Case Study of Monster Inc.Case Study of Monster Inc.

By Donatas SumylaBy Donatas Sumyla

ContentContent

IntroductionIntroduction Online BrokersOnline Brokers Company OverviewCompany Overview Monster.comMonster.com GBFGBF Winner Takes All?Winner Takes All?

IntroductionIntroduction

Founded in 1967, Monster is the Founded in 1967, Monster is the leading global online careers and leading global online careers and recruitment resource property.recruitment resource property.

Company also owns TMP Worldwide Company also owns TMP Worldwide and Yellow Pages.and Yellow Pages.

Provides services in N.America, Provides services in N.America, Europe, and the Asia-Pacific region Europe, and the Asia-Pacific region to more than 495,000 clients to more than 495,000 clients (Fortune 500 to small and medium (Fortune 500 to small and medium size enterprises, educational size enterprises, educational institutions, government agencies).institutions, government agencies).

Over 46 million resumes on its Over 46 million resumes on its database;database;

Online BrokersOnline Brokers

Business Model wasn’t created out Business Model wasn’t created out of a new idea.of a new idea.

Offline business examples:Offline business examples: Real estate agencies.Real estate agencies. Insurance agencies.Insurance agencies. Stock brokers.Stock brokers. Travel agents.Travel agents.

Online brokers were born with the Online brokers were born with the fast spread of the Internet usage.fast spread of the Internet usage.

Online BrokersOnline Brokers

Value for clients is created by:Value for clients is created by: Reducing search costs (big online Reducing search costs (big online

databases, 24/7, up-to-date).databases, 24/7, up-to-date). Personalization (user’s Personalization (user’s

preferences).preferences). The Internet makes The Internet makes

communication between clients communication between clients and trading partners easy.and trading partners easy.

Online BrokersOnline Brokers

Revenues are collected by:Revenues are collected by: Commissions and other transaction-Commissions and other transaction-

related feesrelated fees Subscription feesSubscription fees AdvertisingAdvertising System integration feesSystem integration fees

Cost categories:Cost categories: Cost of revenuesCost of revenues Product development costsProduct development costs Sales and marketing costsSales and marketing costs G&A expenseG&A expense

Online BrokersOnline Brokers

GBF strategy:GBF strategy: Network effects depend on buyer Network effects depend on buyer

and seller heterogeneity and client and seller heterogeneity and client exclusivityexclusivity

Many online brokers are subject to Many online brokers are subject to strong network effectsstrong network effects

Large portion of costs are fixed – Large portion of costs are fixed – companies benefit from strong companies benefit from strong scale economiesscale economies

““Sticky” websites have high CRRSticky” websites have high CRR

Company OverviewCompany Overview

Industry overviewIndustry overview Since the birth of the Internet, the Since the birth of the Internet, the

online recruitment market has seen online recruitment market has seen significant changes.significant changes.

It was influenced by the economic It was influenced by the economic downturn of 2001-2003.downturn of 2001-2003.

Many went bankrupt or merged with Many went bankrupt or merged with the major players:the major players: MonsterMonster CareerBuilderCareerBuilder Yahoo! HotjobsYahoo! Hotjobs

Company OverviewCompany Overview

Industry overviewIndustry overview Online recruitment is positioned to Online recruitment is positioned to

grow more quickly than other grow more quickly than other economic sectors.economic sectors.

Online advertising will exceed $16B Online advertising will exceed $16B by 2008 (mostly recruitment by 2008 (mostly recruitment advertising).advertising).

Mintel forecasts that recruitment Mintel forecasts that recruitment advertising and membership advertising and membership revenues will reach $5.9B in 2009.revenues will reach $5.9B in 2009.

Monster.comMonster.com

Formed in 1994 – 454Formed in 1994 – 454thth commercial commercial website worldwide.website worldwide.

As a leader it offers innovative As a leader it offers innovative technology and superior services.technology and superior services.

The Monster global network consists The Monster global network consists of 22 local content and language sites.of 22 local content and language sites.

Has over 25M job seekers members, Has over 25M job seekers members, a resume database with more than a resume database with more than 17M unique resumes, over 100,000 17M unique resumes, over 100,000 member companies, over 1M unique member companies, over 1M unique job opportunities with the network.job opportunities with the network.

Monster.comMonster.com

Marketing is divided into local and Marketing is divided into local and global marketing segments.global marketing segments.

