Scary Competition for Monster.com


By Olga Kharif For several years now, leading job-search Web site Monster.com has held onto its worldwide dominance with surprising dexterity. Most analysts gave up on the stock after it stopped showing its ads through AOL (TWX) and MSN (MSFT) portals last December. Still, the outfit has managed to keep traffic coming to its Web site. In July, it grabbed 25.7% of all visitors to employment sites, less than 2% below than year-ago traffic numbers, according to research service Hitwise.

You might think investors would be smiling. The site's parent, Monster Worldwide (MNST), is in the black after a string of early annual losses. In its second quarter, which ended June 30, Monster Worldwide reported a 26% increase in sales, to $209 million, and a 75% jump in earnings, to 14 cents, vs. a year ago. And analysts polled by Thomson Financial now predict growth of 39% for earnings and 14.4% for revenue in 2005. Yet, Monster Worldwide's $18 stock price is 40% off its 52-week high of $30 in April.

A GIANT LOOMS. What's going on? Monster.com may be about to face its toughest battle yet. Yes, the U.S. job-search market is expected to double to $1.9 billion by 2008, according to tech consultancy Forrester Research. But rivals, old and new, are gearing up to give the Monster.com's little green mascot a real run for his money.

New entrants are jumping into job search, with the number of sites having grown by 15% in the past year, estimates Bill Tancer, vice-president for research at Hitwise. What's more, many established competitors have access to even greater resources than Monster Worldwide, with its $82 million in cash and equivalents.

Perhaps the biggest threat yet to Monster's supremacy came on Aug. 13, when auction giant eBay (EBAY), with $1.4 billion in cash and equivalents, became a 25% investor in online billboard Craigslist, which gets 100% of its sales from job ads.

WORD OF MOUTH. Craigslist already receives more traffic than Monster's sites, according to Web rankings site Alexa. (Monster is No. 1 in terms of revenues.) Craigslist charges less than Monster, and CEO Jim Buckmaster believes it caters to a more lucrative market -- matching job hunters with employers within local markets, rather than by nationwide searches.

Another emerging competitor is Israeli startup Redmatch. Its technology allows newspapers to post their help-wanted ads online. Redmatch's software matches job seekers with employers based on skills and requirements, reducing the time needed to sift through ads and résumés. Already, more than 150 U.S. newspapers have linked to Redmatch's Internet network, which features 85,000 ads. Within six months, CEO Gal Almog expects to quadruple the number of newspapers Redmatch serves.

Redmatch also sells its technology to corporations, many of which are starting their own Web-based job outreach efforts. Many find that keeping in touch with former employees, for example, can help fill vacancies faster -- and do so with people who need less training and are familiar with their corporate culture.

FORMIDABLE FOES. Monster.com's longtime rivals are ramping up their efforts as well. Yahoo! (YHOO) is now testing a new version of its sites, offering job postings and other information for local areas, says Dan Finnigan, general manager of the HotJobs.com division of Yahoo. Lately, HotJobs has also aggressively cut its pricing to below that of rivals such as Monster.com, say analysts.

Then there's CareerBuilder.com, which is a joint effort between newspaper chains Gannett (GCI), Knight Ridder (KRI), and Tribune (TRB). CareerBuilder increased its traffic by 8.6% year-over-year in July, 2004, gaining at the expense of HotJobs and Monster.com, according to Hitwise. CareerBuilder's revenue has also grown much faster than Monster's, though from a much smaller base.

And that's just a prelude to CareerBuilder's marketing efforts. It plans to run an ad during this season's Super Bowl, next January, and at 2005's Academy Awards, says CEO Matt Ferguson. This fall, it will launch a major TV campaign, in the hopes of making its brand better known than Monster's. "We think we can change that [perception] quickly," Ferguson says.

READY TO RUMBLE. Not that Monster.com is taking the new challenges sitting down. Andrew McKelvey, Monster Worldwide's chairman and CEO, insists that better revenues and margins will keep Monster.com on top, not traffic numbers (see BW Online, 8/16/04, "'This Traffic Thing Is All Over'").

Still, achieving growth in the current climate might be tough. Monster's marketing and promotion expenses increased by 20% in the second quarter ending June 30, according to its quarterly statement, despite ending relationships with MSN and AOL, which collected millions of dollars in fees for listing Monster.com. Anticipating a robust jobs recovery, Monster also expanded its sales staff and made several acquisitions, even as employment remains soft.

Few think the current lull will last for long, however. That's why this green monster is preparing for battle with some pretty determined adversaries. Kharif is a reporter for BusinessWeek Online in Portland, Ore.


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