1. Case Study of Monster Inc. By Donatas Sumyla

3. Content Introduction Introduction Online Brokers Online Brokers Company Overview Company Overview Monster.com Monster.com GBF GBF Winner Takes All? Winner Takes All?

4. Introduction Founded in 1967, Monster is the leading global online careers and recruitment resource property. Founded in 1967, Monster is the leading global online careers and recruitment resource property. Company also owns TMP Worldwide and Yellow Pages. Company also owns TMP Worldwide and Yellow Pages. Provides services in N.America, Europe, and the Asia-Pacific region to more than 495,000 clients (Fortune 500 to small and medium size enterprises, educational institutions, government agencies). Provides services in N.America, Europe, and the Asia-Pacific region to more than 495,000 clients (Fortune 500 to small and medium size enterprises, educational institutions, government agencies). Over 46 million resumes on its database; Over 46 million resumes on its database;

5. Online Brokers Business Model wasn’t created out of a new idea. Business Model wasn’t created out of a new idea. Offline business examples: Offline business examples: Real estate agencies. Real estate agencies. Insurance agencies. Insurance agencies. Stock brokers. Stock brokers. Travel agents. Travel agents. Online brokers were born with the fast spread of the Internet usage. Online brokers were born with the fast spread of the Internet usage.

6. Online Brokers Value for clients is created by: Value for clients is created by: Reducing search costs (big online databases, 24/7, up-to-date). Reducing search costs (big online databases, 24/7, up-to-date). Personalization (user’s preferences). Personalization (user’s preferences). The Internet makes communication between clients and trading partners easy. The Internet makes communication between clients and trading partners easy.

7. Online Brokers Revenues are collected by: Revenues are collected by: Commissions and other transaction- related fees Commissions and other transaction- related fees Subscription fees Subscription fees Advertising Advertising System integration fees System integration fees Cost categories: Cost categories: Cost of revenues Cost of revenues Product development costs Product development costs Sales and marketing costs Sales and marketing costs G&A expense G&A expense

8. Online Brokers GBF strategy: GBF strategy: Network effects depend on buyer and seller heterogeneity and client exclusivity Network effects depend on buyer and seller heterogeneity and client exclusivity Many online brokers are subject to strong network effects Many online brokers are subject to strong network effects Large portion of costs are fixed – companies benefit from strong scale economies Large portion of costs are fixed – companies benefit from strong scale economies “Sticky” websites have high CRR “Sticky” websites have high CRR

9. Company Overview Industry overview Since the birth of the Internet, the online recruitment market has seen significant changes. Since the birth of the Internet, the online recruitment market has seen significant changes. It was influenced by the economic downturn of 2001-2003. It was influenced by the economic downturn of 2001-2003. Many went bankrupt or merged with the major players: Many went bankrupt or merged with the major players: Monster Monster CareerBuilder CareerBuilder Yahoo! Hotjobs Yahoo! Hotjobs

11. Company Overview Industry overview Online recruitment is positioned to grow more quickly than other economic sectors. Online recruitment is positioned to grow more quickly than other economic sectors. Online advertising will exceed $16B by 2008 (mostly recruitment advertising). Online advertising will exceed $16B by 2008 (mostly recruitment advertising). Mintel forecasts that recruitment advertising and membership revenues will reach $5.9B in 2009. Mintel forecasts that recruitment advertising and membership revenues will reach $5.9B in 2009.

12. Monster.com Formed in 1994 – 454 th commercial website worldwide. Formed in 1994 – 454 th commercial website worldwide. As a leader it offers innovative technology and superior services. As a leader it offers innovative technology and superior services. The Monster global network consists of 22 local content and language sites. The Monster global network consists of 22 local content and language sites. Has over 25M job seekers members, a resume database with more than 17M unique resumes, over 100,000 member companies, over 1M unique job opportunities with the network. Has over 25M job seekers members, a resume database with more than 17M unique resumes, over 100,000 member companies, over 1M unique job opportunities with the network.

