr Ftr Gtr Cost of NewsCred editorial services Cost of procuring third-party content Cost of related professional services $16,000 $16,000 $16,000 $48,000 $39,790 $81,000 $81,000 $81,000 $243,000 $201,435 $30,000 $20,000 $10,000 $60,000 $51,315 Total costs $177,000 $172,000 $167,500 $516,500 $428,903 Costs Incurred Using NewsCred The costs of using NewsCred fell into four categories, all of which were related directly to NewsCred, including the cost of: Subscribing to the NewsCred content marketing platform, which totaled $165,500 over three years. Using NewsCred editorial services, which totaled $16,000 per year and $48,000 over three years. Procuring third-party content, which averaged $81,000 per year and totaled $243,000 over three years. This equates to an average of about $24 per article. Paying for strategic advice to help develop the program, identify target reader segments, and so forth. The organization paid $30,000 in the first year, and the amount declined each year as the organization became more self-sufficient. The total over three years was $60,000. The cost incurred for using NewsCred over three years totaled $516,000. Total of all costs across the four areas listed below, as well as present values (PVs) discounted at 10%. Over three years, the organization expects riskadjusted total costs to be a PV of $428,903. Implementation risk is the risk that a proposed investment in NewsCred 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. 8 The Total Economic Impact Of NewsCred

11 Financial Summary CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS Cash Flow Chart (Risk-Adjusted) Cash flows Total costs Total benefits Cumulative net benefits $1.2M $1.0M The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the interviewed organization s investment in NewsCred. Forrester assumes a yearly discount rate of 10% for this analysis. $800K $600K $400K $200K $0K -$200K -$400K INITIAL YEAR 1 YEAR 2 YEAR 3 These risk-adjusted ROI, NPV, and payback period values are determined by applying risk-adjustment factors to the unadjusted results in each benefit and cost section. PRESENT YEAR 1 YEAR 2 YEAR 3 TOTAL VALUE Total costs ($177,000) ($172,000) ($167,500) ($516,500) ($428,903) Total benefits $489,350 $524,500 $550,625 $1,564,475 $1,292,027 Net benefits $312,350 $352,500 $383,125 $1,047,975 $863,124 ROI 201% Payback period 4.3 months 9 The Total Economic Impact Of NewsCred

12 NewsCred: Overview The following information is provided by NewsCred. Forrester has not validated any claims and does not endorse NewsCred or its offerings. NewsCred is on a mission to help marketers create exceptional content that drives long-term business growth. As a leading enterprise content marketing solution, NewsCred helps brands transform the way they connect with people, build brand equity, and win more customers. NewsCred s suite of strategy services, including one-day or multiday sessions and long-term strategic consulting, provide businesses the guidance and expertise to build and execute a robust content marketing strategy that directly ties back to bottom-line business goals. With NewsCred s in-house team acting as managing editor producing, project managing, curating, ideating, and editing content brands can improve internal efficiency. In one place, brands can manage and commission original content in any format, including written, visual, interactive, and video from award-winning freelancers. In addition, they can leverage NewsCred licensed content from thousands of industry-specific and leading publishers like The New York Times, Condé Nast, and Forbes. Powerful technology ties it all together. NewsCred s software platform enables enterprise brands to easily manage content planning, ideation, creation, distribution, and optimization across channels, teams, and global markets all on a single platform. Founded in 2008, NewsCred is the leader in the content marketing category, fueled by nearly $90 million in funding from top venture capitalists.learn more at 10 The Total Economic Impact Of NewsCred

13 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. 11 The Total Economic Impact Of NewsCred