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Advertising Network Viability

(October 20, 2003) - In the current employment environment, any employment advertising works, to a degree. Fishing when the ocean is full requires neither skill nor precision. In this environment simply dipping the net in the water yields fish in significant numbers.

Over the longer term, the viability of any Electronic Recruiting System will depend on its ability to catch the right fish at the right time. Precision message delivery coupled with bi-lateral communications systems and some level of real community development will be the elements of any recruiting tool that lasts through the decade and into the twenty-teens.

The advertising agency surrogates (HodesIQ and the JADs) suffer the same inherent flaws as the industry that begot them. Tied to a percentage of sales, their fortunes are held hostage to the rising and falling of the economy. Most of the JADs are terribly undercapitalized and run into serious credit problems when the economy turns south. HodesIQ, buffered by a large agency, is far less likely to suffer cash-flow problems. While HodesIQ will survive and prosper, the JADs will suffer from radical variations in service quality.

Newspaper ownership is a curse that few organizations have been able to bear gracefully. Conflicting agendas, funding issues and structural objective dilemmas make the stop gap plays by newspaper surrogates subject to unmanageable difficulties. Like its predecessor, CareerPath, CareerBuilder is vulnerable to non-market volatility. Although the juggernaut has had some interesting wins (notably the AOL and Microsoft traffic deals), the basic network architecture is designed to be primarily competitive with Monster and HotJobs. The success of the nodes (individual newspapers) is somewhat of an afterthought. It's a shame, really. CareerBuilder could be leading the charge towards precision message delivery with services that shuttle buyers to the right demographics. Unfortunately, CareerBuilder is organized to fight the last war.

CareerCast, with a very modest investment from DowJones and a rigorous focus on technical delivery,  has managed to position itself as the only network of networks. Modesty, in general, is the key to their success to date and the dramatic field of opportunities they have created for themselves. They have built an environment in which each customer 'wins' when the others succeed.

The next step in evolution for Massachusetts based Net-Temps will be to figure out the precision targeting question. While their traffic acquisition and network development team is the most effective in the industry, the focus is on bulk message delivery rather than a precision tuned variation. Net-Temps currently offers an immense bang for the buck (it's a more polished version of what the JADs are trying to become). Navigating the changes required for next generation recruiting (see Monster's current announcement of the integration of social networking into their offering) will require a significant mind-shift. Somehow, Net Temps will have to morph into a micro-communications platform.

The same caution applies to the wildly successful NicheBoards. The core concept (shared success for all of the players) is a sound alternative to old fashioned agency percentages. However, the R&D muscle available to both Hot Jobs and Monster is going to introduce sweeping changes to the industry over a relatively short time frame. Simply being a job board (or a collection of them) will not be good enough for the next five years. Niche boards must jump ahead of the curve and wow its customers and potential customers with the next set of issues. They are a good choice today but will need significant investment to remain so.

We approach the subject of Regional Help Wanted with some caution. The company is built squarely on the notion that excess radio advertising inventory can be traded for a percentage of sales in a related business. Although the advertising market has been in virtual depression since the dot-com crash, revenues are already starting to increase. Since the operation's effectiveness has depended on a temporary leverage play, the critical question is how they will handle rising costs in their advertising base. Although we see them as next to 'least viable', the core management team has been extremely clever financially and may be able to survive the economic shift, create the required R&D infrastructure and shift the operation to compete with the larger players.

Salary.com, as we've mentioned, offers an approach that targets very specific demographics and skill levels in its visitors. Were we running any of the other networks, we'd look at their toolset as one way of describing the future. Unfortunately, the Recruitment advertising function's   viability is tied to what is both a strength and a weakness. For Salary .com, the recruitment advertising business is an afterthought. The rest of the business creates the opportunity, making the ad network all about marginal income.  That means that viability is strictly a function of success in the larger business.   

When it comes to the two major players in the industry (Hot Jobs and Monster), we see one of the healthiest competitions we could imagine. Coming, as they do, from radically different structural opportunities, the two operations seem hell-bent on playing a game of radically escalating features and functionalities. The biggest problem that they both face is the possibility of losing customers who cannot follow or leverage the new tools they are being offered. They are both so big that learning to feel small for customers must be on the top of their priority lists.

That's the real opportunity for the rest of the industry. Learning to give customers control and a feeling of real intimacy is the best avenue for short-term growth.


Model Elements

Sales Marketing Job Board Technology Targeting Distribution Income
CareerBuilder Decentralized Centralized Centralized Centralized Bulk-Precision Reseller
CareerCast Decentralized Decentralized Centralized Decentralized Precision Manager
HodesIQ Centralized Centralized Decentralized Centralized Precision Reseller
Hot Jobs Decentralized Decentralized Decentralized Precision Bulk-Precision Reseller
JADs Centralized Centralized Decentralized Centralized Bulk-Precision Reseller
Monster Centralized Centralized Centralized Centralized Bulk-Precision Owner
Net-Temps Centralized Centralized Decentralized Decentralized Bulk Owner
Niche Boards Decentralized Centralized Decentralized Decentralized Precision Rep
Regional Helpwanted Centralized Decentralized Centralized Centralized Precision Manager
Salary.com Centralized Centralized Centralized Centralized Hyper Manager

John Sumser

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Materials written by John Sumser © TwoColorHat. All Rights Reserved.
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