"This Traffic Thing Is All Over"


Green monster, the mascot of No. 1 online job site Monster.com, has lately been enjoying good times. Its parent company, Monster Worldwide (MNST), which also owns an advertising agency and a yellow pages business, has reported year-over-year double-digit revenue and earnings growth (see BW Online, 8/16/04, "Scary Competition for Monster.com").

So, Monster is roaring. Monster Worldwide's Chairman and CEO Andrew McKelvey discussed with BusinessWeek Online reporter Olga Kharif on Aug. 11 how the outfit is dealing with its competitors. Edited excerpts of the interview follow:

Q: Where do you think you stand vs. last year?

A: Our second-quarter results were really phenomenal. [The company reported 26% growth in sales, to $209 million, in the period ended June 30, and earnings per share of 14 cents, a 75% increase year-over-year.] It's the result of the company getting better than it was last year. Our sales approach and our very strong brand is what's propelling us.

Q: Last year, you decided not to promote the site through MSN (MSFT) and AOL (TWX) and lost some traffic to rivals as a result. Was it the right decision?

A: We think now that this traffic thing is all over. There were a lot of people that believed that traffic was in direct proportion to revenue, and that's not the case.

AOL and MSN were very, very expensive, and they didn't deliver quality traffic [that translated into sales]. We took that money and put it into branding of Monster and more efficient marketing. And that has really paid off. We think our traffic is better today [in terms of delivering revenue] than it was a year ago.

Q: A lot of your competitors are really cranking up their efforts. Are you worried?

A: All of CareerBuilder.com's and HotJob.com's business adds up to no more than 60% of what Monster has today. They're not our competitors. The competitor is newspapers. Last year, they made more than $4 billion in help-wanted advertising.

Q: Well, CareerBuilder.com is an effort of newspapers that want to capitalize on online help-wanted advertising. They can offer clients advertising in print and online -- which Monster.com can't do. Do you think you're at a disadvantage?

A: I've never heard from anybody that [such packages offered] an advantage. What newspapers want to do is make a lot of money on their classifieds. They go to their clients and offer a print newspaper ad for $10,000. Then they say, "For another $50, you can display your ad online."

What kind of a strategy is that? Clients find that online is faster, cheaper, and better. So why would newspapers try to expose all of their help-wanted classified advertisers to online? That's crazy.

As advertisers realize they get the same result for $50 as they got for $10,000, they'll stop advertising in the newspapers -- and, possibly go to us, because we have a well-known brand and the leading market share.

Q: What about competition from pure-play Internet companies like Craigslist?

A: Absolutely, we have some competition -- here and in Europe. And we will always have competition. The difference is, they're local.

In the past three or four years, you haven't seen any significant new players on a national basis. The barriers to entry are really high. Our market share has been pretty dominant, and we've increased our sales force, and we're continuing to grow this business.


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