In 2004, Monster launched its “Go In 2004, Monster launched its “Go Local” initiative to reach deeper into Local” initiative to reach deeper into small and medium-sized business small and medium-sized business (heart of economy).(heart of economy).

Teamed up with Infinity Broadcasting Teamed up with Infinity Broadcasting to extend its local presence through to extend its local presence through 180 radio stations and their websites 180 radio stations and their websites (70 million weekly listeners).(70 million weekly listeners).

Acquired Jobsahead (Monster India), Acquired Jobsahead (Monster India), 40% stake in ChinaHR.com, jobpilot 40% stake in ChinaHR.com, jobpilot and emailjob.com in Europe.and emailjob.com in Europe.

Monster.comMonster.com

Revenues come from:Revenues come from: The placement of job postings on The placement of job postings on

the sites within the Monster the sites within the Monster networknetwork

Access to the Monster network’s Access to the Monster network’s online resume databaseonline resume database

Other subsidiary servicesOther subsidiary services Designing and placing recruitment Designing and placing recruitment

ads in traditional media ads in traditional media (newspapers, trade publications).(newspapers, trade publications).

StockStock

StockholdersStockholders

Principal stockholder – CEO Principal stockholder – CEO Andrew J. McKelvey (34%)Andrew J. McKelvey (34%)

Direct private holdersDirect private holders Institutional holdersInstitutional holders EmployeesEmployees

Monster.comMonster.com

GrowthGrowth The success of Monster depends on its The success of Monster depends on its

brands and their value.brands and their value. By expanding the brand Monster attracts By expanding the brand Monster attracts

and expands the client base.and expands the client base. Based on the growing number of other Based on the growing number of other

Internet sites and relatively low barriers to Internet sites and relatively low barriers to entry the market.entry the market.

Rapid evolution of the market requires Rapid evolution of the market requires continuous improvement in the continuous improvement in the performance, features and reliability of all performance, features and reliability of all Internet content by Monster.Internet content by Monster.

CompetitorsCompetitors

The market is highly competitive – The market is highly competitive – pressure to reduce prices, new capabilities pressure to reduce prices, new capabilities and technologies, job completion and technologies, job completion schedules.schedules.

Competition from number of sources:Competition from number of sources: Media companiesMedia companies Other employment-related sitesOther employment-related sites Internet portalsInternet portals National and regional advertising agenciesNational and regional advertising agencies Marketing communication firmsMarketing communication firms

Two biggest rivals in the industry:Two biggest rivals in the industry: CareerBuilderCareerBuilder Yahoo! HotJobsYahoo! HotJobs

GBF ModelGBF Model

Value PropositionValue Proposition Reducing costs (time, pleasure, Reducing costs (time, pleasure,

not always money).not always money). Available 24/7.Available 24/7. The amount of resumes and job The amount of resumes and job

postings.postings. Technology (personalization).Technology (personalization).

GBF ModelGBF Model

Network EffectsNetwork Effects Strong.Strong. First-mover advantage (454First-mover advantage (454thth

commercial website worldwide).commercial website worldwide). Heavy spending on advertising Heavy spending on advertising

and building its brand name.and building its brand name. More employers – more job More employers – more job

seekers. seekers.

GBF ModelGBF Model

Economies of ScaleEconomies of Scale A large portion of Monster’s costs A large portion of Monster’s costs

are fixed.are fixed. The company is not completing The company is not completing

transactions on any behalf of its transactions on any behalf of its consumers.consumers.

Only creates the leads. Only creates the leads. It is easier to deal with a few big It is easier to deal with a few big

employers with large number of employers with large number of postings. postings.

GBF ModelGBF Model

Customer RetentionCustomer Retention Medium.Medium. Higher because of the site’s Higher because of the site’s

“stickiness”.“stickiness”. Lower because job seekers tend Lower because job seekers tend

to use several methods to look to use several methods to look for a new job.for a new job.

Winner Takes All?Winner Takes All?

Mergers and AcquisitionsMergers and Acquisitions In 2003-2004, Monster completed 6 In 2003-2004, Monster completed 6

business combinations:business combinations: Howard & Edwards (N.America)Howard & Edwards (N.America) Quickhire (N.America)Quickhire (N.America) jobpilot GmbH (Europe)jobpilot GmbH (Europe) JobsAhead.com (Asia/Pacific)JobsAhead.com (Asia/Pacific)

However, company also However, company also discontinued several business in discontinued several business in Europe, US, Australia and New Europe, US, Australia and New Zealand, etc.Zealand, etc.

Questions???Questions???