Better Resume Search Technology Can Help Monster Face the Competition

Feb.28.10 | About: Monster Worldwide, (MWW)

Monster (NYSE:MWW) is ramping up its efforts to improve resume search by incorporating intelligent search technology, Semantic 6Sense, into its next generation of products for both employers and job seekers. We believe such technology will make Monster more competitive against social networking sites like LinkedIn and Facebook that have increasingly been used as alternative channels of recruitment by employers.

Below we explain the importance of the Career Services business for Monster, how 6Sense technology will benefit recruiters and how it can slow decline in the prices Monster charges recruiters for access to resumes.

Career Services 80% of Monster’s Stock

Monster is an online job search portal that connects employers with job seekers. It has local presence in key markets like North America, Europe and Asia. Monster makes money from two sources:

  1. Employers – Employers range from large, medium to small enterprises. Employers pay Monster to list available job openings on Monster.com and to get the rights to view resumes of candidates and job seekers.
  2. Job Seekers – While Monster does not charge job seekers to search through job listings, it does charge them for premium services like resume writing, cover letter writing and priority resume listing.

We estimate that Career Services (International and North America) constitutes 80% of the $10.70 Trefis price estimate for Monster’s stock.

6sense Technology is Highly Efficient for Recruiters

6Sense is a new resume search technology designed by Trovix, a company that Monster acquired in 2008. The search technology is designed to be smarter than traditional keyword search by incorporating more weighting factors for searches.

Traditional keyword search for resumes is inefficient due to the high number of candidates that may have broadly relevant experiences. Such search results in a long list of candidates to choose from for recruiters, making it more time-consuming to find the right candidate.

6Sense, however, is more precise because it gives extra points to candidates with specific and rare expertise, work experience, and desirable skills. The search results highlight these “best” candidates at the top of the search results page. This improved search mechanism is designed to save time for recruiters.

6sense Can Slow Decline in Resume Access Pricing

Monster has been facing increased competition from social networking sites like Facebook and LinkedIn. As more employers use these alternatives for recruitment, Monster will find it difficult to raise prices. However, if 6Sense technology can save recruiters time, it can help Monster to slow declines in resume access prices.

Average Price per Resume Access in Monster’s North America business declined from a high of $500 per 1,000 resumes in 2008 to $450 per 1,000 resumes in 2009. We expect the declining trend to continue, but at a slower rate, with resume access prices reaching about $390 per 1,000 resumes by the end of Trefis forecast period.

You can modify our forecast above to see how Monster’s stock would be impacted if resume access prices were to grow as a result of the value delivered to recruiters by Monster’s 6Sense technology. You can also see and modify our forecast for Average Price per Resume Access in Monster’s International business.

For additional analysis and forecasts, here is our complete model for Monster’s stock.

Disclosure: No positions.