Samsung will create a mobile-advertising exchange via a new partnership with OpenX, setting itself up as a potential advertising competitor to Google and Apple.
Samsung wants to make it easier and more lucrative for app developers to offer advertising to Samsung mobile phone subscribers.
The company announced Tuesday that it has formed a partnership with OpenX Technologies, a leading provider of digital advertising technologies. Through the partnership Samsung and OpenX will create an exchange that will allow advertisers to purchase mobile ad space directly from mobile developers and Samsung. This closed marketplace should allow advertisers to reach a more targeted audience.
The deal with OpenX is an expansion of Samsung's existing strategy to enable advertising on its products. Earlier this year, Samsung established AdHub to sell advertising for its Internet connected TVs. Through the AdHub, brands will be able to deliver 3D, video, and other interactive advertisements into the living room via Samsung's SmartTVs. Samsung's AdHub is expanding its capabilities with the OpenX partnership to include mobile devices.
Samsung's new exchange sounds very similar to what Apple is doing with its own mobile advertising exchange called iAd. Apple it claims, iAds is the best way for app developers to generate revenue when compared to other advertising platforms, because iAd provides easy integration into iOS.
Samsung is pitching similar benefits to developers. The exchange will allow for real-time bidding on the advertising inventory. Samsung says that this will help app developers maximize their ad revenue, and it will also allow developers to have more control to ensure the ads they display in their apps are of high quality.
"Samsung is empowering both the developer and the advertiser, by creating a win-win solution, in which the app developer is able to achieve higher revenues and advertisers are able to reach their marketing goals," Daniel Park, Vice President of Samsung's Media Solution Center, said in a statement.
In addition to creating this win-win environment for advertisers and developers, Samsung also wants to make some money from the exchange. So far, Samsung hasn't disclosed the terms of its deal with OpenX. But if Apple's iAd is any indication, getting advertisers and developers to buy in to this exchange over other advertising platforms may not be as easy as it sounds.
Apple isn't yet calling iAd a failure, but the company hasn't seemed happy with the adoption rate of its advertising platform so far. Earlier this year, Apple reduced the minimum buy-in for campaigns to $100,000. It had been about $1 million when iAd launched in 2010. And to sweeten its network for developers, it's given them another 10 percent of the revenue. Now developers get to keep 70 percent of the money they make from mobile advertising.
It's unclear how Samsung's exchange will run. The company said it will be up and running in the second half of the year.
Samsung is one of the leading makers of cell phones in the world. Its worldwide market share ranked second to Nokia in the fourth quarter of last year, according to Gartner. The company has seen huge success in its smartphone business, where it competes directly with Google Android phones against Apple's iPhone. While mobile advertising alone may not help Samsung sell more devices, making it easier for developers to make money through advertising will keep them developing apps for Samsung products, which run Google Android OS. Apps are a key part of driving more growth in smartphones.
OpenX is an advertising technology company that has mostly focused on advertising within desktop computers. But now through its relationship with Samsung, it will expand into the mobile market. OpenX competes with other companies developing advertising exchanges, including Google's DoubleClick.