The IAB Internet Advertising Revenue Report released this past March reflects the trend toward performance-based advertising solutions. Among the report’s findings were a 6 percent increase in performance-based revenues over the past year, while CPM or impression-based advertising revenues decreased by six percent. The approximately 4 percent of 2008 full year revenues priced on a hybrid basis represented no change over 2007 figures.

The trend toward performance-based advertising is likely due to the model’s ability to alleviate advertising dollars wasted on an ineffective ad. In turn, advertisers are more comfortable putting their advertising funds into cyberspace, knowing that when they’ve found the right combination, they will gain the return they’ve been looking for.

Ballmer’s basically saying that the advertsing marketing will not recover to pre-recession levels. His belief is that the lower advertising spend that we saw at the end of last year and the beginning of this year, is pretty much here to stay.

He’s also is making some dramatic statements about digital in the years to come:

All content consumed will be digital, we can [only] debate if that may be in one, two, five or 10 years.

There won’t be [only traditional] newspapers, magazines and TV programs. 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.”

I think he’s right. Publishers have to let go of the belief that their traditional models and that their pre-recession advertising levels will return. Any publisher that isn’t planning for less overall revenue, and a higher percentage of digital in the overall mix is missing the boat.

Not only that, but publishers must start making the move to advertising models that are clear wins for their advertisers. I’m talking about performance-based media buys. If a publisher doesn’t have a plan to add at least one performance-based program to their line-up, they need to move in that direction. Immediately.