LG and Google executives after signing a recent collaborative marketing agreement. Credit: LG Display/LG Electronics.
When it comes to the future of TVs, the folks at LG Display (LPL 2.68%) have made it clear they're betting on organic light emitting diode, or OLED, technology. It's hard to blame them -- because OLEDs emit their own light, OLED televisions have vibrant colors, virtually infinite contrast, and have been largely hailed by critics as superior to their LCD-based peers. They also don't require a backlight, so can be made incredibly thin, flexible, and -- as LG Display beautifully demonstrated in prototypes earlier this year -- even rollable and transparent.
The South Korean company has plowed hundreds of millions of dollars into R&D and manufacturing facilities for OLED TVs in recent years, and its efforts are only just beginning. In April, LG Display CEO Han Sang-beom told The Wall Street Journal that LG Display is expecting to not only fully ramp its second OLED factory by the end of 2015, but is also considering plans for a third factory to help it achieve further benefits of scale. Once complete, these factories will help LG reach its stated goal producing and selling at least 1.5 million OLED TV units next year, nearly tripling its 2015 target of 600,000.
Enter Google
But 1.5 million is a drop in the bucket compared to LG Display's longer-term plans. Late last month, The Korea Times reported that affiliate LG Electronics (NASDAQOTH: LGEAF) "aims at securing 100 million customers for the premium TVs, without giving a timetable for the target."
To help it reach that lofty goal, LG has enlisted the help of none other than Google (GOOG 1.69%)(GOOGL 1.67%), with which it recently launched a joint marketing campaign centered around OLED TVs. The Korean Times says LG Electronics aims to use this partnership to "raise market awareness of the OLED products."
As part of the campaign, LG will utilize Google's advertising repertoire, including both search and its video sharing site YouTube. And YouTube, for its part, should prove particularly effective in this case considering that, last quarter, Google management noted the site's TrueView ad format tends to catch consumers earlier in the purchase funnel than typical advertisements on Google.com. Consequently, this makes YouTube an ideal tool for advertisers like LG to "raise market awareness" early in any given product's life cycle.
But there also appears to be more to this partnership than your average advertising package. Specifically, The Korean Times notes LG Electronics "expects to offer a different business model for its OLED TVs by creating a synergy effect with Google's innovative brand image."
"Google has been helping marketers have efficient communication with their consumers through advertisements products and marketing," added Google Korea director John Lee. "We will make further efforts to work with global companies like LG to help them promote their products globally through our digital platform."
Because details of this expanded partnership are few and far between, however, investors should watch closely to see exactly how LG intends to capture this so-called "synergy effect" with Google. But in the end, if one thing is clear, it's that Google is more than willing to help LG fulfill the enormous expectations for its promising OLED TV line. Over the long term, if LG leads the way as OLED TVs gain momentum, it could quite literally give investors in both LG Display and LG Electronics at least 100 million reasons to rejoice.
