Case Study of Monster Inc.

1. Case Study of Monster Inc. By Donatas Sumyla

3. Content • Introduction • Online Brokers • Company Overview • Monster.com • GBF • Winner Takes All?

4. Introduction • Founded 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;

5. Online Brokers • Business Model wasn’t 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.

6. Online Brokers • Value for clients is created by: • Reducing search costs (big online databases, 24/7, up-to-date). • Personalization (user’s preferences). • The Internet makes communication between clients and trading partners easy.

7. Online Brokers • Revenues are collected by: • Commissions and other transaction-related fees • Subscription fees • Advertising • System integration fees • Cost categories: • Cost of revenues • Product development costs • Sales and marketing costs • G&A expense

8. Online Brokers • GBF strategy: • Network effects depend on buyer and seller heterogeneity and client exclusivity • Many online brokers are subject to strong network effects • Large portion of costs are fixed – companies benefit from strong scale economies • “Sticky” websites have high CRR

9. Company Overview Industry overview • Since 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: • Monster • CareerBuilder • Yahoo! Hotjobs

11. Company Overview Industry overview • Online 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.

12. Monster.com • Formed 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.

13. Monster.com • Marketing 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.

14. Monster.com • Revenues come from: • The placement of job postings on the sites within the Monster network • Access to the Monster network’s online resume database • Other subsidiary services • Designing and placing recruitment ads in traditional media (newspapers, trade publications).

15. Stock

16. Stockholders • Principal stockholder – CEO Andrew J. McKelvey (34%) • Direct private holders • Institutional holders • Employees

17. Monster.com Growth • The 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.

18. Competitors • The market is highly competitive – pressure to reduce prices, new capabilities and technologies, job completion schedules. • Competition from number of sources: • Media companies • Other employment-related sites • Internet portals • National and regional advertising agencies • Marketing communication firms • Two biggest rivals in the industry: • CareerBuilder • Yahoo! HotJobs

19. GBF Model Value Proposition • Reducing costs (time, pleasure, not always money). • Available 24/7. • The amount of resumes and job postings. • Technology (personalization).

20. GBF Model Network Effects • Strong. • First-mover advantage (454th commercial website worldwide). • Heavy spending on advertising and building its brand name. • More employers – more job seekers.

21. GBF Model Economies of Scale • A large portion of Monster’s 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.

22. GBF Model Customer Retention • Medium. • Higher because of the site’s “stickiness”. • Lower because job seekers tend to use several methods to look for a new job.

23. Winner Takes All? Mergers and Acquisitions • In 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.

24. Questions???