One of the biggest challenges is keeping online video audiences around long enough to make advertising profitable – and quality content might be the answer. At least, that’s the idea that several top media companies are betting on.

High, quality engaging web series is a key part of future strategies for building audiences and selling advertising. Taking guidance from broadcast networks and cable channels, online media companies are bringing big names in front of and behind the camera to woo audiences and advertisers.

For example, AOL is launching projects with designer Jonathan Adler, actor Hank Azaria, celebrity chef Rocco Dispirito and Oscar award winning actress Gwyneth Paltrow to name a few. Hulu’s projects will involve Mario Batali, Carson Daly, Eva Longoria and Seth Meyers. Yahoo! has a similar lineup with well-known names like Morgan Spurlock, Cheryl Hies, Zachary Levi and John Stamos involved in web series projects. These announcements and more were made in a series of “up front” presentations in New York by the top media companies – which are called Digital Content NewFronts this year. Similar to broadcast television “up fronts,” these presentations were designed to court advertisers and help media companies improve their image.

During its presentation, Yahoo! announced that it doubled their original video programming in the last year. President and CEO Marissa Mayer explained that premium content was one of Yahoo!’s top three goals for the company in the coming years. With the star-studded line-ups, it’s clear that other media companies and betting the same thing.

Online video is a good move for media buyers as well. On television, brand advertisements are skipped over frequently with DVR technology. But commercials on online platforms such as Hulu do get viewed and have a high brand recall. Nielsen is taking notice as well. It announced recently that it will begin a pilot program to track digital programming ratings, which will measure the audiences for linear television content online. AOL, A & E, ABC, CBS, Discovery Communications, Fox, NBC and Univision are on board for the pilot program.

The company had a 36% jump in profits for the first quarter of 2013. But quarterly revenue was still 7% lower than a year ago. Yahoo! owns 24% of the thriving Alibaba Group Holding Ltd, which accounts for some of the increase, but its core business – online-advertising – is declining steadily. Media buyers and advertising agencies are growing more impatient with the lack of leadership in this area.

Yahoo!’s display-ad revenue is about 40% of the company’s sales and the sales of ads are declining. The revenue dropped 11% to $455 million from a year ago, and search ad revenue dropped 10% to $425 million.

Madison Avenue advertising companies are skeptical about spending more with Yahoo! advertising companies. Investing their media buying dollars into Yahoo! isn’t top priority because they aren’t sure how the search engine provides any specific benefit compared to other options.

Mayer, who was hired from Google in July to turn the company around, has been trying to quell complaints by emphasizing the commitment that Yahoo! has to advertisers. In a recent conference call with advertisers, Mayer noted that it would “take several years” for Yahoo! to see the growth rate she would like.

She also noted that display advertising on mobile devices is part of their long-term strategy. Although it will take time for mobile ads to reach the rates of standard online ads, she is confident that the mobile sales will help offset some of their overall losses in time. Mayer promised that mobile advertising details would be released in the coming months – and reported that 300 million monthly users access the service from mobile devices.

Overall, Yahoo! reported earnings of $390.3 million up from $286.3 million last year, and revenue decreased to $1.14 billion from $1.22 billion.

For the past two years, the company has worked on taking the television soaps from the small screen to the LCD screen. Although they wanted to pick up right where the canceled soaps left off in terms of airdates, they initially had trouble getting financing for the new project. They also had to coordinate with the unions that worked with the actors and writers on the shows.

A new trend in soap operas. The move to take previously broadcast shows to the online audience could start a new trend, and it’s what soap operas have been doing for years. Although it might seem hard to believe, soaps have always been at the cutting edge of entertainment. When TV started to outpace radio, soap operas were some of the first programs to commit to the new technology. Now that the Internet is becoming the preferred medium, soap operas are at the forefront again.

The jury is out on its success. However, until the new shows actually launch in their online-exclusive platform, it’s hard to determine if  they will be a success. Audiences for the shows numbered three million when they were on broadcast television. It’s unlikely that they will get this viewership online, but estimates show that they only need 1/6^th of the viewership in order to break even – about 500,000 viewers.

Why is the breakeven point so low? The episodes will cost a lot less to produce than they used to, and advertising will improve as well. Online media buyers can get ad space during the online programming that is much more targeted – and therefore more likely to be effective. Some viewers will also pay for episodes directly through iTunes or through the monthly Hulu Plus subscription service.

