The Total Economic Impact Of Gigya

Transcription

1 A Forrester Total Economic Impact Study Commissioned By Gigya Project Director: Sean Owens January 2014 The Total Economic Impact Of Gigya Cost Savings And Business Benefits Enabled By Gigya s Registration And Social Network Integration Services

2 Table Of Contents Executive Summary... 3 Disclosures... 4 TEI Framework And Methodology... 5 Analysis... 6 Financial Summary Gigya Products Overview Appendix A: Composite Organization Description Appendix B: Total Economic Impact Overview Appendix C: Glossary Appendix D: Endnotes 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. 2014, 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 [1-MQ5GJF]

3 3 Executive Summary Gigya commissioned Forrester Consulting to conduct a Total Economic Impact (TEI) study and examine the potential return on investment (ROI) that enterprises may realize by deploying Gigya s Registration-as-a-Service, Social Login, Single Sign-on, Identity Storage and Social Plugins. The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Gigya s products on their organizations. To better understand the benefits, costs, and risks associated with implementing Gigya products, Forrester interviewed two existing customers, using one as the primary driver of the representative analysis. These customers have had nearly a year of experience using Gigya s products to streamline registration tasks, augment existing marketing efforts, provide increased social networking integration, and improve customer interactions with rich commenting and sharing features. Prior to Gigya, the customers had implemented a labor-intensive registration system across each of their web properties using individual registration modules from social media sites. However, this led to problems, such as having to apply updates across each property separately, requiring registered visitors to log in to each site individually, and collecting very little user information to personalize marketing campaigns or on-site experiences. In order to reduce annual registration-related management costs, these companies enlisted Gigya to provide them with complete modern registration and sign-on systems, which include social login, single sign-on, standard registration and cloud-hosted databases to store user records. The organizations relied on Gigya to create an overall richer user experience with plugins like Comments and Share, leading to increased registration and generating interest in other offerings, such as paid subscription options and indirect merchandise sales. One customer s web properties manager said, Gigya helps make our audience addressable and interactive. GIGYA HELPS GENERATE MORE USERS AND GREATER SITE TRAFFIC, LEADING TO ADVERTISING AND SPONSORSHIP OPPORTUNITIES The interview and subsequent financial analysis found that a representative organization, based on analysis collected from interviews, experienced the risk-adjusted ROI, benefits, and costs shown in Figure 1. 1 The analysis points to benefits of about $800,000 to $1.2 million per year, or about $1.60 to $1.90 per registered user. On the cost side, implementation costs are estimated at about $58,000, or $0.12 per registered user, and annual costs are estimated at nearly $215,000 to $285,000, or about $0.35 to $0.45 per registered user per year in costs. The total three-year net present value (NPV) is more than $1.2 million, or about $2.40 per registered user Behind those financial benefits are significant site traffic improvements: a 300% increase in registered users, a 600% increase in user comments, a 25% boost in site visit time, and 40% more page views. Paid subscriptions are also up, as are advertising and sponsorship revenue. FIGURE 1 Financial Summary Showing Three-Year Risk-Adjusted Results ROI: 163% NPV: $1,116,389 Comment interactions: 600% Page views: 40% Visit time: 25%

4 4 Benefits. The representative organization experienced the following risk-adjusted benefits: Reduced registration and sign-on management costs. The organization estimates that the annual cost of Gigya s Registration-as-a-Service, Social Login, Single Sign-on, and Identity Storage products is less than half the cost of developing its own registration system with similar features, saving nearly $300,000 to $240,000 over three years. Management time saved led to the development of value-added features. Interactive features provided by Gigya are better than those the organization thinks it had or would have developed, such as a mashup of top comments to highlight on the site home page. 300% increase in registrations. Gigya helps drive about $150,000 to $340,000 in increased income per year from more paid subscriptions. Increased digital advertising revenue. Gigya enabled an increase in unique users, registrations, and other site visit metrics, including page views and time on site. These increases have helped the organization sell additional digital advertising at higher rates. New sponsorship opportunities and revenue. Like digital advertising, the improvements enabled by Gigya have helped increase interest from potential sponsorship partners, resulting in new and larger sponsorship deals. New ecommerce revenue. While part of much larger marketing and sales strategies, improvements enabled by Gigya have affected other revenue streams such as sales via the organization s ecommerce platform. Costs. The representative organization experienced the following risk-adjusted costs: Annual Gigya products licensing fees. Based on a starting point of 500,000 registered users, the organization licensed Gigya at $140,000 per year in Year 1. With registration growth benefits, license costs are estimated to grow to about $210,000 by the third year. Internal resource costs. The organization estimates these at about $82,000 per year. While resource costs have gone down with Gigya, some resources are still needed to monitor, configure, and manage registration systems and communicate with Gigya when necessary. One-time implementation costs. These amounted to about $60,000 and included training resources, setting up registration, updating web pages, preparing back-end systems, and setting up new internal processes. Disclosures The reader should be aware of the following: The study is commissioned by Gigya 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 Gigya s products. Gigya 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. Gigya 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 Gigya. 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 Gigya s products can have on an organization (see Figure 2). Specifically, we: Interviewed Gigya marketing and sales personnel and Forrester analysts to gather data relative to Gigya s services and the marketplace for them. Interviewed two organizations currently using Gigya to obtain data with respect to costs, benefits, and risks. Forrester focused on one to construct the representative analysis. 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 interview. Risk adjustment is a key part of the TEI methodology. While the 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 Gigya s products: benefits, costs, flexibility, and risks. Given the increasing sophistication that enterprises have regarding ROI analyses related to IT investments, Forrester s TEI methodology serves to provide a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology. FIGURE 2 TEI Approach Perform due diligence Conduct customer interviews Design composite organization Construct financial model using TEI framework Write case study

