Career Sites: A Look at the Industry Giants

We live in confusing times. As we worry about our family, friends, personal security, and the security of our economy, it seems a bit trivial to be concerned about trends in the career site industry. In the grand scheme of things maybe it’s not so important, but in our narrow world of work life it merits some commentary. Here are my thoughts on the changes that are happening, why they are happening, and our options for influencing the future. I regularly read all the studies by Forrester, Robinson Humphrey, the Recruiting Roundtable, Goldman Sachs and the other industry analysts, and I talk to corporate recruiting executives daily. They all seem to be of the opinion that niche career boards are the wave of the future, and that the large general boards will play a somewhat different role in our e-recruiting efforts. And yet, major industry giants are purchasing all the big boards ? which would seem to run counter to these predictions. What do we make of all of this? In any emerging industry, consolidation is inevitable. The key to understanding the reasons for the consolidation is to first try to understand the motivations of the companies doing the acquiring. I’ve heard all kinds of perspectives on this: ranging from simple explanations ? that larger companies are bailing out failing job boards, for example ? to the most extreme “conspiracy” theories. As a businessperson with a strong affinity for this industry, I’ve tried to make my own objective assessment of why this is happening. And my bottom line viewpoint is just that: it’s about the bottom line ? capitalism at its finest. First, take a look at who the buyers and sellers are. The buyers are several of the “Help Wanted” industry giants: TMP Worldwide, one of the most prominent recruitment ad agencies in the world, and newspaper giants the Tribune Companies and Knight Ridder. Historically, the majority of the revenues for these companies are the direct result of the placement of help wanted classifieds ? either as the agency or the newspaper. Five years ago the agencies and the newspapers claimed that the Internet as a recruiting medium was somewhat of a fad ? only for “techies” ? and would never replace the newspaper. Sadly, as their revenues began to erode, they realized that they might be partially wrong. It’s All About the Bottom Line Without action, the impact of this revenue loss will be devastating. An executive of a very large newspaper conglomerate once told me that over 85% of the entire newspaper’s operating expenses are covered by the revenues generated from help-wanted classified advertising. Even a one percent downward shift in these revenues would have a significant impact on the bottom line. As prudent businesspeople, these executives know that to survive and grow they must get into the e-recruiting game in a big way ? especially as Wall Street breathes down their backs. Call it what you will: diversification, industry consolidation, or a simply a classic case of “if you can’t beat them, join them.” Contrary to what some pundits have speculated, this was not an altruistic effort to create “end to end” solutions and a “one stop shop” for all recruitment needs. It is purely about the bottom line. By owning some of the largest players in the industry and many of the pieces of the horizontal supply chain, these firms have the ability to remain the biggest players in this extremely lucrative domain. I am by no means criticizing their moves. Without knowing their exact strategies for managing the consolidation there is nothing to really criticize. They are legitimate business entities making what they believe to be strategic business moves. The end result is in the execution. But as a consumer of these products and services, if I feel the pinch of rising prices, collusion, and a step backwards instead of forwards, I can influence the market by spending my dollars differently. Monster.com Did Not Purchase HotJobs and FlipDog A second thing to point out is that, contrary to industry “scuttlebutts,” Monster.com did not purchase FlipDog and HotJobs. TMP Worldwide purchased them. TMP holds the keys to the future of these entities. Depending on how strategically TMP integrates, embraces and manages these acquisitions they will either flower or fold. TMP now owns the lion’s share of the revenue generated from Internet job postings. They also own some great assets. The combination of Monster’s brand recognition, FlipDog’s intelligent search technology, and HotJobs’ Softshoe tracking software can be extremely powerful. As a corporation with a talent pool of some very bright executives and deep pockets for investment, they could do some wonderful things with these job boards ? things that will benefit everyone: the job seeker, the recruiter, and themselves. If egos do not impede progress and the players are willing to come to the table and work together we may see some great strides in the industry. Unfortunately I believe that they are a long way off from achieving this and are still in the confusing, uncertain, tripping-over-each-other stage that follows acquisitions and consolidation. The strategy has to come from the top and must be disciplined, aggressive and cutting edge in order to be successful. If I Were the “King of the Mountain” If I were running these businesses I would take the classic brand marketing approach used daily by the likes of P&G, Kraft/General Foods and General Mills. I would not consolidate the boards into one big board, but instead would keep them as separate entities, each with its own unique branding and positioning. P&G successfully manages many brands within the same category: Pampers & Luvs; Dawn, Ivory, and Joy; Tide, Cheer, Era, Gain; Cover Girl & Max Factor. To maximize profitability, I would take the same approach. Within P&G these competing category brands basically have the same functionality and quality, and are all leading brands. How they are different is in their positioning, pricing and marketing strategy. Together they generate significantly more revenue and profit for their parent company than if they were combined into one. I would also dip into my purse and invest in improving and applying the technology I have just purchased to enhance each brand’s functionality. All three brands can take something from each other to improve their product offerings. Like a large consumer products company, I would consolidate the back office operations to streamline processes and improve profitability. I would have one customer service operation that is fully trained on all the product lines. I would create a healthy competition between the brands to encourage creative sales strategies. The sales teams would all work for TMP, but would be assigned to selling specific product lines. This would allow me to move talent around as necessary. I might even consider taking the best of each of the products to create a whole new line of sites ?- niche sites, to appeal to the needs of all types of hiring organizations and job seekers. With unique positioning, enhanced technology, masterful marketing and streamlined internal processes, TMP could create a win-win-win for everyone. Unfortunately, I do not believe that they are centralized enough yet to swiftly take advantage of this opportunity allowing the smaller players to gain more foothold in the meantime. Additionally, the short-term demands of Wall Street could undermine all of their long term efforts, creating even more havoc for the industry. In terms of the Tribune Companies and Knight Ridder, they too have lots of opportunity if they plan and execute strategically. Careerbuilder reinvented itself several years ago and in my opinion did a great job of creating niche value within a large job board. The functionality of the Headhunter site is great, and the alliances they have built within the health care community is a superior asset. It remains to be seen how quickly and innovatively these site integrate, and how (or if) they integrate with their large investments in “Brass Ring”. Again, it takes some brilliant strategic thinking, a dedicated effort and willingness to work together for them, and us, to benefit. Part Two of this article will focus on “Going Niche,” how the large entities are incorporating “niche” into their strategies and how we can influence the industry to help the smaller niche players flourish.

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Karen Osofsky (karen.o@tiburongroup.com) is a co-founder of TiburonGroup.com, an e-recruiting consulting firm that provides outsourced recruiting solutions to rapidly growing companies and new ventures. The firm provides a broad range of recruiting consulting, sourcing, screening, and strategy development services to help companies manage the front-end recruiting process. Tiburon Group is a Certified AIRS Solutions Partner.

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