Samsung launching mobile ad platform to challenge Apple's iAd, Google

The South Korean electronics manufacturer will work closely with OpenX Technologies on an exchange allowing companies to bid on advertising space within applications on its devices, the two companies announced on Tuesday.

“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," said Daniel Park, Vice President of Samsung’s Media Solution Center.

"This is the first time any device manufacturer has entered the ad tech space in this way," OpenX Chief Executive Tim Cadogan told The Wall Street Journal. "It is becoming very clear to the principals in the mobile space that advertising is going to be a very important part of the revenue mix."

Cadogan added that Samsung took a year looking into "a range of players" before choosing his company. Open X currently makes $100 million in annual revenue and is contemplating further moves into the mobile advertising industry.

AdHub Market is expected to arrive in the second half of this year. Samsung launched an AdHub advertising platform for SmartTVs earlier this year.

Samsung has risen to become the world's second-largest mobile phone maker, behind only Nokia. According to Gartner Research, Samsung held a 19.4 percent share of global mobile device sales in the fourth quarter of 2011. The company is also in fierce competition with Apple for the top spot among smartphone makers.

As it enters the advertising market, Samsung will find itself in awkward competition with Google, which makes the Android mobile operating system that has helped the Korean handset maker rise. Since it offers the software for free, Google relies on advertising revenue from Android in order to profit from the platform. Google recently revealed as part of an legal dispute with Oracle that it made just $550 million from Android from 2008 to 2011.

For its part, Apple has not had smooth sailing with its own iAd service. The company has steadily improved its terms in order to drum up support from both developers and advertisers. Apple recently increased developers' share of iAd revenue from 60 percent to 70 percent.

iAd received a significant amount of buzz when it launched in 2010, but Apple has had to decrease its minimum for advertising campaigns to attract advertisers. A report from February claimed Apple is in the midst of a "reset" of the service.