6 6 Analysis INTERVIEWED ORGANIZATIONS For this study, Forrester conducted two interviews with representatives from organizations that currently use Gigya s registration and sign-on management products as well as its social plugins. A sports media website that provides custom event recaps, feature articles, interactive features, online games, streaming video, a marketplace with sports-related merchandise, and other offerings. We really wanted single signon across the board, and users wanted to use accounts from other social media platforms. ~Product development director, sports media website A news website associated with a regional network of newspapers that provides free and paid access to news stories and interactive features. It also facilitates subscriptions for newspaper home delivery. Based on these interviews, Forrester constructed a TEI framework and an associated ROI analysis that illustrates the areas these organizations identified as having the greatest financial impact and collected them into a single representative organization model of costs and benefits. The organizations began implementation in late 2012 and finished in early 2013, so have been using Gigya for about a year. The representative organization model focused implementation on providing single sign-on and enhanced commenting and share services to improve and streamline user registration, login, and social interaction experiences. The Gigya products implemented by the representative organization include: With so many publications in our network, single sign-on was key. ~Digital director, news website Social Login, allowing users to link their Facebook, Google+, Twitter, and Microsoft account information to simplify login. Registration-as-a-Service, allowing users to create new accounts on the site if they don t have social network accounts or don t want to link them. Single Sign-On, to manage registration across multiple web properties, including online games. Identity Storage, to collect relevant data from users social accounts to avoid asking duplicate questions. Social Plugins, particularly the Share and Comments plugins. INTERVIEW HIGHLIGHTS Situation In 2012, the organizations wanted to upgrade or replace their current registration systems, which were completely managed in house and either built in house or based on a social media site s sign-in plugin. This meant that users of other social sites (or those with no social site account) were not able to register, and users who With Gigya, we ve seen a 50% increase in participation in our online games. ~Product development director, sports media website

7 7 did register had to individually sign in to each site that the organizations managed. The organizations identified several opportunities that they expected to improve: Grow the registered user base. Increase social interaction, as more registered users should lead to more shares, likes, and comments. Increase online advertising revenue, as more users interacting more on the site and spending more time on it means that the organizations can command higher digital advertising rates and sign more and larger sponsorship deals. Gigya helped increase page views and ad impressions, increasing revenue and bringing in better advertising and sponsorship partners. ~Product development director, sports media website Reduce site registration management costs. Help drive improvements in physical metrics, such as newspaper subscriptions, paid online subscriptions, and merchandise sales. Solution The organizations replaced their internally managed sign-in systems with Gigya s Registration-as-a-Service, Social Login, Single Sign-on, Identity Storage and Social Plugins. Results The organizations interview results were collected into a composite model summarizing the costs and benefits of a representative organization: User registrations were up 300% in the first year. With the ability to register using multiple social sites or create a sitespecific account, users have more options and it s easier and more convenient to register. Registration allows users to identify favorites to make sure they are alerted about upcoming events and offers. User comments were up 600% in the first year. With more registered users (a requirement for leaving comments on site articles and stories) and easier-to-use commenting features, user commenting grew exponentially. Site visit time and pages per visit were up 25% and 40%, respectively. Partially due to better commenting and sharing functions, users spent more time on the organization s sites and viewed more pages. This would have been even higher, but another area of growth was from mobile devices users who quickly look at a page or two to check quick information on their way to or at an event. Site subscriptions and subscription revenue grew significantly in the first year and are expected to continue to grow. An increase in registrations has given visitors greater visibility into premium subscription options being able to watch events from their computers or mobile devices and has led to an increase in paid subscriptions. Site advertising revenue grew 50% in the first year. With increased registrations and user interaction, the organization can We didn t require registration to comment previously. Now users are much more active and comfortable participating, as obnoxious responses are much fewer and can be quickly removed, and problem accounts can be deactivated. ~Digital director, news website

