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

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.

“Rational arguments enclosed in emotional envelopes.”

Further to some of the thoughts yesterday in this space about the creative shift taking place in the advertising business and its impact on the quality of advertising up for awards at Cannes this year, is the Viewpoint from Hernan Lopez, President of .Fox Networks, in the Global Issue of Advertising Age this week. Lopez calls for a creative revolution in interactive advertising, echoing sentiments already expressed by others such as Randall Rothenberg of the IAB in the U.S.

These are all threads of the same story-line: good creative must come next in New Media. The people require it. The new generation of consumers has made the move to online and advertising must respond with messages that reflect the sophistication of the users and the environment. People are ready and waiting. Old commercials formats are drying-up creatively as attention shifts to new platforms.

Hernan Lopez leans on some of the findings of advertising veterans and researchers, Erwin Ephron and John Philip Jones, to make his points. Both have agreed in their studies over the years that the quality of the creative is the most significant contributor to the success of TV commercials. More recently, Mr. Jones distilled the ingredients of effective advertising down to “rational arguments enclosed in emotional envelopes.”

Creating emotional envelopes is the critical concept here. In a broadcast environment we do it with sight, sound and motion. Online we need to think more like we do in print and use the environment to help create the emotional envelopes.

Lopez laments that we have missed creative opportunities online given our fixation with things like click-through rates. Quite right. Our formative creative years online have been invested in action rates to the detriment of building bridges between our advertising messages and the reason people visit the web. Internet advertising has been lacking emotional context despite being surrounded by it.  

Fortunately, we are gathering ourselves around the need for creative answers. Unfortunately, the answer we are sometimes tempted to give is to make online advertising more like television by relying on video. Video feels like home, I suppose, offering emotional context to those of us in advertising business. But, consumers keep resisting this initiative by communicating through their proxies, the web publishers, that video is disruptive.

In the end, I think we’ll discover that the Internet is not a place for “commercials.” Sight, sound and motion works in the context of television because television is sight, sound and motion. The Internet, on the other hand, is about – well, come to think of it - emotional envelopes. 

We can make a strong new beginning, creatively, by tucking our messages neatly into those.

The International Advertising Festival in Cannes looms as a reminder that the advertising business isn’t what it use to be.

The International Advertising Festival in Cannes is scheduled to begin in less than a week and advertising critic and chaos theorist, Bob Garfield, is not looking forward to it judging from his column in Advertising Age today. Says he:

“They should give Crispin Porter & Bogusky every statue on Monday and send everybody to the airport. Gold. Silver. Titanium. Plutonium. Whatever.

Because first of all, apart from Burger King, the advertising year was a black hole worldwide. Besides, at this stage of Cannes’ history, what’s the point?”

The heart of advertising having gone out of the :30 second commercial, the death of creative at Cannes seems nearly final - or so it may appear. Of the 50 award front runners, reliably compiled over the years by Leo Burnett, Garfield reports that only 29 of them are TV commercials. The remainder are a mish-mash of online and offline submissions which by their nature have a hard time making us laugh or cry and, so, a hard time getting us worked-up enough to think happier thoughts about the state of advertising creative in the world today. If we are in Cannes, we will feel better going to the beach.

I’d have to go back and read it carefully again (which I’m not prepared to do just at this moment) to see if Bob Garfield spoke about progress when he launched his Chaos Scenario on the ad community. Clearly, advertising feels the rip-tide affect of significant changes that have been underway for a couple of decades. But is it chaos and disaster or progress? Can advertising reconstitute itself, creatively, in a post-film commercial world?

It can, but we must re-learn advertising creative - how to make it and how to experience it. At the moment, the un-tangling from TV commercial know-how has not been replaced with the know-how to make effective advertisements for an online and mobile world. The switch from one to the other is not automatic for any of us, creators or consumers. And, it is impossible that it would be, of course, given that big changes of the sort that have been taking place in advertising and media happen only one way: generationally, as one generation hands off to another.

The heirs-apparent of the TV generation were just getting comfortable in their corner offices when the creative protocols of New Media advertising descended on them. These were people that spent years navigating their way to those offices by dutifully absorbing the wisdom of their elders and, now, not enough of what they’d learned would pay for what they needed in a post-TV world. Worse for them - and us - finding what they needed might require asking the younger, dues-paying generation coming-up behind what they’d recommend, which old-timers everywhere are loath to do (and which the smugness of new generation-types doesn’t usually help).

One should not be surprised, then, that having to face forward and then backwards for advice and direction during their careers would make the current, transitional generation of advertising professionals feel irritable and less-fulfilled. The business ain’t what it use to be, or ought to be. As such, we won’t begrudge anyone a few trips to Cannes to wait out change on the beach. But we won’t be surprised, either, to find only 29, not-altogether-decent TV commercials and, then, a majority of other entries that we don’t fully understand, or warm to. We are leaving one art form behind while we learn another and our heart’s not completely in it.

We can’t have long to wait, however, before the ones and zeros of a digital age are making our creative motor go.  Steve Ballmer, CEO of Microsoft, is going to be named Media Person of the Year at the Cannes festival next week, an unlikely prospect even a few short years ago when Microsoft was still in the software development business.

It’s official: Microsoft is a media company

The Guardian.co.uk reports that Steve Ballmer will be named Media Person of the Year at the Cannes International Advertising Festival in June which can only mean that Microsoft is now, officially, a media company. That makes perfect sense to me. Maybe now we can stop calling it “ad:tech“, which continues to send the wrong signal to marketers about the media opportunity online versus technologies such as television and radio. Media is about the content.