By: Lucia Moses
It wasn’t the first time Monster.com founder and CEO Jeff Taylor stared down a gathering of newspaper publishers. This time, he was speaking to about 65 attendees at the Suburban Newspapers of America’s (SNA) spring publishers’ conference in Bal Harbour, Fla. As usual, the cocky and energetic Taylor was taking shots at the industry. As audience members squirmed in their seats, Taylor proclaimed that the future of help-wanted advertising is on the Web, with Monster leading the way. His bottom line: Newspapers can partner with Monster in revenue-sharing ventures — or risk being left behind.
The audience’s reaction was decidedly mixed. As Nancy Lane, executive director of the SNA, recalls, “No one likes to hear from a relatively new kid on the block that their piece of the pie is going away for good.” As for partnering with the upstart, she warns, “You risk the customer loving Monster and cutting you out.”
For many years, newspapers showed little interest in making life easier for Monster. Taylor was snubbed back in 1995 when he met with 75 papers to discuss revenue-sharing deals. “I genuinely put an effort into meeting and got a resounding ‘Maybe,'” he told a gathering of top newspaper-company executives last December. “I helped the newspapers learn, and then I got a lukewarm response.”
The response has been somewhat warmer of late, however. Their discomfort notwithstanding, some suburban publishers are considering collaborating, as they tend to have a weak online help-wanted advertising presence and can’t match Monster’s brand and promotional power.
One is Banks Dishmon Jr., president and publisher of DFW Community Newspapers, which circulates around the Dallas-Fort Worth area. He woke up to the Net threat one day last year when a Monster search turned up hundreds of local ads for administrative assistants, assistant controllers, bookkeepers, and the like. “I just knew it was an alarming number of ads I should have had,” he says.
It’s not just smaller operators that are talking to Monster. Many of the suburban groups are owned by major chains. There are some “big damn newspaper companies” that are coming to the table, says Gordon Borrell, CEO and president of a new-media consultancy, Portsmouth, Va.-based Borrell Associates Inc., and “the greater majority of them are very interested.”
SNA’s Lane plans to take a group of representatives from large companies to Monster’s Maynard, Mass., headquarters this month to continue revenue-sharing discussions. “There are people looking at it, and they’re looking at it hard,” she says.
For a paper that has little to lose, a deal may make sense. That was the case with Black Press Ltd.’s Honolulu Star-Bulletin, which essentially became a startup last year when its joint operating agreement with Gannett Co. Inc.’s The Honolulu Advertiser dissolved. The Star-Bulletin began a one-year partnership with Monster last fall and is happy with it, says Donnie Welch, vice president of advertising. Under their arrangement, the paper does the selling and Web ads are placed on a separate, co-branded site. (Neither side would disclose financial details.)
The question for papers to ask themselves, however, is: If the Web is nibbling away at your print classifieds, why let another party do the cannibalizing? Critics warn that Monster will slant the deals to give itself a disproportionate share of the revenue or, worse, subvert the newspaper’s relationship with employers — and, once the term of the partnership expires, launch a full-scale assault upon the local paper.
‘Nuts’ to the Monster?
That’s why newspapers would be “nuts” to consider partnering with Monster, says David D. Hiller, president of Tribune Interactive, who oversees Tribune’s interactive businesses in its newspaper and TV markets as well as its stake with Knight Ridder in CareerBuilder Inc. “I think it’s a great growth strategy for Monster … and a lousy defensive move for newspapers,” Hiller says. “What is somewhat astounding to me is they think they’re going to get newspapers to let them in their own back yard.”
If newspapers don’t deal, Monster would have to take the costly route of hiring its own local sales forces. “Without newspapers, it probably doesn’t make sense for Monster to allocate a lot of capital in those markets,” says Mark D. Henderson, an ABN Amro analyst. “Looking at the returns of capital for a small to midsize market, they’re much smaller than a Chicago or New York or L.A.”
Apart from their conflicting business interests, it’s hard to see newspapers’ and Monster’s cultures coming together. In many ways, Jeff Taylor, 41, is what most newspapers are not: brash, unconventional, marketing-savvy. He seems an unlikely success, considering his beginnings. A University of Massachusetts dropout, he spent a few aimless years, making money by washing dishes and as a disc jockey. Eventually, he found his calling while working at an advertising firm in Needham, Mass. A few years later, he opened his own recruitment agency. In 1994, he founded Monster Board. (Through a spokeswoman, Taylor declined to speak with E&P for this story or make other executives available, citing imminent deals with newspapers.)
Monster might have ended up as just another dot-com failure had Andrew J. McKelvey, TMP Worldwide chairman and CEO, not taken a gamble and bought it in 1999. Taylor stayed on as CEO, and, with TMP’s backing, poured money into promotions, which included TV commercial spots during the past three Super Bowls and a string of other memorable TV ads. In 2001, Taylor spent a whopping $200 million on marketing — during a year when Monster took in only $535 million in commissions and fees.
