Ballmer Strikes Cynical Tone on the Future of Ad Spending

  |  June 25, 2009   |  Comments

Despite Microsoft's skyrocketing media spend, CEO suggests future is bleak for measured media spending.

Cannes, France -- Anyone routinely exposed to mass media already knows Microsoft has increased its media spend pretty much across the board. But they might be surprised to learn just how much it's gone up.

Speaking at the Cannes Lions festival yesterday, CEO Steve Ballmer said the company's spending on annual measured media has climbed from $200 million to $700 million over a four-year period, as the company serves up new campaigns for Bing, Xbox, Windows, Internet Explorer, and other products.

However Ballmer's not convinced the rest of the U.S. market will follow in Microsoft's footsteps. In fact, he sounded downright cynical when asked about advertising's overall prospects.

"Ten years from now, will media spend...be a higher, a lower, or a constant percentage of GDP?" he asked during an appearance here yesterday. "I can't make a case for a higher percentage of GDP. I can make a case for consistent or lower percent of GDP."

Rather, he sees a bigger future for marketing investments that cost less -- and will therefore contribute fewer jobs and less money to the economy. "In an economy where the cost of production is close to zero, you get all kinds of changes to the monetizaton models."

Ballmer also exhorted the creative community to build experiences that are customized for their content environments. He argued the pace of change in digital media has led many publishers and advertisers to force old media formats to fit into new channels. He noted early experiments in Web publishing tended to treat online as an enhanced print medium, and he argued the same is now happening in mobile.

In a jab at Apple, he praised the App Store but criticized the narrow view many developers have taken -- and Apple has approved -- when designing experiences for the iPhone and iPod Touch devices.

"A lot of what's going on there is people are trying to figure out how to take the PC-based Internet and repackage it for the small screen," he said. "I'll put up my hand and pledge allegiance to the mobile revolution, but at the end of the day the Internet was designed for the PC."

Speaking on the economy, Ballmer argued the word "recession" is inadequate to describe the upheaval of the past year. Rather, he said the U.S. economy has "reset."

"A recession sort of implies a recovery," he said. "We as an economy will grow again from that lower level. I'm sort of prepared for us to trundle along for a while before we begin."

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Zachary Rodgers

Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects. 

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