• Mike Shields, the former advertising editor for Business Insider who is now CEO of Shields Strategic Consulting, argues that tech companies like Samsung and Vizio’s moves into advertising could be successful — but that there are a lot of pitfalls.
  • Samsung has data on when and how customers watch ads, which it could use to produce better advertisements.
  • Samsung will have to contend with a slew of other well-armed competitors making a similar play, though.
  • Click here for more BI Prime stories.

If you spent any time bouncing around the Aria in Las Vegas last month — the unofficial gathering spot for hordes of media and advertising executives invading the Consumer Electronics Show — it was hard to miss the presence of the biggest players in the industry. Google bought everyone in one conference hall donuts; WarnerMedia took over a full restaurant while hosting a mini VR experience. 

And folks holding illuminated signs for Samsung Ads were everywhere.

Here’s a question: Did you know Samsung was in the ad business? You know, the South Korean guys known for cool cell phones and fridges and speakers and laptops — and yes, giant TVs.

The electronics giant has been very quiet on the ad front. But since 2015, Samsung has been selling advanced TV ad campaigns, including on Samsung TV home screens as well as within a free video offering available on these devices.

Samsung isn’t the only TV maker edging into Madison Avenue’s turf. Late last year, Vizio announced plans to build out its own ad sales unit.

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I can’t decide if this represents a brilliant, potentially disruptive new set of contenders for the $70 billion ad market … or a total fool’s errand.

What do the TV makers know about advertising, though?

For starters, these companies make hardware. Advertising is not their core business, and likely won’t ever be.

Many have compared Samsung and Vizio’s emerging role in advanced TV delivery to that of traditional cable distributors.

And as much as Comcast, Cox, Cablevision, and all the rest have attempted to build a vibrant direct sales business, armed with inventory and loads of set top box data, advertising has never been more than a side gig. First and foremost, they care about selling cable packages and keeping customers happy.

Those with long memories will recall the cable ad data consortium that rolled out in the early 2000s with enormous promise and proved an enormous letdown.

Scott Ferber, who founded the early web video ad tech firm Videology, sees parallels between cable providers’ lackluster embrace of advertising and the TV manufacturers of today.

“To succeed in advertising right now, you need audience, inventory, and you need data,” he said. “These guys don’t have all three. They don’t own anything except data.”

To be sure, proprietary audience data is highly valuable in today’s ad world. Just ask Facebook and Google how their gardens are growing.

Samsung knows what you’re watching in real time

According to Cathy Oh, global head of marketing and analytics at Samsung Ads, the venture has ACR data on 45 million smart TVs. ACR stands for automatic content recognition — it’s essentially tech that can pick up what’s on a person’s screen in real time. 

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So Samsung knows exactly what shows and ads its TV owners are watching, and for how long they watch. And they don’t share data with anybody, Oh said.

Plus, Samsung has built its own ad tech stack — including an in-house DSP. In that way, it’s not unlike Roku, which started as a hardware company before becoming a formidable TV ad player.

What Roku has, of course, is a user interface that people love and often turn to first. Do most people have or want that kind of relationship with their actual TVs?

More importantly, Roku controls 30% of the ad inventory from its partners. So it’s got all three legs of Ferber’s ad stool.

However, is it crazy to wonder whether Samsung, and Vizio, follow the Roku playbook? Could these TV makers build out knock-off app stores, essentially replace the need for a secondary device, and become the primary way people navigate their streaming?

“It’s very smart of them because they own first-party data and have access to the apps,” said a top ad buyer. “So they could basically push Roku out of their space. If you have a smart TV, why do you need Roku?”

As the OTT ad market evolves, real estate is everything. If smart TVs’ built-in user interfaces become the new way people pick which apps and shows to watch, TV makers could be thrust into a new pole position.

There are a lot of “ifs” here, of course — along with plenty of potential pitfalls (like, say, privacy). “I believe all of these ‘new entrants’ to advertising want to copy Google and Facebook with their unique data access and targeted advertising capabilities, but underestimate the difficulty of obtaining and the value of scaled, diverse demand,” Ferber said.

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Right now, the demand for OTT advertising is still mostly headed toward the big media incumbents, along with Hulu and YouTube. However, it’s clear that brands are continually looking for alternatives as linear TV ratings decline. Which doesn’t favor traditional TV companies.

At the same time, there’s loads of fervor for buying ads on TV using the same kind of tech and targeting you see in digital advertising.

That’s what Samsung is betting on.

“Over the past several years, we have watched the definition of TV change and the way advertisers leverage TV change with it,” Oh said. “What’s interesting is that today, TV is not just a mass-reach platform: It can also provide precision.”

All true. Of course, Samsung will have to contend with a slew of other well-armed competitors making a similar play. From NBCUniversal’s Peacock to CBSViacom’s Pluto to everything Amazon touches — it’s getting crowded fast.

Over time, Samsung could find the ad business about as compelling as fellow hardware-titan Apple did (which is to say, not very).

Or it could be TV’s sleeping giant.



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