8 8 go to advertisers and ask a higher rate for banner ads and other digital advertising channels. Special site feature sponsorship deals were signed, creating new revenue opportunities and new user features. For example, to help drive paid subscriptions, the organization set up a periodic sponsored event where registered users can watch a live event for free. It has partnered with an advertising sponsor to create a feature that it can promote heavily on high-traffic pages, such as the home page and the event preview, to drive new subscriptions and unlock sponsorship revenue. Increased ecommerce sales. Registered users can access information and receive alerts about upcoming events and offers. While many other marketing campaigns and channels drive merchandise sales, at least a small portion can be attributed to the improved digital content and interactivity. We can show advertisers not only traffic, but detailed comments and interactions with nearly every content type such as news, columns, videos, and sponsored features. ~Product development director, sports media website

9 9 BENEFITS The representative organization experienced a number of quantified benefits summarized in this case study: Reduced registration-related management costs. Improved income through increases in site visitors and registrations leading to a similar increase in paid subscriptions. Increased web advertising income through increased unique and registered user traffic, leading to more interest in advertising and sponsorship opportunities. Increased sales and improved income as a result of increased traffic. Gigya thus played an important role in the organization s larger marketing strategy. These benefits were experienced in the first year after implementing Gigya s services, and are estimated for years 2 and 3. Reduced Registration-Related Costs The organization has a team of 10 people including product managers, systems administrators, and developers that previously each spent about 10 hours per week managing registration and sign-on issues. The organization provided all registration and sign-on capabilities across all of its website properties, using a free plugin provided by a social media site that allows site registration through users social media accounts. However, this plugin does not provide single sign-on functionality (meaning that users had to log in to each site they visited) and each site had to be managed separately (meaning that any updates required many duplicate tasks). TABLE 1 Cost Savings From Leveraging Gigya s Services Versus Building Its Own System And Managing It In House Ref. Metric Calculation Initial Year 1 Year 2 Year 3 A1 Team size 10 A2 Average salary per FTE $99,750 A3 Current hours per week per FTE spent on registration tasks 10.0 A4 Current annual registration-related hardware, software and other costs $250,000 A5 Current annual registration-related total licensing and registration costs A1 * A3 * A2 / 2080 * 52 + A4 $499,375 A6 Process improvement with Gigya 90% A7 Annual registration-related licensing costs with Gigya $140,000 $165,243 $209,419 A8 Annual registration-related total resource and licensing costs with Gigya A5 * (1 - A6) * A7 $189,938 $215,181 $259,357 Atr Buy versus build process and cost improvements (risk-adjusted) A1 * A3 * A6 * A7 $0 $309,438 $284,194 $240,018

10 10 The organization only had time to manage one social media plugin and recognized the need to replace its current system. It could do this itself by adding more social media registration options and/or developing a site-specific registration system. The organization estimated that expanding or building its own system would require twice as much time (10 hours per person per week) to develop, implement, and manage the system. An additional area of cost savings that could be enabled at many organizations is avoiding database licensing costs. Building a home-grown registration system requires a database, and while database licensing costs vary greatly from the many database development firms, an enterprise-grade solution is often very expensive from hundreds of thousands or several millions. While the interviewed organizations did not incur additional costs, many organizations may see potential savings. This added up to nearly $500,000 in estimated costs to build their own registration system, not including the development time required to implement a home-grown system (which could take months or even as much as a year) versus Gigya s products that took only a few weeks to deploy. So, the organization chose Gigya s Registration-as-a-Service and Social Login, which it was able to implement quickly. It has seen annual costs fall, both compared to what it would have spent on a custom-built solution and what it had spent managing its previous social login module. License costs for Gigya services added up to about $140,000 in the first year (for the composite organizations environment starting at 500,000 registered users), and the organization estimates that with registration base growth license costs will grow in future years (see Table 7). The avoided costs and reduced resource time requirements allow the organization to focus on strategies to leverage information from Gigya s technology in new ways, such as a top comments box created as a mashup of comments from all pages with the highest discussion volume. Additionally, Gigya s Social Login provides users more account-linking options, including Facebook, Twitter, Google, and Microsoft. The Registration-as-a-Service module allows users to create an organization-specific account for those that either don t have or don t want to link a social account. Also, the Single Sign-On module improves the user experience by maintaining login status across all the organization s web properties. Annual cost savings were estimated to be more than $300,000 in the first year, and are expected to be about $285,000 and $240,000 in the second and third years, as shown in Table 1. Increased Income From More Subscribers Gigya s technology creates a superior user experience, with more users visiting the site and more of those users registering as a result. Gigya provides rich commenting features that include community feedback, which lets registered users rate the comments of others, giving a higher profile to good comments while demoting (or even removing) comments that are irrelevant, meaningless, or perhaps offensive. Registered users can share pages through or social networks. FIGURE 3 Total Unique User To Subscriber Estimates Total visitors Total unique visitors in a given month Active visitors 50% of total unique visitors Registered users 3% of active users before Gigya; 6% to 12% after Subscribers 10% of registered users

