Steve Ballmer said Wednesday that the global advertising economy has been permanently “reset” at a lower level, warning that media companies should not plan for revenues to bounce back to pre-recession levels.
Speaking at the Cannes Lions International Advertising Festival, Ballmer argued that traditional broadcast and print media would have to plan business models around a smaller share of the advertising market, as revenues continue to move to digital outlets. “I don’t think we are in a recession, I think we have reset,” he said. “A recession implies recovery [to pre-recession levels] and for planning purposes I don’t think we will. We have reset and won’t rebound and re-grow.”
Ballmer, named media person of the year at this year’s festival, also painted a bleak picture for the future of traditional media, arguing that newspaper publishers have failed to generate new revenues from the digital opportunity. He said that within 10 years all traditional content will be digital and yet, Google (NSDQ: GOOG) aside, publishers are failing to generate serious digital revenues.
“All content consumed will be digital, we can [only] debate if that may be in one, two, five or 10 years,” added Ballmer. “There won’t be [only traditional] newspapers, magazines and TV programmes. There won’t be [only] personal, social communications offline and separate. In 10 years it will all be online. Static content won’t cut it in the future,” he added.
“Some say that the ad-funded model has not led to profitability. Google’s search site makes money but past Google is there a publisher with an ad-funded or fee-based model that has made lots of money? No.”
For media businesses to successfully evolve they must provide the right combination of context and relevance to make a compelling online proposition for consumers, according to Ballmer. “There are problems with digital advertising. Start with content and the website environment and [ask] is it suitable for advertising. [That] question is somewhat in the balance as we move forward,” he said. The old approach of simply trying to replicate a print newspaper online is doomed to fail, Ballmer added.
During a question and answer session after his speech, Ballmer was also asked about Microsoft’s interest in acquiring Yahoo.“We have no interest in acquiring Yahoo (NSDQ: YHOO). What we have said is that we will continue to remain open to a partnership with Yahoo,” he responded.
Tags: Steve Ballmer, Microsoft, Technology Prediction, Digital content, Analog content, google, Yahoo, Cannes Lions International Advertising Festival, Ad-funded model, Global Best Practice, Print media,