Monster

Case Study of Monster Inc.By Donatas Sumyla

ContentIntroductionOnline BrokersCompany OverviewMonster.comGBFWinner Takes All?

IntroductionFounded in 1967, Monster is the leading global online careers and recruitment resource property.Company also owns TMP Worldwide and Yellow Pages.Provides services in N.America, Europe, and the Asia-Pacific region to more than 495,000 clients (Fortune 500 to small and medium size enterprises, educational institutions, government agencies).Over 46 million resumes on its database;

Online BrokersBusiness Model wasnt created out of a new idea.Offline business examples:Real estate agencies.Insurance agencies.Stock brokers.Travel agents.Online brokers were born with the fast spread of the Internet usage.

Online BrokersValue for clients is created by:Reducing search costs (big online databases, 24/7, up-to-date).Personalization (users preferences).The Internet makes communication between clients and trading partners easy.

Online BrokersRevenues are collected by:Commissions and other transaction-related feesSubscription feesAdvertisingSystem integration feesCost categories:Cost of revenuesProduct development costsSales and marketing costsG&A expense

Online BrokersGBF strategy:Network effects depend on buyer and seller heterogeneity and client exclusivityMany online brokers are subject to strong network effectsLarge portion of costs are fixed companies benefit from strong scale economiesSticky websites have high CRR

Company OverviewIndustry overviewSince the birth of the Internet, the online recruitment market has seen significant changes.It was influenced by the economic downturn of 2001-2003.Many went bankrupt or merged with the major players:MonsterCareerBuilderYahoo! Hotjobs

Company OverviewIndustry overviewOnline recruitment is positioned to grow more quickly than other economic sectors.Online advertising will exceed $16B by 2008 (mostly recruitment advertising).Mintel forecasts that recruitment advertising and membership revenues will reach $5.9B in 2009.

Monster.comFormed in 1994 454th commercial website worldwide.As a leader it offers innovative technology and superior services.The Monster global network consists of 22 local content and language sites.Has over 25M job seekers members, a resume database with more than 17M unique resumes, over 100,000 member companies, over 1M unique job opportunities with the network.

Monster.comMarketing is divided into local and global marketing segments.In 2004, Monster launched its Go Local initiative to reach deeper into small and medium-sized business (heart of economy).Teamed up with Infinity Broadcasting to extend its local presence through 180 radio stations and their websites (70 million weekly listeners).Acquired Jobsahead (Monster India), 40% stake in ChinaHR.com, jobpilot and emailjob.com in Europe.

Monster.comRevenues come from:The placement of job postings on the sites within the Monster networkAccess to the Monster networks online resume databaseOther subsidiary servicesDesigning and placing recruitment ads in traditional media (newspapers, trade publications).

Stock

StockholdersPrincipal stockholder CEO Andrew J. McKelvey (34%)Direct private holdersInstitutional holdersEmployees

Monster.comGrowthThe success of Monster depends on its brands and their value.By expanding the brand Monster attracts and expands the client base.Based on the growing number of other Internet sites and relatively low barriers to entry the market.Rapid evolution of the market requires continuous improvement in the performance, features and reliability of all Internet content by Monster.

CompetitorsThe market is highly competitive pressure to reduce prices, new capabilities and technologies, job completion schedules.Competition from number of sources:Media companiesOther employment-related sitesInternet portalsNational and regional advertising agenciesMarketing communication firmsTwo biggest rivals in the industry:CareerBuilderYahoo! HotJobs

GBF ModelValue PropositionReducing costs (time, pleasure, not always money).Available 24/7.The amount of resumes and job postings.Technology (personalization).

GBF ModelNetwork EffectsStrong.First-mover advantage (454th commercial website worldwide).Heavy spending on advertising and building its brand name.More employers more job seekers.

GBF ModelEconomies of ScaleA large portion of Monsters costs are fixed.The company is not completing transactions on any behalf of its consumers.Only creates the leads. It is easier to deal with a few big employers with large number of postings.

GBF ModelCustomer RetentionMedium.Higher because of the sites stickiness.Lower because job seekers tend to use several methods to look for a new job.

Winner Takes All?Mergers and AcquisitionsIn 2003-2004, Monster completed 6 business combinations:Howard & Edwards (N.America)Quickhire (N.America)jobpilot GmbH (Europe)JobsAhead.com (Asia/Pacific)However, company also discontinued several business in Europe, US, Australia and New Zealand, etc.

Questions???

TMP one of the worlds largest Recruitment Advertising agency, Yellow Pages the worlds largest advertising agency. What is heterogeneity???