CMO Brief­ing

Sup­ply Path Op­ti­mi­sa­tion is the new buzz­word on dig­i­tal mar­ket­ing, and here’s what the buzz is all about.

Singapore Business Review - - CONTENTS -

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.

Steve Feiner

Yongjie Wong

Benny Chow

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