Digital media projects represent an opportunity for substantial rewards. The benefits in customer engagement, advertising revenue, and brand awareness are obvious. The investment in digital media projects is also great. In order to maximize the return on that substantial investment, steps need to be taken to insure maximum exposure and benefit while minimizing the costs.
No cost can be more significant than unplanned downtime. While there are a number of variable costs to any project, the unpredictable nature of downtime and its associated costs can be devastation to your bottom line. When your customers see an error screen instead of your message or advertisement, the effects reach deeper than the cost of recovery. Each project should be evaluated with an eye to the costs of downtime. In that way, efforts to minimize downtime can be evaluated for their own return on investment.
Major Costs of Downtime
Lost revenue due to lost sales or transactions; If your digital media project is part of a transaction system, any downtime means loss of direct sales revenue.
Lost revenue due to undelivered advertising; If your system delivery paid advertising, your revenues go down when that advertising is not delivered.
Costs for on-site service calls; On-site service calls are very expensive. A 2009 study by the Aberdeen Group calculated the average on-site service call at $276*. If your system is in a hard to reach location, that cost can skyrocket.
Loss of customer loyalty; When your potential customers see your name associated with technological failure, your corporate image suffers.
Additional costs may include personnel time required to manage the service interruption to identify, diagnose and schedule a fix, as well as time to contact clients and explain the issues.
Calculating the cost of downtime requires looking at all of these factors and determining the potential frequency and duration of outages. Some costs are based on the duration of the downtime (i.e. ad revenue per hour) and others are per occurrence (i.e. service call fees). In simplest terms the cost of downtime can be expressed as:
Cost of Downtime = (O x $/O) + (D x $/Dt) + I
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