Monster’s acquisition of HotJobs is a major coup for the recruitment firm, catapulting it into the lead in traffic, and boosting its global growth prospects, while also helping it to gain greater entree to the small employers that to this day still turn to newspapers for recruitment.
The $225 million deal gives it HotJobs, a presence on Yahoo! sites in the U.S. and Canada, and partnerships with some 600 newspapers and media outlets.
No wonder that Monster CEO Sal Iannuzzi told Wall Street analysts in a conference call this afternoon, the purchase makes his company the “No. 1 global firm in our industry.”
Monster’s closest rival CareerBuilder may not agree, but Iannuzzi’s comment is no idle boast. Monster’s overseas revenue is on a par with its North American revenue. (In the 4th quarter of 2009 it had international revenues of $88.5 million. Revenue from the U.S. and Canada was $90.9 million.
Uncharacteristically, CareerBuilder did not respond to requests for its North American revenue (the only number the privately held company provides). However, in the third quarter it had North American revenue of $135 million to Monster’s $95.2 million.
The company also did not respond to an email request for comment on the HotJobs acquisition.
In terms of pure traffic counts, the HotJobs acquisition plus the agreement that keeps HotJobs on the Yahoo! homepages in the U.S. and Canada for three years, pushes Monster ahead of CareerBuilder, which has held the lead for several years. No other career site in the world comes close.
The most recent U.S. traffic numbers I’ve seen put Monster and HotJobs at a combined 32.3 million to CareerBuilder’s 21.7 million. Even though Monster won’t hold onto all that traffic — there is overlap among the job boards — it will be ahead when the sale closes and the dust of systems integration settles.
Monster will pay Yahoo! for the traffic it sends to the career channel, which is a fairly typical arrangement. How much Monster will pay wasn’t disclosed, but without Yahoo providing traffic, HotJobs wouldn’t have been worth much.
The “traffic deal,” Iannuzzi said, “will establish a No. 1 traffic position for Monster in the U.S.”
The newspaper network that comes with the sale probably helps more with the traffic than with sales. However, even today, newspapers still have a sizable (if diminishing) piece of the recruitment pie, especially with smaller and regional businesses and local staffing firms. These are the employers who call into the newspaper to place an ad or go online at the newspaper’s career site to do the same.
Reaching the smallest advertiser directly is not cost effective, yet with a White House focus on boosting hiring by small businesses and so many of them in the U.S. that they are the long tail of employment, Monster’s new newspaper partners will certainly help it there. CareerBuilder, owned mostly by three newspaper companies, has only a fraction of the more than 1,000 dailies and weeklies that are now in Monster’s orbit.
Globally, there are important benefits, too. Monster gets the exclusive right to negotiate with Yahoo’s overseas properties to power their career sites and buy traffic. The U.S. and Canada traffic deals becoming a “template,” Monster’s CFO said.
There’s no doubt Monster will pursue those deals. Iannuzzi made it very clear he has been shifting resources to strengthen the international business and that he sees opportunities in South America and Eastern Europe.
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While the HotJobs news grabbed the headlines, Iannuzzi focused much of his attention during the analyst call on Monster’s new products and site reengineering. This week, Monster officially launched 6Sense search technology, which it built out of the Trovix architecture it got when it bought that job-matching firm 18 months ago.
The brains behind its Power Resume Search and PowerSearch, 6Sense is a hit, Iannuzzi said during the call, with customers as well as seekers. The first major improvements Monster introduced in years came under Iannuzzi’s watch. In January last year, Monster introduced career mapping tools, community groups, and other services to encourage job seekers to stay with Monster even after finding a new job.
A few months later, a pre-beta group of recruiters got to test the new resume search. It was a hit, helping them to find candidate resumes that matched their needs far better than did the standard (and long-time) keyword search. It got rolled out in beta in the fall and I was bowled over by how effective it is.
Since then the job-seeker version was introduced and that, too, is a (big) step up from Monster’s “Standard Search,” as the company calls it now.
Now, three months after becoming generally available and some six weeks into selling the higher-priced Power Resume Search to contract customers, Iannuzzi told the analysts, “What we are seeing is very encouraging … based on six weeks of selling … vast majority of what we are selling is 6Sense technology.”
Curiously, he went on to say 6Sense can be a tool to make recruiters more efficient because it cuts search time, making searches far more precise. But he also said it’s a threat to the industry for that same reason. “The recruitment industry,” Iannuzzi said, will have “to reconsider their business model in light of what we have developed.”
What to make of that very pregnant comment? Iannuzzi didn’t offer any help on that: perhaps because he didn’t want to; perhaps because the conference call ended at that very point.
While we wait to see what others and the market make of that, the financial markets bid up Monster’s stock price slightly in after-hours trading. Evidently, the news of the acquisition and the new product success were positives, despite the cautions from Iannuzzi and CFO Tim Yates.
The first quarter, the one we’re in, is going to be a challenge. They expect, in Iannuzzi’s words, “A rough quarter from a P and L perspective.” The rest of the year, though hardly smooth sailing, should be better.