Supply Path Optimisation is the new buzzword on digital marketing, and here’s what the buzz is all about.
The concept of supply path optimisation or SPO has been making rounds in the marketing industry as of late, and experts say that it will remain a buzzword in the ad tech panels for the next few months. But what exactly is SPO and how does it work? Simply put, SPO is the optimisation of media buying. It uses an algorithm that allows media buyers to interact with media suppliers in generating the right impressions in a transparent, efficient, and cost-beneficial way.
A money-making machine?
Yongjie Wong, co-founder and chief marketing officer of Qourier, said that SPO allows media publishers or suppliers to maximise their revenue in the long run and at the same time affords media buyers the ability to bid on and win media inventory at the most reasonable price.
For Benny Chow, project and marketing manager at Firefly Photography, SPO does not only maximise revenue, but more importantly, it reduces the advertising cost by helping ad buyers optimise bids for better performance by fighting ad-frauds. He explained that SPO makes the process more transparent as some supply-side platforms (SSPS) may use methods to maximise their own profits through means that do not benefit the advertiser’s interest even without the publisher’s knowledge.
Steve Feiner, co-founder and chief executive officer at A Better Florist, added that a current bidding strategy should be return of investment (ROI) positive before the application of SPO, if done correctly, can generate profit.
“If you are not generating an ROI with your current strategy, then optimising that strategy might never deliver a ROI. SPO is a new and complex area of marketing and tech that only works if it is done right. Like most new cutting edge concepts in the beginning, most will play around with the concept, but unfortunately not reap the rewards until it becomes much more widely understood,” Feiner emphasised. Chow added that SPO must be utilised with the demand-side platform (DSP), such as Openx or Google, already built in with the process. Wong further noted that SPO should be used in tandem with the modern company or brand’s marketing direction, considering that transparency and quantifiability are paramount in today’s digital age.
What is the right way to do SPO?
Chief marketing officers and marketing executives are expected to be in the loop on SPO, and since it is a relatively new concept which is still developing, marketers are expected to learn as much as they can with regards to how the concept will play out in the coming years.
“In general, marketers should know that SPO exists and that it will become a much bigger deal in the next few years. In the short term, I don’t think it should not be an area of focus for the majority of marketing executives. There is no shortage of new wonderful concepts to be aware of, and until more basic concepts like attribution are more widely understood, nothing more than a cursory understanding should be required,” Feiner added. Plenty of media buying agencies are already using SPO, and with more education in the next 3-5 years, Wong said that in-house marketing teams would begin to utilise SPO as well. Feiner added that buying advertising programmatically is still a bit of a black box, and in order for more advertising to flow in the right direction, transparency and ease of understanding will need to become paramount. “Demand providers and supply providers interact in a multitude of methods creating a tremendous amount of complexity for all parties. SPO will certainly help with the transparency portion and I do expect it to be a bigger and bigger driver going forward,” Feiner elaborated.
Chow highlighted that SPO benefits the more authentic publishers with good media inventory as it helps save costs in the long run, SPO may become an industry in itself where an SPO agency may develop an algorithm to provide services to ad buyers/dsp to check against SSP.
“There is one potential acceleration driver out there that could drastically change the course of SPO — agencies and large advertisers that are spending hundreds and even billions of dollars. If a WPP or a Unilever objects to current processes, that would create a very strong desire to fix the current situation bringing the issue that SPO is trying to fix to the forefront,” Feiner said.
SPO should be used in tandem with the modern company or brand’s marketing direction, considering that transparency and quantifiability are paramount in today’s digital age.
An SPO agency may develop an algorithm to provide services to ad buyers.