It will be an experiment – but likely to be an effective one – and when it works, the soap’s shift to Internet broadcasting may be a sign of things to come for fan-favorite shows.

In an announcement in April, the company unveiled its new tool to measure online viewing of television shows. The tool will help bridge the gap between traditional measurement and the new viewing habits of audiences everywhere.

The effort is based by several broadcast and cable networks including NBC, Fox, ABC, Universal, Discovery and A & E. The pilot program is called the “Nielsen Digital Program Ratings” system. After a few months of testing it will be rolled out for broader commercial use.

With the program, Nielsen hopes that this technology will become the standard for this new field of entertainment, just as it is with traditional television programming. The TV networks currently involved will use the program to track the viewers of popular shows on their websites, and then compare that viewership data with Nielsen’s to ensure that the tracking is accurate. The company also hopes to become the tool for online video sites like Hulu, YouTube, Yahoo! and AOL – but only AOL is part of the pilot program.

The new technology is a response to the growing need for networks to provide data on online viewership so that they can accurately determine the worth and value of advertising for online media buyers. Not only are viewers watching original programming online, but they are also watching broadcast television shows at a later time online.

Nielsen’s technology is a step in the right direction, but it will only be tracking viewership on computers and not on tablets or smartphones. Ideally, media companies want to know how many people are watching on any type of device. There are plans to cover mobile devices in future releases of the technology. The new program is a compliment to a 2011 program that lets advertisers track the performance of their online advertising campaigns.

Google announced in March that it would be doubling its office space near Seattle, just a stone’s throw away from the campuses of Amazon and Microsoft. The space will be filled with engineers dedicated to working on cloud technology.

Why the cloud? In cloud computing, thousands of computer servers are used in conjunction to create a high-powered machine that is capable of lots of tasks at once. They often store data to run websites, but can also be used to handle analytical problems. These services are rented by independent software developers, large companies and government entities that want computing power without the high costs associated with buying their own machines.

Google’s purchase of office space near Amazon is significant – currently their web services department (A.W.S.) is the leader in cloud services. Microsoft is a close second to Amazon in terms of cloud service providers with their Windows Azure service.

Google’s cloud strategy. Although Google is looking at the cloud business as a new source of profit, analysts say that it’s a strategy to encourage developers and businesses to use Google products instead of the rivals. Cloud business has become so important in other businesses, such as mobile apps, online video and streaming music, that the demand is increasing.

Even though cloud computing is relatively new, Google is still behind its competitors. Amazon was the first company to rent its data storage to other people – and it started in 2004. Microsoft came next, followed by Google.

Google sells businesses cloud-based word processing storage and spreadsheet tools. The Google App engine for building and hosting web and mobile apps has been popular. It was launched in 2004 and has 250,000 developers using it to run one million apps. Google also launched Compute Engine for large-scale computing and data center access recently, but the results have been less outstanding. Consumers say that the cloud service is less expensive than the other options, but still it lacks the power that Amazon and Microsoft offer.

While younger generations have become synonymous with technical ability, what of the older generations?  With a reputation for being decidedly “un-techie,” Baby Boomers and the elderly are too often discounted in market research, advertising, and product creation.  Parodied in pop culture as “behind the times” and unable to stay abreast of rapid changes in the technological landscape, those fifty and older have been misrepresented.  As detailed in the infographic below, current research shows that many of the assumptions about the Baby Boomers and technology are incorrect.  Neither slow to pick up new concepts, nor resistant to the ever-changing digital world, Baby Boomers and the elderly are a quickly growing group of media and technology users.

The infographic presents illuminating information about the trend of technology usage for Baby Boomers and the elderly.  A growing market that uses smartphones, tablets, the Internet, and social media – savvy markets and advertisers should not ignore this powerful demographic.

Embed this infographic on your site: Copy and Paste the Code Below

Via Koeppel Direct

However, analysts are predicting that the revenue from SVOD services could be a problem for companies who want to maintain their primetime audiences – which could, in turn, harm advertising fees and decrease the demand from media buyers for their advertising spots.

For example, CBS is putting popular shows like “The Good Wife” on Amazon Instant Video. Although they are making money on the licensing fees, they are also decreasing the need for viewers to rush home and see the show live. This means they are missing out on the exposure to advertising. If they know they can watch the whole season later on, they are going to be less motivated to see it when it first airs.

What about ratings? While SVOD subscriber rates are growing, there is a very real risk that media companies are hurting their TV ratings. Today’s audiences are growing more accustomed to watching shows on demand – which come with fewer ads. With fewer ad spots and more resistance to advertising, ad revenue could be threatened.