11 11 These features along with compelling news and features written by organization staffers or aggregated from news wires result in a more interesting site that brings in more visitors that register, which also helps drive increased paid subscriptions for streaming video events that subscribers can watch from their PCs and mobile devices. TABLE 2 Increased Income From Greater Paid Subscriber Volume Affected By Gigya Ref. Metric Calculation Initial Year 1 Year 2 Year 3 B1 Month-over-month unique user growth 4% 4% 4% B2 Unique annual site visitors B2 * (1 + B1) 2,500,000 4,002,581 6,408,260 10,259,831 B3 B4 B5 B6 B7 B8 B9 Percentage of unique visitors who read comments, manually share a link, etc. Percentage of visitors that register (to leave a comment of their own) before Gigya Expected registered users per year without Gigya (estimated) Year-over-year registration growth as a result of Gigya Estimated new registered users since Gigya Percentage of new registered users who also subscribe (paid) Total new subscribers attributed to Gigya 50.0% 3.0% B2 * B3 * B4 37,500 22,539 36,085 57, % 75% 33% B5 * (1 + B6) 90, , ,835 (B7 - B5) * B8 B10 Subscription cost per year $60 B11 Bto Profit margin for web advertising revenue Improved income through increased subscriptions B9 * B10 * B11 Risk adjustment 50% 75% 10.0% 6,762 12,169 15,206 $0 $304,273 $547,586 $684,278 Btr Total income increase (risk-adjusted) $0 $152,136 $273,793 $342,139 The estimates for the representative organization include an assumed 4% baseline monthly growth rate in net new users (from all efforts, even if they didn t implement Gigya). With Gigya, the organization saw a 300% increase in registrations in the first year, with significant benefits expected to continue in Years 2 and 3. Other conversion rate assumptions (of general to registered users and registered to subscribed users) are validated by Forrester s Community Benchmarking Metrics: What To Expect For The Health Of Your Community report, which identifies a 4% to 6% visitor-to-member conversion rate and a 10% rate of active or super active members (used here to estimate the number of new paid subscribers). 2 Yearover-year growth is expected to level out in later years, as the change from limited registration to Gigya s solution generated a large initial bump in registrations although significant growth is still expected. While the paid subscription tier is a separate registration system, and other marketing efforts affect subscription growth, the organization estimates that the improved user experience with Gigya helps drive a significant amount of new subscriptions. Calculations based on the data

12 12 and assumptions shown in Table 2 add up to more than 6,000 to 15,000 new subscribers each year. Each premium subscription is about $60 per year, and while other benefits are calculated using the organization s standard 3% profit margin, this digital service is assumed to have little marginal cost for each new subscriber, so a 75% profit margin is used for this benefit. That added up to more than $300,000 in the first year, with expected benefits to increase to $680,000 by the third year, also shown in Table 2. As mentioned, subscription growth is based on a variety of factors, and it is hard to measure the exact growth enabled by Gigya versus growth from other strategies, so 50% risk adjustment has been applied. The adjusted annual benefit totals were more than $150,000 in the first year and are expected to grow to about $275,000 and $340,000 in years 2 and 3, as shown in Table 2. Review the section on Risk for more detail. Increased Web Advertising And Website Sponsorship Opportunities With more total, registered, and subscribed users looking at more pages and staying longer, the organization has been able to increase web and sponsorship income with more and larger deals. The organization estimates that a user s average visit length has increased by 25% and average page views per user are up 40%. In the year since implementing Gigya products, the organization has seen a 300% increase in registrations and a 600% increase in user comments. With Gigya s products, the organization can quickly prepare registered user statistics and share these metrics with potential advertisers and sponsors to quantitatively demonstrate the reach and impact of digital advertising and sponsored features, allowing the organization to sell more advertising and charge higher rates. TABLE 3 New Income From New Web Advertising And Sponsorship Opportunities Ref. Metric Calculation Initial Year 1 Year 2 Year 3 C1 Web advertising revenue growth 50% 25% 10% C2 C3 Annual web advertising revenue before and since Gigya Annual web advertising improvement since Gigya C2*C1 $1,000,000 $1,500,000 $1,875,000 $2,062,500 C2 $500,000 $875,000 $1,062,500 C4 Sponsorship per-deal revenue growth 40% 20% 10% C5 C6 C7 Annual average new revenue per sponsorship before and since Gigya New sponsorship deals each year since Gigya Ad and sponsorship revenue benefits attributable to Gigya C5*C4 $300,000 $420,000 $504,000 $554,400 C8 Profit margin 3% Cto Income growth via increased web advertising (C3+C5* C6)*C7*C8 Risk adjustment 10% % 50% 50% $0 $32,700 $58,485 $82,466 Ctr Total (risk-adjusted) $0 $29,430 $52,637 $74,219