13. Monster.com Marketing is divided into local and global marketing segments. Marketing is divided into local and global marketing segments. In 2004, Monster launched its “Go Local” initiative to reach deeper into small and medium-sized business (heart of economy). In 2004, Monster launched its “Go Local” initiative to reach deeper into small and medium-sized business (heart of economy). Teamed up with Infinity Broadcasting to extend its local presence through 180 radio stations and their websites (70 million weekly listeners). Teamed up with Infinity Broadcasting to extend its local presence through 180 radio stations and their websites (70 million weekly listeners). Acquired Jobsahead (Monster India), 40% stake in ChinaHR.com, jobpilot and emailjob.com in Europe. Acquired Jobsahead (Monster India), 40% stake in ChinaHR.com, jobpilot and emailjob.com in Europe.

14. Monster.com Revenues come from: Revenues come from: The placement of job postings on the sites within the Monster network The placement of job postings on the sites within the Monster network Access to the Monster network’s online resume database Access to the Monster network’s online resume database Other subsidiary services Other subsidiary services Designing and placing recruitment ads in traditional media (newspapers, trade publications). Designing and placing recruitment ads in traditional media (newspapers, trade publications).

15. Stock

16. Stockholders Principal stockholder – CEO Andrew J. McKelvey (34%) Principal stockholder – CEO Andrew J. McKelvey (34%) Direct private holders Direct private holders Institutional holders Institutional holders Employees Employees

17. Monster.com Growth The success of Monster depends on its brands and their value. The success of Monster depends on its brands and their value. By expanding the brand Monster attracts and expands the client base. By expanding the brand Monster attracts and expands the client base. Based on the growing number of other Internet sites and relatively low barriers to entry the market. Based on the growing number of other Internet sites and relatively low barriers to entry the market. Rapid evolution of the market requires continuous improvement in the performance, features and reliability of all Internet content by Monster. Rapid evolution of the market requires continuous improvement in the performance, features and reliability of all Internet content by Monster.

18. Competitors The market is highly competitive – pressure to reduce prices, new capabilities and technologies, job completion schedules. The market is highly competitive – pressure to reduce prices, new capabilities and technologies, job completion schedules. Competition from number of sources: Competition from number of sources: Media companies Media companies Other employment-related sites Other employment-related sites Internet portals Internet portals National and regional advertising agencies National and regional advertising agencies Marketing communication firms Marketing communication firms Two biggest rivals in the industry: Two biggest rivals in the industry: CareerBuilder CareerBuilder Yahoo! HotJobs Yahoo! HotJobs

19. GBF Model Value Proposition Reducing costs (time, pleasure, not always money). Reducing costs (time, pleasure, not always money). Available 24/7. Available 24/7. The amount of resumes and job postings. The amount of resumes and job postings. Technology (personalization). Technology (personalization).

20. GBF Model Network Effects Strong. Strong. First-mover advantage (454 th commercial website worldwide). First-mover advantage (454 th commercial website worldwide). Heavy spending on advertising and building its brand name. Heavy spending on advertising and building its brand name. More employers – more job seekers. More employers – more job seekers.

21. GBF Model Economies of Scale A large portion of Monster’s costs are fixed. A large portion of Monster’s costs are fixed. The company is not completing transactions on any behalf of its consumers. The company is not completing transactions on any behalf of its consumers. Only creates the leads. Only creates the leads. It is easier to deal with a few big employers with large number of postings. It is easier to deal with a few big employers with large number of postings.

22. GBF Model Customer Retention Medium. Medium. Higher because of the site’s “stickiness”. Higher because of the site’s “stickiness”. Lower because job seekers tend to use several methods to look for a new job. Lower because job seekers tend to use several methods to look for a new job.

23. Winner Takes All? Mergers and Acquisitions In 2003-2004, Monster completed 6 business combinations: In 2003-2004, Monster completed 6 business combinations: Howard & Edwards (N.America) Howard & Edwards (N.America) Quickhire (N.America) Quickhire (N.America) jobpilot GmbH (Europe) jobpilot GmbH (Europe) JobsAhead.com (Asia/Pacific) JobsAhead.com (Asia/Pacific) However, company also discontinued several business in Europe, US, Australia and New Zealand, etc. However, company also discontinued several business in Europe, US, Australia and New Zealand, etc.

24. Questions???