CANNES, France, June 24, 2009 – Steve Ballmer, CEO of Microsoft, has been recognized as Media Person of the Year by the Cannes Lions International Advertising Festival, a global event focused on creative advertising communications held in Cannes, France, June 21-27. Ballmer gave a keynote address outlining Microsoft’s commitment to developing new technologies that will unlock the creative potential of digital media and drive competitive advantage for chief marketing officers.

“We are delighted to honor Steve Ballmer, a passionate and dynamic personality whose energetic leadership and vision over the years has made Microsoft into the global leading brand that has touched the lives of millions, and changed the face of worldwide communication,” said Philip Thomas, festival CEO.

Transcript: Steve Ballmer talks about the future of digital media at the Cannes Lion International Advertising Festival

June 23, 2009
Steve Ballmer, CEO of Microsoft, speaks at the Cannes Lions International Advertising Festival, Cannes, France, June 24. Ballmer was recognized as Media Person of the Year by the festival.

Well thanks. It’s an honor for me to have a chance to be here with you today. Share some thoughts, have what I hope will be a fun Q & A session and try to get a little bit of sense on what’s on people’s minds.

You know our guys talked to me, they said, “OK, you are flying over to Cannes, it’s a big advertising deal,” and immediately my brain locked on advertising, advertising, advertising, OK I’ve got to talk about advertising and I’d say for the first four weeks of working on this presentation it was grounded in advertising.

Then I woke up one morning and said, “ No we may start actually in a slightly different place.” We may actually have to go all the way back up and think about the future of content and advertising because in some senses all ad possibilities are enabled by worlds of content – off line content, increasingly digital content.

So what I’m going to try to do today is actually to talk to you a little about both. Certainly, Microsoft has now grown an advertising business in excess of $2 billion and that’s a big number for our company, a big number, and were very serious about it. But I think that this kind of event where we all get a chance to step back some and reflect, I do want to have a chance to reflect more broadly on what’s really going to happen.

As we think about advertisers and marketers and what you are trying to get done, I speak both with the hat of someone selling advertising but I also speak with the hat of someone who buys significant advertising and spends a significant amount of energy thinking about how we as a company, also as marketers, do our job. There’s brand, brand, how do you build brands? How do you build brands offline? How do you build brands online? Offline sometimes more obvious than online, but where does brand fit in?

I put something down that I call “buzz,” because actually at Microsoft I’d say buzz winds up being as an important part of the marketing mix as either brand or selling. How do you get something started? How do you get things bootstrapped? How do you let your presence be known? It’s different than the ongoing building of the brand and nurturing of the brand.

June 23, 2009
Steve Ballmer, CEO of Microsoft, holds the Media Person of the Year award he was given by the Cannes Lions International Advertising Festival, Cannes, France, June 24. Ballmer was honored for Microsoft’s commitment to digital advertising and the influence he has had in the development of today’s media landscape.

And then of course how do you actually get anything sold? And where do various elements of the marketing mix really fit in to that? That’s kind of the set of goals that I think probably those of you that are in agencies, those of you who are marketing people or firms, maybe the same words – maybe offline and separate. Everything will move to be digital. Literally within 10 years you’ll be able to have a screen that’s as thin and light as this piece of paper. We ought to be able to drive everybody to consume the communications and information, the information in their world digitally. All information will be social, you’ll expect to be able to collaborate and share thoughts, perspectives and interactions in any piece of content or any experience socially.

All content all information will be interactive. People will expect to have an appropriate chance to participate. All content will be integrated. Its one of these things where we stop. People were saying, “How do we take today’s newspapers and magazines and put them online?” I think the magazines and newspapers of the future are just integrated, they are integrated texts, pictures videos and the like.

All content needs to be relevant. We’ll live in a world of… at least in the digital world, where people will pull what they want, they’re not going to get things pushed on to them. Not content, not advertising as a form of content, people are going to pull things that are relevant and all content will need to deal with a multi-device world. A world in which the phone, TV and PC – big, middle, and small screens if you will all play important roles in peoples’ lives.

