How to Measure DAM ROI ABOUT THE AUTHOR: WebDAM works with the world s best brands, providing the leading platform for managing, controlling and sharing creative files such as images, logos, graphics, docs, presentations, videos and more.
INTRODUCTION Digital asset management is the proven solution for today s enterprises to effectively find, manage and share branded assets. If you ve been tasked with estimating and presenting DAM ROI for your company s unique needs, this guide will help you identify the numbers that should be collected and describes a calculation method. That said, keep in mind that the nature of DAM itself can make it difficult to come up with concrete figures that apply across all use cases. Using a plug and play DAM ROI calculator won t always yield 100% complete calculations because organizations use and benefit from DAM in many different ways. Despite these challenges, an ROI calculation is still a very valuable benchmark to start with and measure against over time. To reach the most accurate calculation of ROI, it s essential to have a thorough understanding of how your marketing and creative teams work with digital assets, how valuable these assets are and the many intangible factors that will influence ROI. Below are key questions you need to answer for a holistic understanding of DAM ROI: First, identify everyone who will benefit from having a DAM platform in place. This usually includes: MARKETERS VPs, directors, managers, coordinators, etc. CREATIVES Creative directors, art directors, brand directors, brand managers, creative managers, graphic designers, project managers, digital asset managers, etc. OTHER BUSINESS UNITS Media relations, sales teams, product teams, contractors, etc. What are the loaded hourly rates of your DAM beneficiaries? Loaded hourly rate is how much you re spending on a worker in total, including benefits, capital expenses, training and other costs. Short on time? Simply double your baseline hourly rate for a close estimate of your loaded hourly rate. For a thorough calculation, here s a step-by-step guide to finding the loaded hourly rate: First, determine a worker s hourly wage and the number of hours per year they work. Then, calculate the additional annual costs like benefits, insurance, payroll taxes, training and other overhead. Multiply the initial hourly wage by the number of hours they work to calculate annual payroll cost. Add this number to the additional annual costs like benefits, etc. Finally, divide this by the number of actual work hours per year to calculate the fully loaded hourly rate per employee. ((Hourly Wage x Actual Work Hours) + Additional Annual Costs) / Actual Work Hours = Fully Loaded Hourly Rate
Next, consider how much your digital assets are worth. This number will vary quite a bit, as every company s collection of files is different. Here are some data points you should collect to determine the value of your assets: Identify how much you ve paid for your assets, whether it s license fees, the cost of photo shoots or commissioned art, contracted designs, etc. Remember that digital assets are not all the same some have had more resources invested to create them. These factors don t even include the returns that finalized designs are continually bringing back to your company it can be difficult to measure how much an individual asset in a billboard design is earning for your company. For an estimated value of your digital assets, add these all up. For an average value of one asset, take this and divide by the number of assets in your collection. With WebDAM, we are able to quickly and easily access nearly a decade s worth of assets. It makes it even easier for our artists to WOW our customers, which is a huge win for CustomInk. Joe Nicolia, Art Technology Specialist, CustomInk Then, measure how much time your team spends working with assets. Be sure to consider the entire lifecycle, from production, edit cycles, publishing, distributing, and reusing these files. Across this lifecycle, DAM simplifies the process of finding, sharing, collaborating, controlling and protecting your valuable assets. DAM also provides effective brand management across global teams. To start, put yourself at the user level and measure how long your team spends finding and sharing files each week. (We ve seen some teams literally grab a stopwatch to time their colleagues and apply the results to their whole team. Other teams have used surveys.) Then, during a DAM demonstration, compare how long it takes to do the same things. Something to consider is that if you have an extremely large collection, this could affect the time it takes to find an individual file because your search will yield a large number of results. Also consider that you ll need to invest in accurately organizing and keywording your assets in a DAM and configuring the software to fit your unique needs and workflows. At WebDAM, we make this simple. Another factor to consider is how comfortable your team is with technology. This can influence user adoption of a DAM and ultimately the ROI of your system. This is one reason WebDAM has always focused on providing the best user experience and company-wide adoption in the market, delivering the best DAM ROI to organizations. With WebDAM, we save about 2,000 hours annually with the entire field staff. All in all, WebDAM saves us an exponential amount of time. Steve Stern, Brand Manager, La Quinta Inns & Suites
HOW TO CALCULATE THE ROI OF DAM Depending on your strategy, feel free to be extra conservative with your DAM ROI calculations. If the numbers sound unrealistic, scale them back and calculate from a more conservative view point. We advise you to look at these numbers and take three different approaches to your calculation: conservative, moderate and aggressive. From our perspective, even a conservative ROI calculation will be convincing enough to implement a DAM platform or upgrade to more modern software. Now, let s walk through a sample DAM ROI calculation and see where all these different components fit into the equation. In this scenario, we re evaluating DAM ROI over three years for a mid-market business. First, let s calculate the company s loaded hourly rate for DAM beneficiaries: 1. Company s loaded hourly rate $ Number of People 30 individuals interacting with assets in a DAM Average Base Salary $50,000 is the average base salary for this team Hours Worked 8 hours/day x 5 days/week x 52 weeks/year = 2,080 hours 2,080 hours - 15 days of PTO (3 weeks) = 1,960 hours per year or 49 weeks per year Hourly Rate $50,000 (average salary) / 1,960 (hours worked) = $25.51 average hourly rate Loaded Salary Include additional costs like benefits, training and other overhead = $50,000 per employee. $50,000 (base salary) + $50,000 (additional costs) = $100,000 per year Loaded Hourly Rate $100,000 / 1,960 (hours worked) = $51.02 loaded hourly rate for each member of your team Next, let s look at how much the company s digital assets are worth. 2. Value of digital assets $ Number of Assets The business has 30,000 assets in total. Value of Assets They ve invested $80,000 in licensed stock images and $220,000 in commissioned art, photography, video and designs. Total Value of Assets $300,000 is the total value of assets (this is a conservative estimate). Keep in mind that your final designed assets are worth significantly more, so you don t want to lose them or make them difficult to locate and reuse.
