Verizon makes its case to advertisers that AOL matters

Snoop Dogg performs onstage at AOL NewFront 2016 in NYC's Seaport District on May 3, 2016.
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Verizon's $4.4 billion purchase of AOL was led by its desire to tap into AOL's programmatic ad technology. At the same time, many people wondered if AOL's media business — which includes properties like the Huffington Post, TechCrunch, Engadget, Makers and AutoBlog — could fit in with the telecommunications company's plans.

Verizon wants to shut those questions down.

"All of this is towards a bigger plan of building out a diversified media company. … It's our belief the market is going to segment. Paid TV is not going to go away," said Brian Angiolet, senior vice president of consumer products for Verizon. "There's going to be a segment of consumers who enjoy that. But there's also going to be an emerging segment who wants to interact differently and discover differently."

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To assuage advertiser fears and show its commitment to media, AOL and Verizon's streaming service go90 shut down South Street Seaport in downtown Manhattan on Tuesday evening and threw an over-the-top digital content NewFront presentation. The NewFronts are an annual event where advertisers are shown upcoming digital video content from media companies, similar to television's Upfront presentations.

In what could be best as a pop-up festival, each of AOL's media properties had an interactive booth with activities to explain their content. Verizon partners NFL and NBA also had stations, as well as other Verizon go90 series like "The Runner." Snoop Dogg, who has an upcoming series called "Coach Snoop" with AOL, and Demi Lovato performed for the masses, which intentionally were mostly members of the public.

"We wanted more of the public interaction for the advertisers to witness," Angiolet said. "Sometimes you're selling advertising to a 45-year-old talking about talent and shows they're not familiar with. We just wanted them to see the reaction in people's faces."

Angiolet said it sees opportunities for AOL's media properties to create content for its over-the-top video offering go90 and other projects. The go90 service was launched in October 2015 as a way for Verizon to reach millennials through short-form video content. Competitors include Comcast Watch from Comcast and Binge On from T-Mobile.

In addition, Verizon and Hearst recently purchased Complex Media in April, and acquired a stake in AwesomenessTV that same month. Earlier in March, Verizon and Hearst formed Rated Red, a lifestyle brand aimed at millennials in middle America, as well as Seriously.TV, a news-comedy channel. Ideally, Angiolet said Verizon wants to create a network that reaches a broad swath of millennials.

And when go90 content migrates to AOL's technology stack in the third quarter of this year, AOL properties will be able to write editorial around go90 shows, Angiolet points out. Companies will also be able to use AOL's programmatic ad technology to buy ads on all of Verizon's content, providing a valuable revenue stream. Before its purchase of AOL, analysts said less than 1 percent of Verizon's revenue was made up of ad sales.

"What's going to happen here is what happened with cable," Angiolet said. "Brands are going to emerge and become leading voices for particular segments and points of view. That's what we're buying into."

On its own, AOL is making moves as well. It recently purchased virtual reality production company RYOT, furthering expansion into VR content.

"We want to engage the consumer in a way that is as immersive as the other experiences on their mobile phone," said Mark Connon, senior vice president and global chief mobile officer for AOL. "It's recognizing the consumer is on the go. Often times, short format versus long format, consuming in smaller bites and how you package content are all things that work for the consumer experience, but also we have a desire to monetize that content in a way that is enjoying to the consumer."

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It's also exploring off AOL video possibilities. Huffpost Live, which was closed in January 2016, is going through a major revamp. Nate Hayden, vice president of originals and branded entertainment, said it intends to create HuffPost video content, but optimized for other platforms like Facebook.

"We're doing a lot more customizing for off network (outside actual AOL properties). …There's openness in embracing the fact that this might be an off-network distribution play," Connon said. "There is an audience there. Why wouldn't we go where they are, even though sometimes they may be classified as a competitor?"

DISCLOSURE: Comcast is the parent company of NBCUniversal, which owns CNBC.