So, the future of content and information isn’t going to be the same. Static content won’t cut it for the consumer in the future. But that also applies to the advertising that we all of us create and utilize as part of the new media. All content has to share those properties including the advertiser, sorry …and that’s an important concept for us.

If you think about a new world of content, a world in which everything is integrated, social, digital and relevant and adds spin in that context, it’s a different kind of a world. If you think about what the future looks like. I talked a little bit about the ‘how’, kind of how content behaves and kind of what you might be doing and the fact that ads have to look like it we should also stop and say “How are people going to be spending their time consuming information, consuming content?” If I go back to when I was a kid, content consumption was reasonably simple. Particularly I lived three years as a young kid in Belgium. I was living in a …I spoke no Flemish and no French when I arrived and my media experiences were particularly limited; one or two TV programs a week in English, an English language newspaper, maybe a couple of comic books, and there weren’t too many places to reach. Even my parents had more sophisticated interests at the time.

Today we think about the ways people spending their time consuming content. Their search. We don’t actually use search as the end destination but search is an important point to let us broaden out and learn about, find the things we’re looking for. There’s social content, there’s social websites that are all about letting me interact with friends. A concept that didn’t exist before.

There’s personal content of the things that I read, that I authored that I create, just make in your mind a model of all the words you read in a day. What percentage come from a book, a website, a Word or PowerPoint document, a television show, a magazine, a newspaper; that has shifted so radically over the last several years. In my own case I’d say that most of what I read is somehow personal information, or at least personal in my business context. But there’s personal websites, there’s professional content, content that somebody actually has to have a knowledge base to produce. Certainly when you think about today’s TV shows, books newspapers etc. It’s super important.

And yet what we have found in the age of the web is that there’s plenty of websites that are not professionally “produced,” that wind up capturing the time and imagination of people. There’s platforms that let users generate their own content; Twitter, Facebook – just as a few example of that kind of media. That stuff’s more are more important today than ever before, ever before.

Advertisers’ sites. Sites that you build, sites that are important to you to tell your story. It’s an important part of the pool of information and content in this digital world. And then of course there’s just millions and millions of other websites that don’t fit in any of the other categories I outlined.

What’s the point? The point is that every one of these websites, every one of these experiences that captivate, that take time from consumers, everyone of them is likely to have a different business model. Some of them are likely to say, “We’re just free, we’re free because the company or the person who built this doesn’t have economic needs, we’re free because this helps support some other business.”

When you create a website for one of your accounts, that account isn’t about the website, it’s about some other product. Some of these things will actually be ad-funded, that’s classic and traditional. Some people are saying, “Hey, look, ad-funded websites have not lead to enormous profitability.” If you take a look at the internet today certainly Google makes lot of money on their search site. But once you get past the Google search site and you say, “Is there a publisher, a content producer that’s making a lot of money with an advertising or fee-based model?”, the answeris no.

So as all of us sit here as advertisers, we have to ask, “Who will be creating the content that people spend time on, what is their motivation, will they even have advertising on their websites?” Many websites that are very popular don’t take advertising. And so the notion of how people spend their time, where advertising can be relevant, where it makes sense, where it makes sense to the publisher, is all super important, super important and as we think about the problems of digital advertising I don’t start with the advertising. I actually can start with the content environments and say, “Do the content and website environments create places where you can put relevant and interesting and appropriate advertising or not?”

And I think that question is somewhat in the balance as we move forward. I think that the challenges of embracing this new world where all content is digital, is as much a creative challenge, both for the publishing community, the people who build websites and also the people who create advertising. What is a relevant advert in this world? What are you trying to do with your add? Are you trying to get buzz? Are you trying to sell something? That’s the easiest measure, of course. Are you just trying to get someone to come visit your website?

Today I see many ads on the web and I’m not sure what their purpose is. Are they actually trying to get me to pay attention and learn something? Are they actually trying to get me to click through and learn more? You really have to have a sense of what it means to be relevant and in contact to whatever the website on which your advertisement lands is trying to do.

