Monster’s Competitors Are Nipping at its Heels

Life at Monster.com these days isn’t exactly a cabaret. But the financial picture isn’t so bleak that the company’s zany mascot, Trumpasaurus, is preparing for anything resembling a retreat. It’s true that revenues are down and competitors are boldly trying to slay the ubiquitous Monster. But the online career portal is, at least for now, hanging on to job board supremacy over archrivals HotJobs and CareerBuilder.

    As every hiring manager knows, the job board wars offer solid clues about what’s going on in the evolving realm of digital recruiting, what works–and what doesn’t. That’s why workforce executives listen closely when Steve Pogorzelski, president of Monster North America, declares without hesitation: “The Monster is not dead. And we will not be dead a year from now. We will still be number one.”

    Being number one in the job-recruiting field is about more than bragging rights. With mushrooming online competition, including corporate Web sites and niche job boards, Monster and its rivals are under intense scrutiny from hiring managers. Human resources chiefs often use all three big job boards, but are becoming much more choosy because the tight job market creates more pressure to make each new hire count.

    Monster’s revenue numbers show why competitors are smelling blood. During the quarter ending September 30, earnings reported by Monster Worldwide, the job board’s parent company, showed a decline of one cent per share: 11 cents versus 12 cents a year earlier. Overall, Monster Worldwide reported $508.9 million in revenues for the first nine months of this year, compared to $536.1 million during the same period in 2002. Monster reduced its workforce by 250 people over the last year, giving it a leaner, meaner look in moves the company hopes will translate into higher profits. The decline continues a slide that began in 2001, and resulted in a loss in 2002. To add to the company’s problems, deals have been struck by fierce competitor CareerBuilder with two of Monster’s biggest accounts–AOL and Microsoft’s MSN. By January, when job-seekers click on to AOL or MSN, they will be driven to CareerBuilder instead of Monster.

    Securing the prized contracts will cost CareerBuilder as much as $50 million a year. Matt Ferguson, president and chief operating officer of CareerBuilder, predicts that there will be a massive swing of more than 6 million unique visitors a month away from Monster to CareerBuilder once the contracts kick in. Taking dead aim at the top spot, CareerBuilder expects that its traffic will increase from 7 million to between 12 and 14 million unique visitors a month.

    “We expect to be number one,” Ferguson says. “It’s a massive swing. If you look at this year’s traffic, and add AOL and MSN to our numbers, we would be number one today.” Others agree that the deals surely will help CareerBuilder, but there is less certainty that Monster will lose its top spot. “Monster has a big head start,” says Bob Jordan, co-chairman of International Demographics, which puts out industry surveys under the name The Media Audit. “It’s a name that everyone is familiar with. Even if a person isn’t on AOL, it’s still easy to type Monster in a window and go there directly. At the same time, AOL and MSN is a real improvement for CareerBuilder.”

Opportunity knocks
    If it were a movie, CareerBuilder’s attack on Monster could be called Revenge of the Newspapers. The big play by the newspaper chains to knock down Monster is much more than a fight between the three dominant job boards for a bigger share of the growing online recruiting market. When the economy takes off and hiring picks up, the Internet job boards anticipate a golden opportunity to take a big slice of newspaper classified ads, traditionally a major profit center for newspapers. Forrester Research Inc. estimates that online recruitment advertising will reach $1.8 billion in five years, more than twice the $838 million expected this year. But that pales when measured against the expected $4.5 billion generated this year by newspaper job classifieds. And that is only about half the $8.7 billion worth of job ads produced for newspapers in 2000, its peak year.

    “Newspaper ads are still significant, but not to the extent that they were 10 years ago, or even five years ago, because of Monster and other employment job sites that have grown significantly,” Jordan says. “Newspapers will admit that a lot of what they lost is never going to come back.”

    Whether the frenzied fight for résumés and job listings by the big job boards means better-quality candidates for job openings is uncertain. Corporate recruiters complain that the big job boards flood the field with candidates, many of whom are inappropriate for the jobs they are advertising. As always, the name of the game in recruiting is finding the right candidate for the right job in the least expensive way in the shortest time possible. In most cases, that still means that most new hires come by word of mouth and employee referrals. “Employee referrals are by far the most effective source of new hires in terms of return on dollar invested and quality of hire, especially if you track that 6 or 12 months out,” says Bertrand Dussert, vice president of global services for Recruitmax, an applicant-tracking company that powers corporate career sites. Recruitmax software works from the inside, tracking employees who might be candidates for promotion, as well as the outside, combing through hundreds or thousands of applicant résumés for a given job opening. It is a key player in an industry that has grown up using technology to tame technology.