13 13 The organization estimated a 50% increase in total digital advertising revenue and average sponsorship deal size in the first year. Given that Gigya s products are just part albeit a big part of a larger marketing strategy, the organization estimates that Gigya enabled about 50% of the total growth each year. This resulted in about $33,000 in the first year and is expected to result in about $60,000 to $82,000 in years 2 and 3 in new web and sponsorship income enabled by Gigya s products, as shown in Table 3. While the 50% Gigya impact allocation estimate is an estimate based on experience, it s an educated guess. A 10% risk adjustment has been applied to compensate. The risk-adjusted total benefit was about $29,000 in the first year, and is expected to enable about $53,000 to $75,000 in later years, as shown in Table 3. Review the section on Risk for more detail. New Income from Additional Sales Due to more total, registered, and subscribed users and the related increase in site usage and social interactivity, an already interested and active user base has become even more enthusiastic, leading to more potential sales. Users visit the site to check information more often and are more involved, adding comments and sharing pages with friends. Others use their mobile devices to check event times and dates. All registered users receive updates to their favorites with reminders and special offers. While Gigya s registration and social engagement products are a small part of a large marketing strategy, the organization estimates that the increase in site usage and registered users is responsible for part of its annual growth in merchandise and other sales income, adding up to about $155,000 in the first year, and expected to slowly grow to about $165,000 by the third year, as shown in Table 4. Given the indirect path of showing how income from merchandise has increased as a result of Gigya products, it s hard to exactly target Gigya s impact. A risk adjustment of 10% has been applied (although, as with advertising revenues, the factors used to estimate total benefits could actually be higher, not lower). The risk-adjusted total benefit was about $140,000 in the first year, and is expected to be about $145,000 in subsequent years, as shown in Table 4. Review the section on Risk for more detail. TABLE 4 New Income From Sales Improvements Due To Gigya Ref. Metric Calculation Year 1 Year 2 Year 3 D1 Current annual revenue (millions) $500 D2 Annual growth rate due to all marketing activities D3 Expected annual revenue (millions) $515 $530 $546 D4 Profit margin 3% D5 Dto Estimated indirect impact from richer web interactions with Gigya Indirect increased income D3*D4*D5 *1,000,000 Risk adjustment 10% 3% 1% $0 $154,500 $159,135 $163,909 Dtr Total (risk-adjusted) $0 $139,050 $143,222 $147,518

14 14 Total Benefits Table 5 shows the total of all risk-adjusted benefits across the four areas listed above, as well as present values (PVs) discounted at 10%. Note that annual benefits are higher in the first year, as it s expected that year-over-year growth will be higher in the first year switching to Gigya, while annual growth is expected to be lower (but still very positive) in subsequent years. Over three years, the organization expects risk-adjusted total benefits to have a present value of more than $1.3 million. TABLE 5 Total Benefits (Risk-Adjusted) Benefit Year 1 Year 2 Year 3 Total Present value Cost savings from leveraging Gigya s services versus building their own $309,438 $284,194 $240,018 $833,650 $696,507 system and managing it in house Increased income from greater paid subscriber volume affected by Gigya $152,136 $273,793 $342,139 $768,068 $621,635 New web advertising and sponsorship income due to Gigya New income from sales improvements due to Gigya $29,430 $52,637 $74,219 $156,285 $126,018 $139,050 $143,222 $147,518 $429,790 $355,607 Total benefits (risk-adjusted) $630,054 $753,845 $803,894 $2,187,793 $1,799,766 Total benefit results are also displayed in Table 6, this time divided by the number of registered users included in the Gigya license 500,000 in Year 1, with the increased registrations shown in Table 2 included in Year 2 and 3. TABLE 6 Total Benefits (Risk-Adjusted) Per Registered User Benefit Year 1 Year 2 Year 3 Buy versus build process and cost improvements per registered user Improved income through increased subscriptions per registered user Increased income through greater web advertising per registered user $0.62 $0.48 $0.36 $0.30 $0.46 $0.52 $0.06 $0.09 $0.11 Indirect increased income per registered user $0.28 $0.24 $0.22 Total benefits per registered user (risk-adjusted) $1.26 $1.28 $1.22