Bringing it all back home
Today, the company with the goofy name and ugly mascot is the biggest online job board, with 15 million r?sum?s. Its brand awareness is remarkable, says Greg Harmon, director of interactive for Belden Associates, considering “this is a company that didn’t exist six years ago.”
While Taylor is used to ambivalence from newspapers — after all, he mocks their products as dinosaurs while threatening their business — he now has a new enticement to draw them (however reluctantly) to his side.
Newspapers have generally viewed Monster as a national brand that competes mainly for technology and executive job listings, while print retains the local markets, where most hiring is done. That position may be outdated, however. With growth in his executive-recruitment business slowing, Taylor is going after local help-wanted ads, specifically those for hourly jobs. “We are actually recruiting in 300 local markets,” Taylor declared in December.
The timing couldn’t be worse for newspapers, which watched their help-wanted advertising revenue sink 34.5% last year, as the category shrank to 13% of their overall ad-revenue pie in 2001 from 18% in 2000. Papers continue to lose share of recruitment dollars to cheaper online and print competitors.
Meanwhile, Monster is preparing to pounce. On March 25, the company began its planned nationwide rollout with the launch of TriState JobMatch, an hourly-job-search site for the Cincinnati area. Monster recently registered domain names containing the word “JobMatch” in at least 200 cities and plans to extend the Cincinnati model to at least 100 second-tier markets over the next two years, according to people who attended the SNA presentation.
Based on the Monster model, its Cincinnati site (http://www.tristatejobmatch.com) lets hourly workers fill out applications online and search job listings using multiple criteria, while employers can customize their searches for applicants using prescreening tools.
Critics of the strategy are quick to point out that people supposedly don’t go surfing to look for construction and secretary jobs because they’re less likely to have computer access, and newspapers are still the strongest local job-search source around. “I would argue they’re going to have a much tougher time branding those products than we would,” says Barry Lawrence, a CareerBuilder spokesman. “People know their local newspaper.”
But more and more blue-collar and other hourly workers are logging on, a reflection of the Web’s democratization. Nielsen//NetRatings data show blue-collar workers were among the fastest-growing categories of Internet users from December 2000 to December 2001. According to Monster, administrative/support services is its fifth-most-visited search category. U.S. Bureau of Labor Statistics data suggest that most of the hiring in the next eight years will occur in hourly occupations, another reason such positions are a growth area online.
As for local awareness, a Belden Associates survey last fall showed Monster as a strong challenger to newspapers. Among newspaper Web site visitors in seven markets ranging in size from Waco, Texas, to Atlanta, 32% viewed Monster as excellent or good, 37% felt the local paper’s online classifieds were excellent or good, and 41% described the local paper’s print classifieds that way.
Feeding the Monster
If Taylor is passionate about going local, that’s because Monster’s future may depend on it. TMP, which makes most of its money from company commissions and fees for services, has suffered over the past year as companies have quit hiring. Citing an uncertain outlook, TMP lowered its 2002 earnings estimate in February, causing its share price to tumble.
Consolidation among online job boards, while feeding Monster, also has strengthened its competitors. Players such as CareerMosaic had already been digested by the time CareerBuilder swallowed Headhunter.net and Yahoo! gobbled up HotJobs. Meanwhile, more employers are skirting the middleman altogether and posting job openings on their own sites. Twenty major employers, including IBM and Intel Corp. — complaining about the cost of advertising their openings online — launched a cooperative job site (http://www.directemployers.com) in February.
Dresdner Kleinwort Wasserstein analyst Edward J. Atorino joined others in downgrading TMP’s stock rating the same month, and now says, “I think life’s going to be a little tougher for Monster going forward.”
Risk and reward
Even if Monster’s strategy is risky, that doesn’t mean newspapers should dismiss its plans to compete locally. While papers have big local audiences through their print products, Monster has developed strong local awareness in a short time. Newspapers are starting to catch up, but in many cases they don’t match Monster’s rich job-search and employee-match services. In service to employers and promotions, they frequently get low marks.
“Newspapers are always too slow to really tell their story, and, in many markets, they don’t develop … sustainable relations with agencies and employers,” says Miles E. Groves, chief economist for the Bethesda, Md.-based Barry Group and a newspaper strategy consultant.
The Web isn’t the only threat to the category, though. In making their help-wanted advertising the high-profit-margin business that it is, papers have opened the door to niche print and online competitors.
“Newspapers, with their price increases, have rated themselves out of part of that business,” says Charles S. Diederich, director of recruitment advertising for the Newspaper Association of America, who hopes Monster’s moves will serve as a catalyst to get newspapers to revive the category. “If we became too expensive … we need to create new products or rejigger our product.”
Admitting they consider Monster serious competition may be a bitter pill for newspapers, but Belden’s Harmon says it’s a mistake to underestimate the threat. “These guys are smart, well-funded, and determined,” he warns, “and if you say they’re going to fail just because you’ve been there for the past 120 years is vastly negligent.”