August must be acquisition season this year. Just a few months after Simply Hired announced it was shuttering and sold off to the parent company of Indeed and weeks after Yahoo was sold to Verizon, 90s dotcom era giant Monster announced Tuesday morning that is it being acquired by Dutch staffing firm powerhouse Randstad for $429 million.
Some commentators have described the acquisition as one rival purchasing another, but this is misguided. Monster, at its core, was a job site, while Randstad has always branded itself a recruitment agency. While these businesses may somewhat compete for job seekers, it is faulty to describe them as rivals. Their goals are ultimately different – Monster wants to sell ad units while Randstad wants to fill positions for its employers.
An End to Recruitment Silos
Regardless, this acquisition signifies a few things in the recruitment world. The first is the breaking down of the silos between different aspects of the industry. In this case, the merger is bringing together a job site and a recruitment agency. It is unclear from what I have read what exactly will happen to the ad sales business, but many sources indicate that Monster will continue to operate similarly to their current structure. To some extent, the merger is being described as an opportunity for Randstad to grab a stronger foothold on the American market. If this is the primary purpose, then it is not hard to imagine that Monster will continue to operate in the way it always has.
However, this begs the question – with 2 different revenue models, how will Monster sell ad placements while Randstad sells fulfillment? At first glance, these seem contradictory. But actually, it seems possible that they might package these two offers as different products, allowing employer advertisers the choice of what to buy. This is perhaps one of the key issues in understanding how the merger is a step towards ending the recruitment silos.
Recruiters and hiring managers now want end-to-end solutions, with lots of customizable options for how to spend and how to source candidates. Other Monster competitors are already doing this, offering a pay-to-post option and a pay-per-applicant option.
The 90s Dotcom Bubble Bursting Decades Later
Another point the merger signifies is the end of a certain era, perhaps the first era, of the transition from print classifieds to a digital-first mindset. Monster was born out of a company that “placed ads in telephone directories.” The early internet job board mentality was all about taking the print and posting it online.
Slowly the industry changed from that 90s-era mentality to a more sophisticated digital-first mindset, first changing posting length from 7 to 14 or 30 days, measuring apply-clicks, apply online, and more recently with programmatic and matching recruitment technologies. Throw in the introduction of LinkedIn as a dramatic game changer to the job seeking and recruitment experiences and the old print-first mentality of just ‘copy and pasting’ from the print ad to a digital posting is fading fast.
Uncertain Economic Future
Another wrinkle to this acquisition is the timing. Unemployment has been down for several months in the USA and the economy seems to be heading in the right direction, given recent Jobs Reports from the Bureau of Labor Statistics. In that case, growing its new Monster business may be difficult for Randstad, especially given that the company reported a loss in the second quarter of 2016.
On the other hand, with natural uncertainty built into the economy during an election year, it may be a good time to buy now, expecting that unemployment may rise if the economy slows after America’s big decision in November. And that is before you consider the impact of other global economic influences such as Brexit, the Zika virus, and Chinese-Vietnamese territorial disputes.
As seen in the last decade in America, when companies stop hiring and unemployment rises, job postings stall, but only for a time. Once companies come out of a recession, hiring and job postings can be the first signifiers of economic growth and can become a very profitable business. It may be impossible to know what will happen in the future, but since there may be fewer job openings now with low unemployment rates, Randstad might have been able to get a good price at $429 million.
With today’s news, the job board and recruiting world wakes up to a new reality. While we wait to see how the merger will affect the two companies (soon to be one) business strategy, it is a sign of a changing tide in the recruitment world. Silos are being broken down and more and more of your favorite 90s-era tech companies are fading into extinction.