Samsung Ads is trying to compete with Amazon, Roku for connected TV budgets

“Over the past several years, we have watched the definition of TV change and the way advertisers leverage TV change with it. No longer is TV just a mass-reach platform; it can also provide precision. To address these consumer-viewing trends, in 2018, Samsung Ads introduced a CTV/OTT solution with inventory in ad-supported apps,” Tom Fochetta, vp of advertising sales at Samsung Ads, said in an email.

To aggregate this OTT inventory, Samsung is now arranging deals with media companies distributing OTT apps on Samsung on its smart TVs for those companies to provide a percentage of their in-app ad inventory for Samsung Ads to sell, according to advertising and media execs with knowledge of the matter. Fochetta declined to discuss its arrangements with OTT app publishers.

It is unclear what percentage of their ad inventory apps are required to provide to Samsung Ads, but the policy is not unique. Amazon and Roku require that apps on their connected TV platforms provide 30 percent of their ad impressions for the platforms to sell, and cable and satellite TV providers similarly receive two minutes per hour of TV networks’ inventory.

Collecting inventory directly from OTT app publishers “is a change for them, and it’s a change that’s been well received by the buying community,” said Mike Piner, svp of video and data-driven investments at MullenLowe’s Mediahub.

Aggregating inventory directly puts Samsung Ads in a stronger position among advertisers now, especially TV advertisers, than where it had been previously when it was only aggregating inventory through third-party ad exchanges. It gives Samsung the chance to satisfy advertisers unsure of the scale of its smart TV platform.

“The challenge for them is they are reliant more so on market penetration of their core [TV] device to build audience affinity,” said Albert Thompson, managing director of digital at Walton Isaacson. Samsung Ads has told ad buyers that it has more than 40 million smart TVs registered in more than 28 million households. That puts it in the ballpark of Amazon’s Fire TV, which claims more than 30 million active accounts, and Roku, which claims more than 27 million active accounts.

In addition to the ad impressions that Samsung is collecting from apps on its smart TVs and buying through third-party exchanges, the company also has its own free, ad-supported streaming video service, TV Plus, which launched in 2018, Fochetta said. Similar to Roku’s Roku Channel and Amazon’s IMDb Freedive, Samsung’s service features more than 25 channels from companies including Cheddar and Pluto TV, and TV Plus’s ad inventory is only available for purchase through Samsung Ads, according to ad buyers.

Samsung’s connected TV ad offering mirrors Amazon’s and Roku’s. In meetings with ad buyers, Samsung Ads has tried to differentiate itself from its rivals by talking up its smart TVs’ automatic content recognition technology that enables Samsung to track what people are watching on linear TV, though Roku is able to do that for smart TVs that have its Roku TV technology built into the devices.

Reselling inventory bought from third-party exchanges had drawn concerns from advertisers, especially among TV advertisers, about where their ads would appear. “The flaw with the exchanges is the more people you put between content and technology and the consumer, the lower the value is,” said Tracey Scheppach, CEO and co-founder of Matter More Media, an agency that specializes in targeted TV and digital video advertising. Samsung’s offering had gained most traction among digital buyers accustomed to audience-based buys where the content against which an ad appears is of less concern, but not with TV teams who care about who is seeing ads, as well as the content alongside the ads.

Since 2015, Samsung Ads has used the information gleaned from its smart TVs to package audiences into its “Taste Graph” of more than 20 genre-based targeting segments, such as football, comedy and cooking, according to Fochetta. The company plans to add viewership data from its TV Plus service to the Taste Graph sometime this year, he said.

In addition to being able to track what people are watching on linear TV, Samsung is able to recognize what devices are connected to its smart TVs, and the Samsung Ads team is incorporating that information into its sales pitch. For example, Samsung knows if a person has a cable or satellite TV box hooked up to a smart TV and can use that to aim ads at cord-cutters. Fochetta said that Samsung Ads worked with an auto advertiser to get in front of viewers that could not be reached through linear TV and was able to increase the brand’s reach by 26 percent.

However, for as far as Samsung Ads has come from the days when its pitch centered around click-to-play video ads on its smart TVs’ home screens, the company still has work to do, especially when it comes to winning over TV advertisers who want to know exactly where their ads are running. Piner said that lack of transparency is holding back the shift in budgets from traditional TV to connected TV overall. If Samsung is able to use its direct access to publishers’ OTT inventory as well as its knowledge of what people are watching on linear TV, maybe it could change that by providing a level of transparency and control that advertisers are struggling to find among the connected TV aggregators. “Behind the scenes, Samsung has been building this subtle ad empire, but they haven’t flipped the switch yet,” said another agency executive who asked to remain anonymous.