How to Measure DAM ROICalculate the bottom-line benefits of digital asset management.

Guide | How to Measure DAM ROI

2webdam.com | learn@webdam.com | ©2018 Webdam

As marketing organizations become more technologically driven, digital asset management (DAM) systems are evolving into an essential part of the technical infrastructure. To create impactful brand interactions across a highly fragmented media landscape, marketers must rely on an extended network of collaborators and technology platforms. DAMs are not just the central repository for all the visual assets – now they interconnect the people and processes.

Calculating the complete value of a digital management system – and the financial return it provides – is complicated. Use cases and sources of value vary from one company to the next. And some of the financial benefits are subjective and tough to calculate.

With that in mind, the financial case for DAM is well established. Most companies believe DAM delivers value in three main areas:

Save MoneyOne of the most easily quantified sources of value is cost savings. DAM drives efficiency in marketing operations by making it easier to find, manage and distribute marketing assets. Teams spend less time looking for and sharing things - and re-creating things they can’t find.

Strengthen Brand EquityDAM simply makes brands better: it increases the quality of creative work, makes it easier to find the right visual asset to create impactful brand experiences and lets marketers scale their activities so partners, subsidiaries, franchisees and others deliver communication that reinforces brand strategy.

Reduce Legal ExposureDAM acts as a gatekeeper to support effective rights management. By making use restrictions clear, organizations cut the risk that marketing assets will be used inappropriately. Asset rules can restrict use and even take assets offline when licenses expire.

Calculate Cost SavingsFor most companies, implementing a DAM system is a financial no-brainer. A positive net return is usually possible in the first year based on cost savings alone. Brand equity and legal risk can be figured in, but are trickier to calculate – especially in the short term. Many companies choose to justify the investment based on cost savings and see a stronger brand and reduced legal exposure as upside.

The following framework will help you figure out how much money a digital asset management system is likely to save you. This model is based on objective figures that you can look up and calculate or accurately estimate. You can also adjust your assumptions to come up with more conservative or aggressive scenarios.

Guide | How to Measure DAM ROI

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Consider how much your digital assets are worth.

Although every company is different, you very likely have a lot invested in visual assets like photography and digital design. Here are some things you can consider to estimate their value and a projectable cost per asset.

• Identify how much you’ve paid for your assets: license fees, the cost of photo shoots or commissioned art, contracted designs, etc.

• Some companies find it easier to simply multiply their art, design and photography budgets by the number of years they collected assets.

• Quantify or estimate the number of assets in your collection.

• Divide the value of your assets by the number of assets in your collection for an average value of each asset.

Determine loaded hourly rates for everyone who interacts with marketing assets.

Consider everyone who will interact with your DAM – executives, marketers, creatives and other business users. A loaded hourly rate is how much you’re spending on an employee in total, including benefits, capital expenses, training and other costs. If you’re short on time, you can simply double the baseline hourly rate for a close estimate of the loaded hourly rate.

For a thorough calculation, here are the steps:

1. Determine a worker’s hourly wage and the number of hours per year they work.

2. Calculate additional annual costs like benefits, insurance, payroll taxes, training and other overhead.

3. 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.

4. Divide this by the number of actual work hours per year to calculate the fully loaded hourly rate.

((Hourly Wage × Actual Work Hours) + Additional Annual Costs)

The Equation:

Actual Work Hours= Fully Loaded Hourly Rate

The Equation:

Total cost of visual assets

Number of assets in your collection= Average Asset Cost

Guide | How to Measure DAM ROI

4webdam.com | learn@webdam.com | ©2018 Webdam

1. Loaded Hourly Rate

Measure how much time your team spends working with digital assets.

Think about each user and measure how much time they spend finding and sharing visual asset files each week. Be sure to consider the entire lifecycle, from production through edit cycles, publishing, distributing and reusing these files. 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 to ask colleagues how long tasks take.

