Seeking an Update
As you may already be aware the employment job board provider Seek (ASX: SEK) is held in both The Montgomery Fund and Montgomery [Private] Fund.
Recently our friend at Morgans, Ivor Ries, published a terrific note on the Seek Premium Talent Search (PTS) product. While this is one of a number of the new initiatives the company will launch over the next few years – to effectively move into the recruitment market, it is perhaps the most significant in terms of identifiable opportunity for revenue growth.
Essentially what Seek is doing is evolving its historic position as a job-ad posting board, to one that mines its database of jobseekers to provide recruiters with access to qualifying passive candidates.
The obvious opportunity to grow a competitive advantage through the network effect cannot be overstated here. As job seekers realize recruiters may actively seek them out to offer opportunities they may not have found on themselves, more individuals could be encouraged to lodge and update their CV’s on Seek’s site. Correspondingly as more CV’s are lodged and update, more recruiters will rely on the site to communicate with active and passive job seekers.
Ivor’s note talks about how recruiters currently run their own databases, retaining information about candidates they have placed in the past. This database is inevitably limited in scope, costly to maintain and dated.
Seek will offer both a limited free option as well as a paid premium option for accessing its database of CVs, candidate search algorithms and the ability to contact a candidate.
Our takeaway’s are that recruiters have a cost base of $9 billion per year and they spend an estimated A$550m a year on maintaining their own databases. Using Seek and LinkedIn would cost a fraction of this. Most recruiters that have trialed the free PTS anticipate subscribing and Seek’s product is around 90 per cent cheaper than the comparable product offered by LinkedIn.
While Seek’s product provides a lot more detail than LinkedIn on the candidate, due to its access to CVs, it is said that the algorithm doesn’t filter as effectively as LinkedIn.
As we have stated in the past, Seek’s success in evolving its product to value-add by replacing high cost internal functions undertaken by recruiters is essential for the company to mitigate the impact of increased commoditisation of the base job listing product. The feedback from the recruiters surveyed regarding the value of accessing Seek’s database of CVs is encouraging as is the level of intended subscription uptake.
Elsewhere, the AFR reports that “The biggest two-month jobs gain since 1988 has virtually ruled out any Reserve Bank interest rate cut when it next meets in February.”
Roger Montgomery is the founder and Chief Investment Officer of Montgomery Investment Management. To invest with Montgomery domestically and globally, find out more.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Pierre
:
Evidence suggests that the Seek Premium Talent Search (PTS) product will be unlikely to reach a level of significance for Seeks earnings. Why? It is dependent on candidate network effect. At present only Linkdin has such effect. Candidates don’t need two Linkdin’s. Its a dominant player wins type scenario, similar to Seek vs the also ran, or REA vs the also ran, or Google vs the also ran. You see, as a candidate Linknd in provides a natural networking ecosystem in which the sacrifice of personal information may be offset by the potential for professional advancement. Seek offers no such advantage in its network. Recruiter’s I am sure fine the concept appealing, but its not the recruiters who hold the keys on this.