The company's philosophy of front-line employee empowerment continues to be instrumental in the success of TMPW's client-agency relations. This philosophy has also helped TMP Worldwide become the world's largest recruitment advertising agency, a top 10 Web publisher, and the world's 14th largest advertising agency overall.
TMP Worldwide Inc. is the world's largest Yellow Pages advertising agency as well as a leader in the field of recruitment advertising. Its offerings include monster.com, a web site that in 1999 was carrying more than 140,000 job advertisements and contained a database of more than a million resumés. Both Yellow Pages and recruitment clients place small advertisements that are distributed to thousands of media outlets. TMP Worldwide's astonishing growth in the 1990s was fueled by the acquisition of more than 100 companies, including 45 between the beginning of 1996 and the end of 1998.
Yellow Pages Specialist in the 1980s
The company was founded in 1967 by Andrew J. McKelvey as Telephone Marketing Programs, a specialist in placing advertisements in Yellow Pages telephone books. By 1980 the New York City-based company also had offices in Chicago, Los Angeles, Miami, Toronto, London, and Milan. Its gross annual billings had reached about $35 million, which, at 15 percent commission, came to more than $5 million in revenue. Telephone Marketing Systems was placing ads for clients such as Ryder Systems and Econo-Car in the nation's 5,700 directories. The company also held a three-year consulting contract with the French government.
Telephone Marketing Programs had $67.5 million in gross billings and $10 million in gross income in 1983, all stemming from Yellow Pages advertising. "We saw a tremendous opportunity to consolidate in the early 1980s," McKelvey later told Hugh Pope of the Wall Street Journal. "We learned how to buy agencies, how to merge them, and our market share grew steadily. The average agency doesn't want to go into Yellow Page advertising. They want to make award-winning commercials. But what we do is just as creative."
In 1985, when Telephone Marketing Programs ranked 67th among U.S. advertising agencies, its gross billings were $103.3 million and its revenues $15.3 million. TMP now had seven major offices and six sales units nationwide. In 1986 it opened TMP Japan Inc. in Tokyo as a joint venture. In France, it was in the initial phase of making advertisement placements by electronic delivery.
Telephone Marketing Programs was benefiting from a proliferation of new Yellow Pages directories as a result of the government-mandated breakup of the American Telephone & Telegraph Co. (AT&T). This was forcing advertisers to expand their budgets for directory advertising, and largely as a result, Yellow Pages revenues rose 19 percent to nearly $7 billion in 1985. To accommodate national advertisers unwilling to spend more money, however, TMP, in an effort to target the best buys for its clients, was beginning to survey customers in a variety of markets to determine which directories they used and how often they used them.
By the end of the 1980s Telephone Marketing Programs was the largest advertising agency in the Yellow Pages field. In 1989 its gross billings reached $270 million and its gross income climbed to $40.5 million, of which all but $3 million was in the United States. The company now had 17 offices. It gained 22 clients in that year, including giant firms such as Avis, Coca-Cola, CVS, Hitachi, and SmithKline-Beecham, while losing only seven. The company's billings and earnings reached $501 million and $59.7 million, respectively, in 1992. By 1994 it commanded a 40 percent share of the Yellow Pages market, including such major clients as General Motors and Ryder Trucks.
Recruitment Advertising Player: 1993--95
TMP Worldwide entered the field of recruitment advertising in 1993, when it purchased Chicago-based Bentley, Barnes & Lynn, an agency with about $50 million in annual capitalized billing, of which recruitment advertising accounted for roughly 75 percent. TMP sold the agency's consumer division to Ayer Inc. in 1994.
Paul Austermuehle, a Bentley, Barnes vice-president who was made president, said the following year that TMP's advanced Yellow Pages technology had helped his agency discover new revenue streams. TMP's heavy investments in computerization and technology, for example, enabled a longtime Bentley, Barnes client to meet a Clear Air Act mandate by reducing the number of commuters who were driving to and from work without passengers. "We're only just now discovering how to make the best use of all the things our TMP marriage provides," Austermuehle told Ylonda Gault of Crain's New York Business.
Like Yellow Pages advertisements, recruitment, or classified advertising was an unglamorous, labor-intensive part of the advertising business neglected by many name agencies because of relatively low profit margins. TMP Worldwide followed the Bentley, Barnes purchase with seven other acquisitions of agencies specializing in recruitment in the following year. These included Deutsch Shea & Evans, Merling Marx, and Chavin & Lambert of New York City and Rogers and Associates of Santa Clara, California. The additions raised TMP's recruitment billings to about $125 million a year and made it the third largest recruitment agency in the United States and the nation's 19th largest advertising agency overall. In 1994 the company lost $2.5 million on commissions and fees of $86.2 million.
Founded in 1981, Rogers & Associates was the second largest advertising agency in Silicon Valley, with California offices in Los Angeles, San Diego, and San Francisco as well as Santa Clara, plus offices in Chicago, Dallas, Miami, and Tampa. Curtis Rogers became president of TMP Worldwide's new recruitment division, while his partner, Steve Schmidt, was appointed president of the parent company's interactive/new media division, with responsibility for "Career Taxi," a web site enabling clients to create an online brochure for attractive prospective job applicants.
By early 1995 TMP Worldwide's roster of acquired recruitment agencies had reached 12. Of TMP's 70 offices, 25 were focusing on recruitment advertising. TMP's billings in 1995 included $200 million from classified recruitment advertisements in newspapers and other publications. Its acquisitions that year included two competitors in the Boston-area recruitment ad business: Adion and the Haughey Group. TMP's 2,500 recruitment advertising clients at the end of 1995 included Cigna, Nike, Dean Witter Reynolds, and Gateway 2000.