15 15 COSTS The organization experienced only a few costs associated implementing Gigya s services: Gigya products licensing fees. Internal resource management and monitoring costs. Initial implementation costs. These represent the mix of internal and external costs experienced by the organization for initial planning, implementation, and the first year of ongoing management associated with the service. Licensing and management costs are estimated for subsequent years. Gigya Service Annual Licensing Fees The organization spent about $140,000 on Gigya license fees in the first year, based on its current 500,000 registered users, as shown in Table 7. With registered user growth expected in the following years in large part due to Gigya (see the section above on registration and subscription growth) license fees are also expected to rise. The following Gigya services are included in the license costs: Social Login. Registration-as-a-service. Single Sign-On. Identity Storage. Share Plugins. Comments. Gigya provides other services, such as SocialSync and Gamification; the organization did not implement these when it first switched to Gigya, but may in the future. See the section on Flexibility for more information. TABLE 7 Estimated Gigya Service Costs Ref. Metric Calculation Initial Year 1 Year 2 Year 3 E1 Gigya annual license costs $140,000 $165,243 $209,419 Etr Annual Gigya license costs (riskadjusted total) E1 $0 $140,000 $165,243 $209,419 Annual Resource Costs While resource costs are much lower since switching to Gigya products, the organization still has to manage tasks such as dealing with user support questions, collecting and preparing user registration reports for internal tracking, and dealing with Gigya product updates and changes. The organization estimates that, since implementing Gigya, these tasks now take only 3 hours per person per week (down from 10 hours per week), totaling about $75,000 per year.

16 16 However, the organization realizes that it may have overestimated how much of that recovered time resources it would use toward value-generating tasks. A 10% risk adjustment has been applied, increasing the cost estimate to a more conservative level, about $82,000 per year, as shown in Table 8. Review the section on Risk for more detail. TABLE 8 Annual Resource Costs Ref. Metric Calculation Initial Year 1 Year 2 Year 3 F1 Web team size 10 F2 F3 Fto Average fully burdened salary per FTE Hours per week spent on registration-related tasks Annual internal resource costs to manage Gigya-related data and systems F1*F2* (F3/40) Risk adjustment 5% $99,750 3 ($74,813) ($74,813) ($74,813) Ftr Total (risk-adjusted) $0 ($82,294) ($82,294) ($82,294) Implementation Costs Gigya implementation was relatively straightforward and quick, but included processes such as migrating currently registered users, preparing the organization s websites for the new registration, sharing, and comment features, and setting up new internal processes. The organization s implementation took about three weeks of work for an equivalent of 10 FTEs, including ramp-up and training for other IT and management resources to turn off previous registration processes, update all site web pages, understand new Gigya data sources, and other relevant tasks. The estimated total implementation cost was about $58,000, as shown in Table 9. TABLE 9 Implementation Costs Ref. Metric Calculation Initial Year 1 Year 2 Year 3 G1 FTEs involved in implementation 10 G2 G3 Gtr Average fully burdened salary per FTE Total hours spent on implementation and planning per FTE Gigya implementation and planning costs G1*G2* (G3/2,080) $99, $57,548 $0 $0 $0

17 17 Total Costs Table 10 shows the total of all costs, including the initial and year 1 costs experienced, and the estimated costs for years 2 and 3. Costs are also summarized as PV, discounted at 10%. Over three years, the organization expects costs to total a riskadjusted NPV of a little more than $600,000. TABLE 10 Total Costs (Risk-Adjusted) Cost Initial Year 1 Year 2 Year 3 Total Present Value Gigya service annual licensing fees Annual internal resource costs to manage Gigyarelated data and systems Implementation and planning costs of the Gigya solution $0 ($140,000) ($165,243) ($209,419) ($514,663) ($421,177) $0 ($82,294) ($82,294) ($82,294) ($246,881) ($204,652) ($57,548) $0 $0 $0 ($57,548) ($57,548) Total costs (risk-adjusted) ($57,548) ($222,294) ($247,537) ($291,713) ($819,092) ($683,378) Total cost results are also displayed in Table 11, this time divided by the number of registered users included in the Gigya license 500,000 in Year 1, with the increased registrations shown in Table 2 included in Year 2 and 3. TABLE 11 Total Costs (Risk-Adjusted) Per Registered User Benefit Initial Year 1 Year 2 Year 3 Annual Gigya license costs per registered user ($0.28) ($0.28) ($0.28) Annual internal resource costs to manage Gigya-related data and systems per registered user Gigya implementation and planning costs per registered user ($0.12) ($0.16) ($0.14) ($0.11) Total Costs per registered user (risk-adjusted) ($0.12) ($0.44) ($0.42) ($0.39) 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

