local media insider

The Dead Cat Bounce, and What Would Perry Do?


One of my favorite slides from the Borrell Local Interactive Media Conference is a blip on an economic graph. It's called the Dead Cat Bounce (below).  Usually the Bounce refers to a brief upward movement in the Wall Street markets preceding a catastrophic slide.  

The same motion, outlined by Harvard scholars Clay Christensen and Gilbert Clark (both were lead speakers) is seen when  new technologies disrupt  established industries - from steel to computer chips, to media. The entire cycle ends with a "period of ambiguity" Clark says, including the Bounce, which is a sort of "last gasp followed by perpetual decline." 

So where is traditional media on the curve? Behind the bump with time to react? In front (after all, media has been in decline for years)? Or poised on the top of the Dead Cat Bounce like a hundred foot wave (taste precludes a Tsunami comparison) Honolulu's North Shore? Ok, it's a tiny bump seen below: 

And if so, how long before that wave breaks?

If you are not familiar with the theory behind disruption, we've summarized Clark's presentation here and Clark's method of executing informed by this theory here).

Not being an economist, I won't even begin to project (though I have  won a bet about traditional media growth rates against smarter minds with better research - you know who you are and you owe me a beer).

But, several of these smarter people now give predictions that, yes, we are perhaps right on TOP of the Dead Cat, and that it may last for a year, followed by a five year drop into the deadly churn of internet media disruption.

Tides in some last undertow are still sweeping advertisers away from established media like...well, like classifeds. First, there is Google and Facebook, who, those in a position to know (sources not speakers) last week say are preparing to launch massive (think in thousands, not hundreds) os local, feet on the street sales teams.

And then there are other inroads are made by a plethora of local start-ups who seem intent on inflicting "death by a thousand pecks" on established media companies. The media agnostic start-up ReachLocal has been on a development and buying spree and  entrepreneurism is going on around us at a frenetic pace. One of my new contacts in business school at Michigan State is already on his fourth start-up, human-fueled by fellow-students from Wharton who want to be Mark Zuckerberg. 

In my last call with Stephn Weis, head of Interactive at Hearst and VP of Revenues at the Houston Chronicle,  I asked what new trends he was seeing. The  biggest impact, he said, was from the rise of local entrepreneurs, often  victims of disruption themselves, who are building a businesses around local micro-niches. In spite of odds against long-term survival, these players tak=ke $500 here and there from accounts that used to be owned by the established media.  "It all adds up," Weis says.

And it also adds up to opportunity. My second favorite slide from the convention is this one, below, from Clark's presentation. It  shows the largely untapped market available to both established media companies and newcomers. Established media tends to obcsess over the small sliver of marketshare currently under-fire,  instead of looking for the larger opportunity in untapped markets.  

Which brings us to the question, what would Perry do? CEO of Autotrader.com, Chip Perry grew his Cox-owned online-only start up from zero in 1999 to $1 billion this year (the print magazines, a separate division, have been shut down). Perry is convinced there are "jobs to do" across numerous local verticals.   

"They are out there," he says. Still, getting the "job to do" wrong has cost millions, as entrants into the disasterous areas of auto e-commerce can attest. 

So this week's two reports include practical ideas for how to think about business models, rather than how to execute them. The first is "Taking advantage of Disruption: Three key strategies from Clay Christensen" and the second summarizes how Clark thinks about leveraging and transitioning his own company, Cox-owned Deseret Media

Many thanks to Borrell & Associates for a great conference - more than  1,500 executives attended including those who streamed from afar. Also to Chip Perry, CEO of AutoTrader, for weighing in. 


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