Next you need to figure out how long the same tasks take using DAM. You can ask a vendor for help or estimate based on a demonstration. Try to think in terms of outcomes as much as elapsed time. For example, looking for an asset by entering a broad search term will take the same amount of time. But if your search returns 200 results rather than the 20 that matter, you’re going to spend a lot of time sorting through irrelevant options.

Calculate the ROI of DAM Let’s walk through a sample DAM ROI calculation and see where these different components fit into the equation. In this scenario, we’re evaluating DAM ROI over one- and three-year periods for a mid-size business.

First, let’s calculate the company’s loaded hourly rate for DAM beneficiaries:

Number of People

Average Base Salary

Hours Worked

Hourly Rate

Loaded Salary

Loaded Hourly Rate

30 individuals interacting with assets in DAM

$50,000

8 hours/day × 5 days/week × 52 weeks/year = 2,080 hours2,080 hours – 15 days of PTO (3 weeks) = 1,960 hours per year or 49 weeks per year

$50,000 (average salary) / 1,960 (hours worked) = $25.51 average hourly rate

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

$100,000 / 1,960 (hours worked) = $51.02 loaded hourly rate for each member of your team

Guide | How to Measure DAM ROI

5webdam.com | learn@webdam.com | ©2018 Webdam

3. Time Spent Searching for Digital Assets

Total Hours Weekly

Total Hours Annually

Total Cost

Savings

Total Savings

3 hours per week × 30 people = 90 hours per week

90 hours per week × 49 weeks a year = 4,410 hours per year in lost productivity

4,410 × $51.02 (loaded hourly rate) = $224,998 per year searching for files

In our experience, DAM software can reduce the time spent finding and accessing files by 80%. $224,998 × 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.

$179,998 (savings) + $30,000 (total cost of lost assets) = $209,998 total saved each year

Then factor in how much time the company spends searching for assets. Without a DAM in place, the marketing manager estimates that each team member spends 3 hours a week searching for files.

2. Value of Digital AssetsNumber of Assets

Value of Assets

Cost of Lost Assets

30,000 assets in total

$80,000 in licensed stock images and $220,000 in commissioned art, photography, video and designs

$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.

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.

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.

That adds up to a loss of $30,000 per year. Having a DAM in place would dramatically reduce this risk.

Next, let’s look at how much the company’s digital assets are worth.

Guide | How to Measure DAM ROI

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4. Implementation & ROICost of DAM

Net Savings

ROI

Total Investment

Total Savings

3-Year ROI

$35,000 up-front investment with annual recurring investments of $25,000

$209,998 (savings) – $35,000 (DAM investment) = $174,998 net savings in the first year

ROI = (gains – cost) / cost($209,998 – $35,000) / $35,000 = 4.99 × 100 = 499% ROI in the first year

Over three years, this is what the calculation would look like: ($35,000 + $25,000 + $25,000) = $85,000 invested over 3 years

$209,998 (savings) × 3 years = $629,994 saved over 3 years

(Total savings over 3 years – total DAM investment) / total DAM investment($629,994 – $85,000) / $85,000 = 6.41 × 100 = 641% ROI over 3 years

Numbers don’t tell the whole story. As explained earlier, there are DAM benefits that are difficult to quantify, but extremely valuable nonetheless. While this ROI framework may not consider every aspect of your specific case, working through these details will help you better understand what a DAM could do for your business and measure some of the financial benefits.

If you’d like to see how others have achieved great ROI with digital asset management, take a look at our customer stories.

ABOUT WEBDAM

Webdam, is a leader in digital asset management, changing the way marketing and creative teams manage the world’s brands. Founded in 2005, the Webdam cloud-based platform connects the visual content that drives impactful brand experiences and allows brand-building activities to scale across the enterprise and consumer touchpoints. Over 700 of the world’s leading brands rely on Webdam to accelerate their marketing operations. For more information, please visit webdam.com and follow Webdam on Twitter or Facebook.

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