18 18 initiatives but not the obligation to do so. There are multiple scenarios in which a customer might choose to implement Gigya products 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). The key areas the organization has identified where they can gain more value from Gigya s products are grouped into two categories: Better leveraging registration information. The organization knows that it could be doing more with registration information. The site captures a registered user s geographic information and favorites, but uses that information only sparingly for sales and marketing purposes. The site plans to implement more targeted marketing and advertising campaigns based on information that users have shared during registration or added to their profiles, and expects that investment will lead to increased advertising revenue and merchandise sales. If the site can double the ecommerce income affected by Gigya products, the result could be more than $160,000 in the third year, with potentially greater returns in future years. Implementing additional modules. The organization knows that it could implement additional Gigya modules to provide users an even richer social experience and expand many of the benefits summarized above. The organization is currently evaluating other Gigya products, such as SocialSync, Ratings and Reviews, and Reactions to ensure that registration information is up to date and to provide additional rich interactive features. A richer experience will draw more users, more registrations, and more participation, providing even greater opportunities for digital advertising and sponsorships. Doubling web advertising revenue growth and the number of sponsorship deals in the third year could lead to nearly $20,000 in increased income, with greater returns possible in later years. On a longer-term basis, the organization is evaluating Gigya s Gamification product as another marketing tool that would reward loyalty and hopefully lead to increased registration and subscription rates. 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 Gigya products 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 Gigya products, resulting in lower overall total benefits. The greater the uncertainty, the wider the potential range of outcomes for cost and benefit estimates. Quantitatively capturing investment risk and impact risk by directly adjusting the financial estimate results provides more meaningful and accurate estimates and a more accurate projection of the ROI. In general, risks affect costs by raising the original estimates, and they affect benefits by reducing the original estimates. The risk-adjusted numbers should be taken as realistic expectations since they represent the expected values considering risk. The following impact risks that affect benefits are identified as part of the analysis: Subscriber growth estimates are based on the current month and year estimates; there are a number of factors that could affect growth, and the organization understands that later years may be slightly overestimated. A 5% risk adjustment has been applied to be conservative. Gigya s impact on digital advertising and sponsorships has been estimated at 50%, although based more on anecdotal evidence than data results. Like subscriber growth, there are a number of other influences that could affect total advertising and sponsorship results, so a 10% risk adjustment has been applied to allow that this impact factor may be less than estimated.

19 19 It is very hard to estimate the impact on ecommerce sales after improving the organization s website experience, but it is generally agreed that Gigya s products have led to some improvement in these areas. But as there are many marketing channels including television, radio, print, and word of mouth the exact impact is hard to estimate. A risk adjustment of 10% has been applied (although, as with advertising revenues, the factors used to estimate total benefits could actually be higher, not lower). TABLE 12 Benefit And Cost Risk Adjustments Benefits Adjustment Increased income from more subscribers 50% Increased web advertising and website sponsorship opportunities 10% New income from ecommerce sales 10% Costs Adjustment Annual resource costs 10% The following implementation risk that affects costs is identified as part of this analysis: The organization realizes that it may have underestimated the time required from each resource per week or overestimated how much of that recovered time those resources would put toward value-generating tasks (in other words, was the time saved used to complete more work or get more coffee?). A 10% risk adjustment has been applied to increase the cost estimate to a more conservative level. Table 12 shows the values used to adjust for risk and uncertainty in the cost and benefit estimates. Readers are urged to apply their own risk ranges based on their own degree of confidence in the cost and benefit estimates.

20 Costs and benefits (in $ thousands) 20 Financial Summary The financial results calculated in the Benefits and Costs sections can be used to determine the net benefits, ROI and NPV for the organization s investment in Gigya products. Table 13 and Figure 4 below show the risk-adjusted ROI and NPV values. These values are determined by applying the risk adjustment values from Table 12 in the Risk section to the unadjusted results in each relevant cost and benefit section. FIGURE 4 Cash Flow Chart (Risk-Adjusted) $1,600 $1,400 Financial Analysis (risk-adjusted) $1,200 $1,000 $800 $600 $400 $200 $0 ($200) ($400) Initial Year 1 Year 2 Year 3 Total Costs Total Benefits Running Total TABLE 13 Cash Flow (Risk-Adjusted) Initial Year 1 Year 2 Year 3 Total Present value Costs ($57,548) ($222,294) ($247,537) ($291,713) ($819,092) ($683,378) Benefits $0 $630,054 $753,845 $803,894 $2,187,793 $1,799,766 Net benefits ($57,548) $407,760 $506,308 $512,181 $1,368,701 $1,116,389 ROI 163%

