Currently perched on top of the Job board ladder, SEEK amassed many laurels since it started in 1997. Of late, in the backdrop of an economic downturn, SEEK’s shares dropped to their nadir. However, SEEK is determined to maintain its #1 spot in the midst of uncertain economic times and ever growing alternatives. I recently spoke to Carey Eaton (CIO), and we discussed a range of issues including the economy, the competitive landscape, aggregators, and SEEK’s approach to social media.
Q. SEEK’s share price has been in a freefall lately. Do you think it will get worse or better? What’s SEEK’s reading on the current recruitment marketplace in Australia. What are job ad numbers at SEEK telling you?
CE: Clearly the entire market has been falling and media stocks generally have been hard hit – there’s certain factors SEEK can control and factors beyond our control, so we’re really focussing on those that we have control over and make sure we position the company as best we can.
I’m no economist so I can’t tell you what’s going to happen – I’m not even sure the economists can tell you themselves! What’s for sure is that SEEK is best positioned of any player to weather and benefit from this downturn in the longer term. If you look at any number of measures and indexes out there, they’ll all tell you that the migration of employment advertising inventories from print to online is rapidly continuing through the downturn. So we’ll take a lot of market share from the newspapers. At the same time a lot of recruitment advertisers are going to question why they’re using multiple job boards and if they decide to scale back their advertising they’re not going to scale back from the number one marketplace in favour of the second or third. So I’d expect SEEK to grow its share of the online market as well. Looking at our Learning and International assets, I think a very good story is now evident in our latest half year results about the long term value we’re creating there. So SEEK is very well positioned for the long term.
Q. SEEK recently made a huge overhaul of the site, has the move paid any dividends? Are there any plans to introduce new technology? How is SEEK looking to stay ahead of the pack?
CE: SEEK is not really that focused on technology compared to servicing the needs of our customers. The project was very much about making it easier for jobseekers to do the things they want to do on the SEEK website like find and apply for a job, find out about vocational learning opportunities for career advancement, sign up for job mail and get good advice about job hunting. We’ve been very happy with the results and we’ll continue to make investments in improving the site and making it easier for jobseekers and advertisers to use our products and services.
We’ve made significant investments in technology over the last few years so the focus is more around maximising the value of those technologies rather than making new investments. That said I wouldn’t rule it out either – generally we look at the needs of the customers and the products that meet those needs. If technology is a way to meet those needs then we use that option but we never start with the technology and try find a use for it. I think we’ll continue to be the marketplace of choice for jobseekers and advertisers simply by meeting their needs better than anyone else.
Q. There are a few well entrenched niche players in Australia. Do you see any of the niche players eating into SEEK’s market? Or, do you think the market is big enough for niche and generalist to exist side by side and thrive ?
CE: I’m not sure the market is big enough. When you look at the absolute pricing levels of a job ad around the world, Australia is around the US$120 mark compared to around $400 in the U.S. and up to $1,200 in Scandinavian countries. The combination of these price levels, large populations, lack of clear number one players and other factors in these markets create good environments for sustainable profitable niche players. Australia has low price levels, large geography and low population which are factors which make niche players very small, difficult to get to scale and profitability, with limited further opportunities for growth. I think there is a value proposition for what I call global micro-niche players who use differentiated pricing by country to get a piece of the action but frankly it’s a small piece and doesn’t really threaten generalist marketplace models I think.
Q. In the US there is clear evidence that traffic is migrating from the big generalist job boards to aggregators. Do you see this happening in Australia? Also, will SEEK’s position on blocking aggregators ever change?
CE: Aggregators work on the idea that they can deliver traffic to job boards that the job board doesn’t already have. I’m not sure there’s anyone in Australia who would use an aggregator at the expense of using SEEK. They also work on the idea that an aggregator can deliver jobs to an audience that they can’t get somewhere else – ie all the jobs. I’m not sure there’s much unique online inventory out there that’s not already on SEEK. There are also very difficult challenges for aggregator business models when it comes to monetisation. I don’t think the Australian marketplace is big enough for aggregators to make any real money here using the ‘ad words’ or ‘ top of the list’ models we’ve seen in the U.S. where volumes are much larger. Indeed makes a small amount of money from 5 million jobs. I’m not sure how attractive the same proportion of money from 250,000 jobs really is.
Q. If any, it can be argued that SEEK’s weakness is the lack of a proper resume database. Is a resume database still a priority at SEEK?
CE: We’ve been quite public about the fact that our resume database product is 8 years old and needs to be updated. I’m not sure a lack of a cutting edge resume database product has held us back in the slightest. Nor have I seen any evidence that having a resume database product gives you any competitive advantage in the Australian marketplace or in fact any market in the world. I’m not aware of any job board anywhere who has had a great commercial success using the resume database model compared to the advertising model in the same market. We do intend to offer the market a much better product in this space suffice to say that our view is that it is more of a complementary service to our core product range rather than the game changer some have been touting out there.
Q. Social media is generating a lot of noise, with some suggesting that job boards will have less relevance in an increasingly networked world. What is SEEK’s long-term view on social networking. Many recruiters now swear by the likes of LinkedIn to find talent, do you see that as a threat?
CE: Not really. Referrals and advertising have always co-existed. Social networks cannibalise the need to advertise. I do think social media is here to stay and plays an important role in enriching user experience on job boards and in the recruitment space generally. I wrote a long article on the subject on geoffjennings.com the other day so I might point people to that as a bigger explanation rather than repeating it all here.