One way to solve the problem would be for media companies to charge higher licensing fees for their content. However, Netflix has rejected offers that were too high, and both they and Amazon are supplementing with original content. Media companies could only go so high without losing out on the SVOD deals.

SVOD currently accounts for 1% of aggregate revenue for the six largest media companies. It is expected to grow in the coming years, and may replace DVD viewing entirely. Traditional TV viewership hasn’t fallen in the past three years despite online streaming content, but only time will tell if it will hurt revenue in the long term.

By using the “borrowed interest” from the social media world, these media buyers and advertisers are trying to align their brands with elements of popular culture. Social media is now so understandable that it’s part of the lexicon of how people relate.

Social media meets advertising mainstream. For example, the Toyota Venza crossover ad campaign focused on the idea of socializing by contrasting the ways that parents and their adult children enjoy their social life. In the print ad, the headline reads, “My mom hasn’t accepted my friend request yet. What could she be doing?” The image holds the answer – the “aging” mother is out driving her Venza to meet her friends for bike riding.

Ads for Snickers Peanut Butter Squared candy uses the word “like” and a familiar Facebook thumbs up. Sephora advertises beauty balm cream as the “must-have status update.” Chock Full o’Nuts coffee uses the term “social network.” Several other ads also make statements about socializing online and socializing in real life.

When it comes to good ads, it’s all about bringing the consumer’s real-world experiences with social media and connecting the advertising process to them. However, it’s a delicate balance between connecting and mocking. Several ads try to make the point that experiencing their products offline is better than spending time on social media.

It’s a popular approach, but experts warn that advertisers should be careful with this framework. It can easily turn into criticism of the digital social experience – something that lots of customers are enjoying. Using the social terms without making consumers feel bad about spending time on social media could make the difference between a great campaign and a flop.

But thanks to new tools and the big data revolution, it looks like there are new ways for direct response advertisers and media buyers to reach out to the right people. Americans are receiving less mail than they did 10 years ago, but direct response mail is still going strong.

It’s all thanks to Big Data – a catch-all phrase for analytical software and storage. Big Data tools and analysis have been helping direct marketers and media buyers learn more about their target market, define their pitches and improve conversion rates by outstanding percentages. 

Here’s how it works:

• Direct marketers can go through hundreds of sources of public and private (legally attained) data to create targeted demographics.

• Rather than marketing to broader groups, like middle-class families, they can drill down even further to market to young, upper middle-class families who have pre-school aged children who like ordering books online.

• This information is used to deliver timely, targeted messages, catalogs and special offers.

While age, marital status and other demographics has long been part of media buyers’ and direct response advertisers’ arsenals, the information is a lot more specific and can be used to target subgroups of customers. Using tools designed to cull massive amounts of information, advertisers can now collect information that used to take months to compile in a matter of minutes.

With these tools, retailers and other direct marketers can design campaigns that speak directly to these subgroups, rather than the general pool of consumers. As a result,  direct mail campaigns are more effective and profitable for a company, which encourages them to invest more in the campaigns and keep direct mail messages flowing into your inbox.

Rather than take the competition lying down, there are several new apps and devices being released in the next six months that will challenge online video services directly:

• At the Consumer Electronics Show in January, Cox Communications, the third-largest cable operator by subscribers, unveiled its new Internet-enabled set-top box and app for the iPad. Both tools give subscribers access to online streaming content and a convenient way to search through live TV listings. The iPad app can be used to control the channels on the TV. The company has plans to integrate other online streaming services like Netflix into its set-top box soon.

• Dish Network has a horse in the race for online viewers as well. The satellite television provider is enhancing their digital video recorder – called the Hopper – with Internet functionality. Subscribers can download and stream recordings from their favorite Dish Network channels. They are also offering an iPad app that has downloadable and streaming recordings.

• Comcast, the biggest cable operator, is also offering a set-top box with online functionality. Its X1 box is being tested in select markets, and features streaming online content but doesn’t offer integrated apps from other online video outlets.

Internet delivery of content has become an important part of how consumers access content and a new area of exposure for online media buyers. While consumers have found multiple workarounds for viewing online content on their televisions, this often requires them to handle several remotes and flip back and forth between services.

Cable and pay TV providers are hoping that the convenience of using one device – or one device and an app – will help consumers make the move from their competitor’s online streaming services to one home base for entertainment.