    A survey by Staffing.org, which puts out periodic reports on recruiting metrics and performance benchmarks, came to the same conclusion. Internet recruiting tools like Monster, HotJobs and CareerBuilder were considered the most effective general source for outside recruits, but employee referral programs still ranked first. After that came organization-based recruiting, such as job listings on a company’s own Web site or job fairs. Monster job postings came in first among online recruiters, followed by HotJobs and CareerBuilder. “All Internet postings combined would just barely edge out employee referrals,” the authors concluded. Gerry Crispin, co-author of CareerXRoads, a 456-page guide to job and résumé Web sites, agrees. “Despite the large number of listings on the big Web sites, they still constitute less than 5 percent of the total number of hires. Ninety-five percent of positions are filled some other way,” he says. Crispin cites another major competitor to the big job boards–niche Web sites that cater to specific classes of professionals, like nurses or engineers, and are often operated by professional associations. It has been estimated that there are as many as 40,000 individual Web sites that provide links to jobs. “They have been slowly and quietly building job board models that are helping their constituents and becoming more visible to employers,” says Crispin, whose book reviews many of the boards. He estimates that as many as 15 percent of new hires are coming from niche boards.

Proven value
    Although Internet recruiting is just one part of the hiring puzzle, it is still an essential element for many managers. Ted Glatt, manager of talent sourcing for Lockheed Martin, uses Monster and CareerBuilder, but only as a supplement. “We’ve been successful with both of those boards,” he says. Like many other Fortune 500 companies, Lockheed Martin feeds much of its online recruiting energy into its own Web site, and it has accumulated a database of 1 to 1.5 million résumés. “We get a lot of write-ins. A lot of people come directly to us,” he says. “Our number one source for filling our openings is our own employees. Right behind them would be people who write in directly or employee referrals.”

    Glatt says that employee referrals “are becoming more and more important for us,” not less. Like other major employers, Lockheed Martin has a bonus program for employees who refer successful job candidates. Begun in 2002, the program awards $1,500 to any person who recommends a successful new hire. He says newspaper classifieds are way down. “Recruitment ads in newspapers can be very expensive, and the shelf life is not very long.” But Lockheed Martin continues to use newspapers as part of its recruitment mix.

    Jim Bowles, vice president of workforce development for Cingular Wireless, uses all three big online job boards, but keeps looking for better solutions. He says spending on newspaper job ads is down about 40 percent in recent years, and the company continues to review its sources for job candidates. Cingular is one of the companies supporting a new challenger to the big job boards, DirectEmployers.com. Formed by a group of Fortune 500 companies, it drives job-seekers directly to the Web sites of member companies, rather than have them answer questionnaires and fill out résumés by middlemen like Monster. Even so, Cingular continues to make significant expenditures for online recruiting and hiring. Big job boards, Bowles says, “have become an absolutely critical element in the way we search for candidates.”

    Despite the competition, Monster is confident that it can stay on top. Among the bright spots: Monster has an agreement to provide résumé templates for the new Windows 2003, so casual job-seekers, often the kind of top performers that employers covet, can fill out a résumé and have it ready to be filed with Monster with a few clicks. Monster also has a contract with the federal government to provide résumé services, which could be another major source of candidates.

    “A year from now, Monster will have grown its customer base, increased customer satisfaction, and increased customer traffic,” Pogorzelski says. When Monster originally contracted with AOL and MSN, the job board needed high visibility and exposure to raise its profile. Now, as the best-known job site, with 30 million résumés on file, Monster figures the $50 million it would have cost to keep AOL and MSN can be better spent elsewhere. “We are spending over $100 million on marketing, we have a significant head start, and our brand awareness is such that they have a long way to go to catch up,” Pogorzelski says.

Yahoo upgrade
    Dan Finnigan, executive vice president and general manager of HotJobs, admits as much. “HotJobs and CareerBuilder have a lot to prove before we talk about Monster not being the leader,” he says. But HotJobs and its parent, Yahoo! Inc., are not standing still. Yahoo last month acquired Overture Services, Inc., a powerful search engine, for about $1.63 billion. Overture’s technology will help sift through millions of résumés online and match job-seekers with employers in a way that is “far beyond what the competition has,” Finnigan says. The hope is that HotJobs can match job-seekers with employers with the same success it has had in developing its popular and profitable Yahoo Personals. “The business is big enough for all three of us,” Finnigan says.