2. Value of digital assets (cont.) Cost of Lost Assets To lose one of these assets could cost the company relicensing fees, additional photo shoot expenses and redesigning efforts. These assets have a high replacement cost if lost. Cost of Lost Assets If each person loses 1 asset a year, 30 assets are lost annually. Let s assume it would cost the company $1,000 to recreate each asset. Total Cost of Lost Assets That adds up to a loss of $30,000 per year. Having a DAM in place would dramatically reduce this risk. Then, factor in how much time the company spends searching for assets. Without a DAM in place, the marketing manager has found that each of his team members spends 3 hours a week searching for files. 3. Time spent searching for digital assets Total Hours Weekly 3 hours per week x 30 people = 90 hours per week Total Hours Annually 90 hours per week x 49 weeks a year = 4,410 hours per year in lost productivity Total Cost 4,410 x $51.02 (loaded hourly rate) = $224,998 per year searching for files Savings In our experience, DAM software can reduce the time spent finding and accessing files by 80%. $224,998 x 0.8 = $179,998 in savings This is assuming your digital assets are properly tagged and organized. Remember, this calculation doesn t even address all the intangible values of DAM like brand management, time saved by reusing files, business insights from analytics and other benefits. Add a potential $30,000 in savings from lost assets. Total Savings $179,998 (savings) + $30,000 (total cost of lost assets) = $209,998 total saved each year. Now, it s time to factor a DAM implementation into the equation and calculate the ROI. Let s assume that a company-wide DAM purchase, deployment and support is a $100,000 up front investment with annual recurring investments of $75,000. Note that the price of a DAM varies greatly depending on a company s needs, and be sure to incorporate the hours and loaded hourly rate of the time invested by your DAM administrator.
4. Implementation & ROI Cost of DAM $100,000 up front investment with annual recurring investments of $75,000 Net Savings $209,998 (savings) - $100,000 (DAM investment) = $109,998 in net savings in the first year alone ROI ROI = (gains - cost) / cost ($209,998 - $100,000) / $100,000 = 1.10 x 100 = 110% ROI in the first year Over three years, this is what the calculation would look like: Total Investment ($100,000 + $75,000 + $75,000) = $250,000 invested over 3 years Total Savings $209,998 (savings) x 3 years = $629,994 saved over 3 years 3 Year ROI (total savings over 3 years - total DAM investment) / total DAM investment ($629,994 - $250,000) / $250,000 = 1.52 x 100 = 152% ROI over 3 years This is just using average numbers and cost savings. Again, it s a good idea to take a conservative, moderate and aggressive approach to calculating all these figures and comparing them when evaluating your DAM needs. This ROI calculation is just a subset of the value DAM brings to your organization. There are many intangible ways DAM benefits your organization. WebDAM is the most cost-effective, powerful and user-friendly solution. Elly I Anson, Brand Identity Manager, Vodafone IDENTIFY THE INTANGIBLE AND SOFT ROI OF DAM Sometimes numbers don t tell the whole story. There are many soft benefits of DAM that can t be represented in financial terms, but they are still vital ingredients to identifying the ROI of your DAM deployment. Here are some common examples of intangible DAM benefits that you should consider. BRAND CONTROL & GROWTH $ LOWER OPPORTUNITY COSTS NEW REVENUE OPPORTUNITIES
Brand Control & Growth Companies have invested countless hours and resources into creating a strong, memorable brand experience, so it s crucial to safeguard that investment with DAM software. DAM gives your organization control over how assets are used and who uses them, empowering complete brand management across the company. DAM deploys brand guidelines to ensure that your brand is always accurately and consistently represented. DAM ensures teams always have the most up-to-date branded materials. When important files are easily accessible, branded materials can be created and distributed faster, enabling rapid brand growth. Lower Opportunity Costs With DAM, teams don t waste time hunting for files, freeing up time to spend creating high-value products and driving results for your business. A DAM platform will help you avoid recreating assets, saving valuable time and resources. Easy, round-the-clock access to critical files means your team members can work more efficiently and get to market quicker. DAM improves collaboration by eliminating bottlenecks and siloes that can delay time-sensitive projects. DAM software automatically converts assets to the right size and resolution for all channels, so marketing and creative teams save time previously spent resizing and optimizing assets. DAM also manages all metadata associated with an asset, like rights information for licensed content, reducing the risks and costs associated with improperly using assets or potentially violating a license. Never waste time searching for who approved, downloaded or used an asset. With analytics and reporting, have complete transparency. New Revenue Opportunities Bring in new sources of revenue by selling rich media assets right through your DAM platform. While this ROI calculation may not cover every aspect of your unique DAM needs, addressing these factors will equip you with financial justification for purchasing DAM software and empowering your team with global brand management. Don t take our word for it see how others have achieved great ROI with digital asset management.