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Monday, July 03, 2006

Not Just Cost Cuts at the TES

The Guardian reports this morning that the TES will be increasing its rates by 10% when it relaunches in the Autumn. This is the right and only strategy for the paper to take. It has private equity owners who will be demanding a 25% compound return on their investment. The TES already enjoys a dominant market share of the available recruitment advertising so there is little prospect of volume growth. Cost cuts have already been announced, so price increases are the inevitable only further strategy.

What TES customers will have to come to terms with is that feeding a private equity owner means that growth must continue every year. These price increases that are speculated in The Guardian will not be the last.

The risk for the management of the TES is that the DES gets fed up with lining the pockets of businesses with its recrutment dollar and decides to provide an alternative itself. Ask Derek Carter at EMAP how that affects your recruitment revenues.

Equally, with no alternative but to push up the price, isn't this the time for a new low cost on line competitor to eat the TES lunch?

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