    CareerBuilder has the added incentive of reclaiming a field that newspapers had to themselves for more than a century. The widespread development of the Internet in the 1990s changed all that. Print ads peaked in 2000, and since then have had a series of steep declines–off 34.5 percent in 2001, down another 23.1 percent in 2002, with the drop in revenue continuing through the first two quarters of 2003, according to the Newspaper Association of America. Much of the loss, industry experts say, is due to the soft economy, but publishers acknowledge that they have felt the pressure from competitors like Monster and HotJobs. The competition for the MSN and AOL accounts shows the determination of the three big newspaper chains that own CareerBuilder–Gannett Co. Inc., Knight Ridder and Tribune Co.–to reclaim lost ground.

    Other newspapers have job boards set up in every big city. “Even with the recession and over 3 million jobs lost, print recruitment advertising is still a $4 billion to $5 billion industry,” says Charlie Diedrich, director of marketing and advertising for the Newspaper Association of America. “Internet recruiting has a bright future, which is why newspapers have been investing so heavily in it. I don’t think its promise has begun to be realized.” Until then, newspaper classifieds–ubiquitous, easy to access and pointed at local job markets–will continue to dramatically overshadow online advertising.

High price paid
    But that’s not to say newspapers don’t hear the footsteps behind them. Some think that newspapers were so eager to cut their losses that CareerBuilder paid too much for the MSN and AOL contracts. “They paid a heck of a lot of money for those deals,” says analyst Christa Sober of Thomas Weisel Partners. She says newspapers got into online job boards late, and still don’t seem to be promoting them, because they want to protect their traditional print classified-ad base. Still, she says, CareerBuilder’s aggressive moves have turned up the heat. “It’s a much more competitive environment because of CareerBuilder’s moves,” she says. The soft economy has had an effect, but she thinks online boards have shown relative strength. “A lot of the ad money has certainly vaporized, but it seems online hasn’t lost as much as offline,” she says.

    Monster last year held 39 percent of the online job-advertising market, compared to CareerBuilder’s 14 percent and 12 percent for HotJobs, says Forrester’s online principal analyst, Charlene Li. Other surveys, based on traffic, show HotJobs in second place and CareerBuilder in third. According to Nielsen//NetRatings, Monster recorded 11.7 million unique visitors in August, compared to 4.2 million for HotJobs and 3.7 million for CareerBuilder. Monster, by all accounts, still holds a commanding lead.

    Just how many jobs are filled from each source remains difficult to determine. Many companies keep close tabs on the sources of their new hires; others are said to be far more lax. Data is often tracked by position–say hourly workers or technology engineers–rather than segmented by industry, so hiring managers might know from experience whether an online board, a newspaper or in-house referrals work best for an hourly worker, an engineer or a mid-level manager. Companies like Deploy Solutions, Webhire, Peopleclick, Recruitmax and Recruitsoft have sprung up to help employers and hiring managers sort through the sometimes thousands of résumés that pour in through the Internet, define the right candidates and fill jobs quickly. Speed is important, since every day a desk is empty, revenue might be lost.

    “Data is absolutely imperative in decision-making. Am I more likely to hire more engineers from Source A, more financial analysts from Source B?” says Jim DelRosario, vice president of staffing performance for Deploy Solutions. Still, he advises clients to spread their money around–“so you cast a wide enough net to attract the people you want to attract.”

Premium on talent
    With millions of résumés on file, the big boards are well positioned to go after an increasingly important category: top performers. In a soft job market, employers are putting a premium on quality. That often means trying to reach workers with proven success, who are most likely working and not necessarily looking for a job. During the boom years of the 1990s, “employers were desperate for any employee with a pulse, so having anyone in your database was a plus,” says Peter Weddle, who researches Internet recruitment and employment issues. But the soft economy has changed things. “The war for talent has morphed into the war for the best talent.” Employers, Weddle says, “don’t necessarily want the largest database; they want the database with the most talent they want to see.”

    Given the residual hangover from downsizings, layoffs and widespread job insecurity, experts say, job loyalty isn’t what it used to be. Peter Cappelli, professor of management at the University of Pennsylvania’s Wharton School, thinks job dissatisfaction and employers looking for top performers will start job boards humming. Job boards make it possible for corporations to get “lots and lots of applicants,” he says. “On the other hand, it has made it easier for people to have access to lots and lots of jobs.”

    Cappelli believes that many workers are eager to jump jobs. “What has held this back is that there aren’t any jobs. As soon as the economy picks up again, are we going to see the same kind of job-hopping we saw in 1999 and 2000? The answer is yes. There are a lot of people who are unhappy with the jobs they have and would walk out tomorrow if they had the chance.”

    Should that happen, the three major job boards, plus tens of thousands of smaller niche boards, will be there to catch them.

Workforce Management, November 2003, pp. 37-44 — Subscribe Now!