Online Job Sites Battle for Share

Monster and CareerBuilder are facing fresh challenges from upstarts like LinkedIn. To cope, some may have to buy or get bought

by Olga Kharif

Musicians looking for work on a cruise ship have not one, but at least two Web sites where they can search for ocean-liner jobs. That may sound like a narrowly defined niche to have its own series of job-search sites, but it's part of a growing number of sites dedicated to matching employers and job seekers in very specific pockets of the job market. There are also sites catering to pharmacists, stay-at-home moms, and job seekers in particular regions.

And some of these niche job-search sites are turning up the competitive heat on online recruitment stalwarts like Monster.com, CareerBuilder.com, and Yahoo's (YHOO) HotJobs.com. They're not alone. There's also a vanguard of sites like LinkedIn.com and Craigslist.com, which specialize in interactive, social-networking features, that are grabbing share in the online search market that by some estimates is worth as much as $5.9 billion.

Niche sites controlled about 64% of the online job-search market in 2006, up from 39% in 2004, according to Gordon Borrell, chief executive officer of consultancy Borrell Associates. The rivalry will only accelerate this year, as demand for online recruitment surges. A recent HotJobs.com survey indicates 40% of workers plan to look for a different job in 2007. Much of that searching will happen online.

Job Web 2.0

The Big Three have the most to lose. In the past six months, visits to Monster, HotJobs, and CareerBuilder dropped by 23.7%, 18.4%, and 7.1%, respectively, according to Hitwise. "The generalist site is falling away to that very strong niche," says Borrell. It didn't help that Monster Worldwide (MNST), Monster.com's parent, went through management changes and a stock options review, while Knight Ridder, one of the owners of CareerBuilder.com, was sold.

Who's gaining? In large part, sites that make up the newly emerging interactive Web. Sales at LinkedIn.com, a social network of professionals, rose more than tenfold in 2006, says CEO Reid Hoffman. LinkedIn's backers include Netscape co-founder Marc Andreessen and Greylock Partners, which has also invested in new Web stars including Digg.com and Facebook.com. The business is profitable and this month it expects to raise another round of funding for a guerilla marketing campaign and international expansion. "We are beginning to cross into the mass market," Hoffman says. "Our business has arrived," (see BusinessWeek.com, 9/11/06, "Social Networks: Execs Use Them, Too").

To be sure, the incumbents are still growing, owing to the strength of the overall job-advertising market. CareerBuilder.com's sales rose 38% in the first nine months of 2006. But such fortunes could change dramatically if, as analysts expect, the market cools as soon as 2008.

Consolidation Prospects

To cope, CareerBuilder and its ilk are regrouping in some dramatic ways. Monster.com more than tripled its sales force in 2006, to 1,800. It's also relying more on partnerships such as with newspaper chains like Freedom Communications, which owns 36 newspapers including The Orange County Register, to expand in local markets (see BusinessWeek.com, 12/6/06, "Newspapers' New Online Delivery Boy"). Rival HotJobs.com has recently set up a slew of new newspaper partnerships, too.

More revamping may be in order, analysts say. Some of the Big Three may need to gobble up successful niche sites, catering to unique audiences, or sites that offer interactive features. "We are planning to be a consolidator," says Doug Klinger, president of Monster North America (see BusinessWeek.com, 9/6/05, "The Job of Challenging Monster"). Jobster.com now lets people use tagging, making searching for keywords easier. In January, the site will start letting people post video résumés.