Re-modeling: Steve Ballmer speaks at the Cannes Advertising Festival

June 25, 2009 § Leave a comment

MediaPost’s (very helpful) “Around the Net” wrap-up of the day’s news stories caught the report in The Guardian newspaper of Steve Ballmer’s speech at the Cannes Lions International Advertising Festival.

If there is much coverage of the speech over the next few days I imagine it is going to focus on Ballmer’s assertion that advertising revenues will not rebound. They have been reset at lower levels, he says. It’s not entirely clear from the story, but I think Ballmer is really suggesting that ad revenues are reallocating to digital, meaning that overall ad spending may rebound, but not for TV and print. He recommends that traditional media companies re-work their business models taking into account the smaller slice of the ad pie they will enjoy. Fine. We’ve said as much here talking about the need for newspapers, especially – but all media - to be more focused and relevant.

Keeping such thoughts in mind, please add to them the second key observation Ballmer makes, according to the Guardian report, as follows:

“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.”

It’s always interesting to me that certain Internet stake-holders will admonish traditional media to reset their business models to leaner and meaner at the same time that big and fat seems to inform their own models online. It suggests that there is a hidden, but working assumption among the would-be new media barrons that not just the money, but the model of traditional media has moved online. Frankly (plus, simply) it is why so many online publishers are stumped trying to make money, including Microsoft. They behave as if the change impacting traditional media, including leaner/meaner, is peculiar to traditional media. That’s a mistake.  The change applies to all media.

The truth is, there are plenty of web publishers online making lots of money. Lots. They just don’t look like Time Warner, or Tribune, or Microsoft. They are the right combination – as Ballmer recommends – of context and relevance, offering a compelling online proposition for consumers. But there are only two people in these companies. Or four. Maybe 10. They are small. They are focused. They are deeply suspicious of BIG. But they’ve given up their day jobs, put their kids through college, bought a boat, taken vacations and, basically, given the finger to “the suits” of the world and, for many, achieved substantial levels of job satisfaction.

Early-on, the venture capitalists and investment bankers used to scratch their heads and wonder about many of the mid-and long-tail publishers of the sort we represent at Burst. “How do they make money?” they’d ask. The real question they were asking, of course, was, “How do they make money on a par with CBS?” This is the question that has consistently led online media ventures to the edge, and over the edge. It caused the first Internet meltdown, and it keeps us feeling precariously balanced, in constant search of killer apps and formulas – something, anything to unlock buried treasures.

Steve Ballmer has the answer under his nose. It’s the same answer that made Microsoft possible when it helped topple the old main frame computer business. Big iron is the close relation of big media. And a computer on every desk and in every home is the close relation of a publisher in every garage and every basement.

The revolution that began with Windows and Apple is continuing.

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