21 21 Gigya Products Overview The following information is provided by Gigya. Forrester has not validated any claims and does not endorse Gigya or its offerings. Gigya s Connected Consumer Management Suite enables the world s largest brands to understand and connect more closely with today s mobile and socially connected consumers. Our technology helps businesses access, consolidate, and manage permission-based identity and behavior data while providing deep customer insights that turn data into action. Through products like Social Login, Registration-as-a-service, Social Plugins and Gamification, Gigya provides clients with the rich data, intelligence, and tools needed to reach consumers with the right messages on the right platforms at the right time. Gigya drives user acquisition and engagement for 700 enterprises and reaches 1.5 billion unique users per month, ensuring that today s businesses stay relevant in the age of the connected consumer. Gigya s full product offerings cover: Connect: Collect: Convert Social Login: Allows users to authenticate on your site or in your app using a social network identity from Facebook, Twitter, LinkedIn, Google+, and more than 25 additional identity providers. Registration-as-a-Service: A complete toolset for building and managing registration and profile management workflows across your web and mobile properties. Consumer Insights: An actionable dashboard that allows marketers to tie user identity and action to direct revenue, and create targetable audience segments based on any various user attributes. Single Sign-On (SSO): A turnkey authentication solution that syncs a user s login state across multiple web properties, integrating with your existing registration system and Social Login. SocialPrivacy Certification: Assure users that your business adheres to the highest standard of social data management practices with the SocialPrivacy Certification Seal. Clients with SocialPrivacy Certification typically see a 20% lift in social login conversions. Identity Storage: A cloud-hosted database designed to seamlessly store all social user data as well as traditional profile information, with the ability to store an unlimited number of fields including behavior and interest data, too. SocialSync: Keep your user data fresh with real-time updates to user records. When users make changes to their Facebook profiles, Gigya automatically updates their user records so you can focus on marketing execution. Social Compliance: Ensure that your business adheres to social network terms of services and the Consumer Privacy Bill of Rights, while maintaining COPPA and SafeHarbor compliance. Gigya eliminates the complexities of managing various social network policies and data laws through features such as automatic account deletion and user data controls. Social Plugins: Leverage Gigya s comprehensive suite of social plugins to create an engaging experience for your users that amplifies user-generated content, social syndication and interaction. Social Plugins include: Share Reactions Activity Feed Comments Ratings & Reviews Live Chat Gamification: Create an engaging, competitive web experience by incentivizing users with points, badges and special offers for performing valuable actions on your site or app.

22 22 Appendix A: Composite Organization Description For this TEI study, Forrester created a composite organization to illustrate the quantifiable benefits and costs of Gigya s Connected Consumer Management Suite. The composite organization is intended to represent a media website serving a national (as well as a small international) user base. It s based on characteristics of the interviewed customers, one of which was used as the primary driver of the representative analysis. The composite organization began implementing Gigya s products in late 2012, finishing in early 2013, and has used Gigya Registration-as-a-Service and social plugins for almost a full year. The organization: Manages a national (and global) news website delivering a large quantity of free information and features, with about 2.5 million unique users per month at the time Gigya s technology was implemented. Registration and social features are managed by a team of 10 managers, admins, and developers. Has other lines of business, such as related merchandise, a print version of content found on the web, etc. Monetizes the website through digital advertising, paid sponsorships (such as a vertical section of the site dedicated to weather reporting or a broad but specific offering like streaming video), and user-paid subscriptions (for top-tier offerings like streaming video). Subscription account management is handled in a separate system. Measures success of the Gigya products in terms of unique and registered user growth, total registrations (now managed through Gigya s products), paid subscriptions, other digital revenue (like web advertising), and impact on other revenues (like merchandise or print subscriptions). The Gigya products implemented by the representative organization include: Social Login, allowing users to link their Facebook, Google+, Twitter, and Microsoft account information to simplify login. Registration-as-a-Service, allowing users to create new accounts on the site if they don t have social network accounts or don t want to link them. Single Sign-On, to manage registration across multiple web properties, including online games. Identity Storage, to collect relevant data from users social accounts to avoid asking duplicate questions. Social Plugins, particularly the Share and Comments plugins. With Gigya, the composite organization has the following objectives: Grow the registered user base. Increase social interaction, as more registered users should lead to more shares, likes, and comments. Increase online advertising revenue, as more users interacting more on the site and spending more time on it means that the organizations can command higher digital advertising rates and sign more and larger sponsorship deals. Reduce site registration management costs. Help drive improvements in physical metrics, such as newspaper subscriptions, paid online subscriptions, and merchandise sales. For the purpose of the analysis, Forrester made some assumptions to estimate the impact of Gigya s products on indirect revenue streams, such as increased user interactions and registrations leading in part to more merchandise sales. These estimates are provided as examples of potential benefits a representative organization might experience; readers are urged to consider their own business and environment when applying estimates to their own situation.