If Telstra thinks buying the Trading Post group will automatically
grant them a share of the lucrative online job ads market – they
could be in for a rude awakening.
Not even a year ago the world’s biggest job board, Monster pulled out
of Australia. With only 20 million aging people, there was no
profitable future in job boards in the recruitment advertising market
in Australia.
Microsoft Corporation, AOL and Australia’s largest recruitment firm who
were Monster’s joint venture partners here agreed. The remaining
partner,
NineMSN thought it would be a good idea to help Monster leave Australia
and
get into bed with the market leader, Seek.

The Packers bought 25% of Seek for $33 million, thus valuing the company at
$132 million. For a website that spends $23 million in advertising each
year in order to generate $20 million in revenue, James Packer’s seat on
the Seek board may have come at quite a hefty price. It might be worth
investigating how many times James Packer has attended Seek board meetings
compared to his other directorial obligations, I suspect you might find he
is disproportionately interested in the Matthew Rockman and Paul Bassett
dotcom enterprise. Off the record, it was no coincidence that Seek raised
their prices to their biggest customers by 62% within three weeks of the
new ownership arrangements.

The biggest purchasers of advertising space are not expanding companies but
recruitment agencies. A quick look at Seek will tell you that there are 800
recruitment firms advertising there, compared to 350 companies. The average
volume of ads purchased by a recruitment firm is many times more than the
average number of employment ads bought by a company. In other words
between 80-90% of a job board’s revenue comes from recruitment firms, not
from corporate advertisers. Same for the newspapers.

Factor this into the much quoted ANZ economist’s Job Advertising analysis
which counts the number of job advertisements on websites like Seek in
order to make economic judgements. Some politicians trumpet these results
very loudly as some sort of achievement. This may prove risky. The number
of job adverts is not simply a factor of how many jobs there are in the
market. The number of jobs advertised is directly linked to the
difficulties faced by recruitment firms in generating the applications of
quality candidates that their clients will employ.

If Company X wants to employ someone, they will call 5 recruitment firms
and also post their own advert on (say) Seek. Those 5 recruitment firms
will also post ads on (say) Seek for the same position, or possibly two ads
for each job coded in two different ways. Recruiters pay for capacity on
job boards (thousands of jobs at a time) so there is no disincentive for
them not to post multiple ads for the same job if they really want to fill
the job. So for each actual job available in Australia, there may be up to
5-10 advertisements per job board. Replicate this by posting those multiple
ads to all three leading job boards, being Seek, Career One (News) and My
Career (Fairfax). Therefore it is quite possible that the ANZ analysis
might be out by a factor of up to 20 adverts for each actual job. We have
not even mentioned adverts for temp jobs. The ‘error margin’ will also
increase as the candidate market gets tighter. There is no way that the ANZ

is in touch with the 800 odd recruitment firms on Seek to work out what
strategy each is employing. Seek has no objection to their customers buying
more adverts than they technically need of course. A look at the number of
jobs posted by the agency ‘Personnel Concept’ on Seek, My Career and Career
One gives you a very quick insight into the dangers of making economic
judgements from counting advertisements.

The key to getting the real numbers is to look at the rate of increase in
listed recruitment companies’ revenues. You’ll find quite a difference
between this growth and the growth in job advertising. We digress.

Shortly after the Packer’s move from Monster to Seek, News Ltd rebranded
102 Australian newspapers’ employment classified as ‘Career One’ and spent
a further $7 million on advertising the site on TV and trains, buses and
billboards around the country. News Interactive also contacted a number of
recruitment firms and asked them to provide the names of candidates they
had placed who would be happy to say that they had ‘found a job on Career
One’. The recruitment agencies, thinking they were getting some free PR in
the News press willingly obliged. It was somewhat of a surprise to later
read about candidates placed in good jobs ‘by Career One’ in the Daily
Telegraph and the Herald Sun with no mention of any recruitment agency.
You’ll be very hard pressed indeed to find a company in Australia whose HR
department will confirm they get their employees from Career One,
especially those employing people that appeared in the News Ltd papers
advertorials not so long ago. There was a complaint about these
advertorials at the time that appeared on Media Watch – but no-one spoke to
the candidates’ employers to get the full story. In selling this campaign
to agencies to ensure content (jobs) appeared on Career One, News Ltd
employees were quite candid in using the words ‘our monopoly’ as a selling
point to the people with the content, the recruitment firms.

And along comes Telstra’s acquisition of Trading Post. An article in
yesterday’s Shortlist Magazine confirms that the new owners intend to get
stuck into the ‘rivers of gold’ that employment advertising is rumoured to
generate. Telstra may be a bit optimistic. It is all very well having a
website with a search engine. But unless you can convince agencies to spend
their money advertising their jobs on your website, your employment
advertising revenue is a non-starter. A quick call to Trading Post to ask
to speak to the Internet Manager there will reveal that only a few weeks
ago the company was looking to hire one. As soon as possible. Whether there
is someone in the role today would be an interesting question.

After the Monster experience, and in a cost conscious market, no
recruitment firm is going to want to provide their jobs content to Telstra
to help them set up another channel where we have to spend even more money
to generate applications from candidates we already know about. It’s not as
if the quality end of the candidate market is looking for a job in the
Yellow Pages or on Trading Post anyway. If they invested in establishing
such a channel it would only force Seek, Career One and My Career to have
to spend even more money on advertising – money that recruiters would
have to provide of course. This is the lesson of Monster’s departure. Those

that have the jobs, ie the recruitment firms have an interest in
consolidating the advertising media market in Australia. Which is why
Mike Game at Fairfax’s My Career or Nick Jones at News Interactive
(Career One)
do not seem that concerned about Telstra’s move. A quick look at
Trading
Post’s NSW jobs confirms that they have 12 adverts compared to 57,000
on Seek. No-one is expecting this to change in the near future. Least
of all
James Packer.

Peter Fray

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