Same thing on the media buying side, what’s going to happen? Most advertisers I talk to sort of assume that what they really want to buy is the whole Internet. You want to buy audience, you don’t just want to buy MSN or Yahoo or even Google, or this, you want to buy the Internet, but how do you want to buy the Internet? How do you make sure your ad’s as relevant one place it appears on the Internet as another place it may appear on the Internet?

Not just how it is effective but when you target an audience, you target this, you target that, you got to make sure you’re delivering the right kind of creative, that’s really going to make sense and not leave you just as an interruption into the content flow. Are you going to buy placement? Are you going to buy context. Are you going to buy users when you buy the Internet?

We think a lot about these questions. Are you going to buy reach? There used to be reach and frequency. You know that – reach and frequency. Now we’ve got reach, frequency and some notion of how much time do people spend. Reach times moments of truth. It turns out that on the Internet it’s easier to buy a moment of truth when someone is actually trying to make a purchase decision. That might be exactly the time that you want to make your purchase or your media buy and you need exactly the creative and exactly the right set of relevant environments at that time.

One thing I’ve learned from search and I think we can all learn from search. Search is one place where are the ads are always relevant that’s why the adverts are very well accepted into the search experience. That’s not true broadly through all of these websites. So how do we allow advertisers to create ads that fit in the context and are relevant in the context of what people are doing on the web? And how do we let media buyers really pick and choose in a way that doesn’t mean everybody’s got to be expert in 5,000 websites? You’re not going to be expert in 5,000 websites.

We need a new approach on both sides. So content, content to advertising, advertising to media. We sit here in Microsoft and say, “Hey, a reinvention is needed.” And the reinvention is going to start with the concepts of how digital experiences are different, how their business models are different, how the content is different than the offline world. If you had asked me the same question five years ago, I’d have said we are mostly trying to do the offline world online, there’s no people talk that way. Let’s take our newspaper and make it digital, let’s make sure it looks just the way a newspaper looks today, we can actually like flip the pages.

We’ve got to think about this stuff from soup to nuts, from content on through, in a very, very different way. Another confounding effect – because I want to sort of lay it out and then I’ll try to offer a few solutions- but another confounding effect is this notion of actually realizing these experiences and these marketing opportunities, not only on the PC but also on the phone and TV. And I said that in a specific order because I think that’s about right. The internet is designed for PC; At the beginning and the end the most important thing to do today is to get your website to look good on the PC. Mobility is coming fast, everybody’s got mobile phones. 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 and we’re all in the process now of thinking sure that same content looks good on a screen that’s 3 inches or 2 inches or 4 inches- not just on a screen that’s 10 to 15 to 17 inches, and you see a lot of work going on in that area today. And as the PC world evolves, new browser technologies change to windows, windows is growing presence, we’ve grown marketure on windows relative to other operating systems in the past three or four months. We’ve seen new technologies whether its new versions of Flash, Silverlight, etc.

The PC-based internet is just vroom, the content there is just zipping ahead and at yet the same time people are saying, “OK, there are these new smart phones, there’s 40, 50 60 70 million of them they have a browser. What does it mean?” We’ve seen the Apple IPhone phenomenon. Give a lot of credit to Apple and what they’ve done with the the App Store and at the end of the day if you stop and think about it, 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 a small screen.

Redo search, you don’t do search you go to the App Store, App Store is a kind of a substitute for a part of search, and yeah, the whole Internet’s out there, but phones are trying to figure out how to embrace the whole richness of digital content which is being offered first for the PC.

We are dealing with the question of how many mobile platforms will there be? Will there be one or will there be many? The same thing will happen on the PC as we see the evolutions with Silverlight, with Flash, with HTML and some of the other rich presentation technology.

And Microsoft will continue to push forward with our windows mobile program, which despite the fact that we’ve certainly seen a little momentum in our competitors this year; we think the notion that there’s a software platform that can be available on many hardware devices, is key to platform standardization on the phone. The TV, the TV’s pretty important as a lot of the best marketing experiences in the world today are on that screen and yet the TV is probably where the development or the future of what’s going to happen to interactive digital content is least clear.

