According to the interim financial report for 2021 recently released by Joy Spreader Group Inc. (HKG:6988, “the Group”, “Joy Spreader”), a leading marketing technology company listed in Hong Kong, the Group’s spend on research and development (R&D) rose to HK$29.9 million (approx. US$3.8 million) during the first half of 2021, a YoY gain of 712.5 per cent.

“The firm’s key advantages lie in data and algorithms that are optimized through a continuous enhancement of the business model, which requires substantial R&D investment,” explained one of Joy Spreader’s executives at its interim results press conference held on August 31.

The key advantages gained by the company as a result of increased spending on its data and algorithms confirm the wise decision undertaken by the company in calling for the strong R&D investment.

Joy Spreader has built advantages in data and algorithms to meet its business needs thanks to the extensive experience that the firm has accumulated over time. The mobile new media performance-based marketing company’s business model is based on facilitating transactions at marketing points by using its Direct to Consumer (DTC) solution that enables accurate matching of data-rich profiles and detailed descriptions of products as a result of an integration of its supply-side platform (SSP) and demand-side platform (DSP) services.

The DTC model is designed to precisely define the relationship with users. With online shopping having become the most common way that goods and services are purchased, the performance of the DTC model largely depends on the ability to accurately respond to the new trends sweeping the consumption market, precisely target potential consumer groups and enable high precision matching with those groups, all of which require the underlying support of data and algorithms.

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Using the firm’s DSP services as an example, to help corporate clients win new customers or additional orders from existing customers, Joy Spreader provides data-rich profiles of products from clients alongside an algorithm model-based marketing point recommendation engine to assist sellers in choosing the most suitable marketing point for selling or placing its products, stimulating purchases as well as downloading of apps or services purchased.

With a large amount of data that the firm has accumulated over the past few years in mobile new media content, anonymous user behaviors and products, Joy Spreader has built a powerful technology platform that is supported by its proprietary business intelligence technology and strong capabilities in data collection and analytics.

Data accumulation is known to have a decisive impact on the building and performance of models, helping Joy Spreader build up its leading advantages and competitiveness across the industry.

These advantages are reflected in the firm’s large collection of data models and its long-term, deep commitment to perfecting the quality of the data and the algorithms. On the one hand, the interim financial report showed that as of June 30, 2021, the number of data models being deployed increased YoY by 37.4 per cent to 169. In addition, the number of data labels used by its intelligent recommendation coupling model rose to 2,447, up 27.25 per cent YoY. On the other hand, the Group began developing data-driven and model-based algorithms on the WeChat Official Account Platform in 2013 before embarking on similar development on the Douyin platform, the Chinese version of TikTok in 2018.

Joy Spreader’s expanded database and enhanced capabilities in algorithms are closely associated with the continued increase in the Group’s spending on R&D. The firm invested nearly 80 million yuan (approx. US$12 million) to develop and create an algorithm model for the marketing ecosystem on WeChat in 2013 and 2014, just as the new media platform was consolidating its dominance, demonstrating the firm’s focus on and continuous efforts in R&D.

Joy Spreader then continued increasing its R&D spend in tandem with the expansion of its business. During the first half of this year, the Group’s R&D investment soared 712.5 per cent to HK$29.9 million (approx. US$3.8 million), with a heavy focus on data analytics and algorithm modeling.

Based on its deep experience with algorithms, Joy Spreader built the DTC model that allows the Group to address the challenges facing the e-commerce marketing sector through more targeted marketing and a higher level of conversions while rolling out the roadmap to expand into foreign markets.

Joy Spreader plans to focus on developing the short-form video (SFV)-based e-commerce marketing business outside of China as part of its next stage of growth. Most notably, the firm has taken the lead in building a new technology model tailored to the needs of overseas mobile new media markets as they are distinctly different from the domestic market in terms of both environment and characteristics.

Building on the success and the extensive experience Joy Spreader has had in monetizing video content on domestic mobile new media platforms, Joy Spreader has begun doing the same on platforms outside of the country. So far, the firm has built a new technology model and service system specifically for foreign markets in preparation for its expansion onto overseas e-commerce platforms, with TikTok serving as a prime example. The Group has revealed that it has put in place an international algorithm team in Sweden to provide data analytics and professional support for algorithms optimized for its overseas business.

As a leading Chinese mobile new media performance-based marketing technology company, Joy Spreader believes in the necessity and importance of investment in R&D. With the optimization of its data collection and algorithm modeling for SFV content, the Group expects to further increase its R&D spend while strengthening its advantages in data and algorithms, facilitating the continuous transformation of its core technologies into the company’s key strengths.

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