We’ve seen products like our Xbox live consol, our Xbox live service get to 20 million people, which we think is phenomenal, and yet compared to the world of televisions that are out there, it’s still small. We’ve seen the adoption of next generation set-top box technology, but at the end of the day you can put a PC, some form of a PC – or maybe a new device – but I think it’s PC next to the TV or embedded in the TV and we’ll have to, as we’re repackaging the internet and the digital content for the phone, we’re going to see content get repackaged and repurposed to really make sense of a TV based experience.

We’re starting to see some of this with what we’ve done with some of our Media Center technology, what HP has done with some of their smart touch devices, which still aren’t on 50-inch screens but make sense on 20-25 inch screens, things are driving forward in interesting ways.

All of this effects the future of content, so its effects the future of marketing, it effects the future of advertising. We know we all need reach people in these different modalities. The issues that I’ve outlined are issues of great importance to Microsoft. Were asking ourselves how do will build the tools, how do we build the operating systems that enable this next generation of digital content, Windows, Windows Mobie, Windows Media Center, Xbox, development and design tools like Visual Studio, Silverlight, our Expression suite for those of you doing rich creative work.

The Microsoft media network, we do think it’s important to try to help you buy the internet not just buy msn or buy windows live but to buy the Internet. Our Atlas tool set, which were designed for advertisers to help end to end with the process of buying the internet. Bing, Windows Live, when you want to buy a social website, we want to be able to engage you and let you build a website that participates more broadly in the social interfaces that we’ve build up globally with our windows live messenger product specifically.

On the flip side we, too are a publisher, were are a publisher through Xbox live and we have ad experiences we’d like to sell you. We’re a publisher through MSN, where we will try to pioneer the new world of digital content and the new world of digital advertising. Windows live and the social experience it brings. But of course last but certainly not least is our investment in our Bing search service. I can say now ‘Bing’, I used to have to say Microsoft search service or msn live or live search. It was not our strongest marketing day, now it’s simple, www.bing.com.

The cleanest piece of marketing I would say we have done in a long time. But as a publisher that’s a very important effort for us, we’ve got an incredibly strong competitor, the strongest probably anybody’s had in any market. It’s a weird dynamic when everything is ad-funded, because the consumer doesn’t have to view price as part of the equation and yet we’re out there innovating.

We don’t think as a publisher and from a consumer perspective, we don’t think search is going to be static either. Fifty percent of all queries in any month were never issued on the web before. The new content types, the new website type of information that people want to search through, whether its tweets, or anything else continues to expand, the ability of any of the search engines to really understand what you are asking for and really understand the semantic content of what’s on the web, is still reasonable low.

Fifty percent of the time today that people issue a search, they never really find what they were looking for. People who do search today aren’t really looking for thousands of blue links, most of the time. They are looking to achieve a task, they’re looking to make a decision, they are looking to get something done. I highlighted, partly because it is mission-critical to us, but also I think it’s just another good indicator of how much more dynamism and innovation there’s going to continue to be in the internet itself; search, user generated content, social platforms, personal platforms, professionally produced content and all of the advertising that integrates with it.

We’ll sit here five years from now and we’ll say, ‘Wow’, things really did change and they changed incredibly significantly. And at Microsoft we want to be able to say five years from now, that we were your partner and the publisher’s partner, in creating this new world of digital content. In helping you bridge the gap between PC, phone and TV. In helping you develop the ads that are as rich and relevant and interesting as the content that’s gone digital. And to make software an important part of the creative process and the media process in the ways that you really want to drive things.

So we’re pretty enthused, but I would say as marketing professionals, how we reach customers in the digital future will depend as much on the innovation, the new website and content approaches as anything we do specifically around digital advertising and I encourage you to keep your eyes focused, your ears open and certainly to have a rich dialog with those of us at Microsoft who are interested in having that dialog with you. If I can help personally my email address is [email protected], as long as you send me something that doesn’t look like spam, I’m sure I’ll get back to you within at least not too long a period of time. Thank you all.

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