Adion founder Jeff Taylor became head of TMP Interactive, which was put in charge of the "Monster Board" recruitment web site Taylor created in 1994. He later told Rex Crum of Boston Business Journal, "I knew the business [of Monster Board] was bigger than New England, but almost all the ads and job seekers were from New England. By selling, I was able to utilize the infrastructure of TMP and grow the business." At the end of 1995 Monster Board was listing more than 7,000 positions from U.S. and Canadian employers, receiving resumes from 48 countries, and registering 15,000 "hits" a day.
TMP Worldwide was not ignoring its core Yellow Pages business, which among its 2,100 clients in 1995 included Ford Motor Co., MCI Communications, Hallmark Cards, Pizza Hut, and United Van Lines. Its gross Yellow Pages billings of $425 million in 1995 accounted for 30 percent of the total billings in this field by U.S. agencies--three times the share of its nearest competitor. An important 1995 acquisition was the purchase of Dallas-based GTE Directories Corp.'s Yellow Pages business and assets from U.S. West. By contrast, TMP held only a seven percent share of the recruitment advertising market. TMP had net income of $3.2 million on commissions and fees of $123.9 million in 1995, marking an end to at least four years of deficits.
Publicly Owned Powerhouse: 1996--99
TMP Worldwide spent more than $25 million to acquire 12 companies in 1996 and, at the end of the year, had acquired 36 companies since the beginning of 1994 with estimated total gross annual billings of about $350 million. The company made its initial public offering in December 1996, raising $80.5 million by offering a majority of its outstanding Class A shares of common stock at $14 a share. This sum almost exactly matched the company's long-term debt at the end of the year and enabled it to borrow more money for more acquisitions. McKelvey remained president and chairman of TMP and continued to hold 60 percent of the company, including all the Class B shares, which had 10 times the voting power of the Class A shares.
TMP Worldwide registered commissions and fees of $162.6 million in 1996. It lost $52.4 million after taking a charge of $52 million for issuing stock to existing shareholders of TMP's predecessor companies in exchange for their shares in these companies. By July 1997, when TMP sold 2.4 million more shares to the public, its stock was trading at $22.25 a share.
TMP Worldwide's overseas acquisitions included the 1996 purchase of the recruiting firm Neville Jeffrees Australia Pty Limited for $25 million. TMP had purchased eight companies in 1997--including Belgian and Dutch recruitment agencies--at a total expense of $18 million by July, when it landed Austin Knight, the largest such agency in Great Britain, with 1996 gross billings of £134.4 million (about $210 million), commissions and fees of £29.3 million (about $45 million), and 24 offices worldwide. Collateral lines of business brought its annual revenues to more than £70 million (about $110 million). Its clients included Sony Electronics, British Gas, Schweppes, Nestlé, and Yahoo! TMP now had a presence in 11 countries and 80 offices worldwide. Other 1997 acquisitions included the British companies MSL Group and Lonsdale Advertising, and a U.S. agency, Johnson Recruitment Advertising. TMP's 1997 revenues came to $329.5 million and its net income to $10.7 million.
By this time TMP Worldwide was placing the advertisements of all its print clients online at web sites that included not only Monster Board but Online Career Center, the Internet's earliest career site; MedSearch, the main online classified-ad service for the healthcare industry, and Be the Boss, a site promoting opportunities in franchising. Founded in 1992 by Bill and Susan Warren, Indianapolis-based Online Career Center continued to be run by Bill Warren.
By late 1998 Monster Board was listing 50,000 job postings and receiving more than two million visitors a month, making it the Internet's top job-search site. Prospective employees paid nothing, while the cost to employers began at $175 for 60 days. The service was available in five countries. In January 1999 Monster Board, Online Career Center, and MedSearch combined to form Monster.com. During the second quarter of 1998, Monster.com had an operating profit of $455,000 on revenues of $10.7 million. Monster.com's revenues for the first quarter of 1999 reached $20.1 million. In May 1999 it was serving 42,000 clients, listing 204,000 jobs, holding more than 1.3 million active resumes, and recording 7.6 million "hits" per month. It was planning to introduce, in July 1999, Monster Talent Market 1.0, a service to connect job searchers with contractors, consultants, freelancers, and small business owners.
TMP Worldwide had made 14 acquisitions in 1998 by mid-October of that year. Among these was Stocking Advertising and Public Relations, one of the oldest agencies in the Washington, D.C., area, with annual revenue of $11 million. TMP paid for the purchase with stock valued at $14.5 million. The company had gross billings of $1.4 billion in 1998, including about $794.2 million for recruitment advertising and about $485.2 million for Yellow Pages advertising. Commissions and fees came to $406.8 million, including $48.5 million in Internet revenue. Net income was $4.2 million.
TMP Worldwide's list of 17,000 clients in 1998 included more than 80 of the Fortune 100 companies and about 400 of the Fortune 500. The company maintained 71 offices in the United States and 46 abroad. Its long-term debt was $118 million at the end of the year. McKelvey held 37.2 percent of TMP's shares in March 1999. The company's growing Internet business was not lost on investors, who bid its stock to a peak of $93 a share in the spring of 1999.
TMP Worldwide's ravenous appetite for acquisitions showed no sign of slowing in 1999. In January it announced the acquisition of three European recruitment agencies: the German firms Bonde & Schmah and PMM Management Consultants and the French company Sources, SA. The latter purchase, combined with TMP's other operations in France, put the company into a leadership position in the recruitment advertising industry in that country, according to McKelvey. Also in January 1999, TMP Worldwide acquired Morgan & Banks Limited, its biggest acquisition to date, for more than 5.1 million shares of TMP stock. This Australian company was providing permanent recruitment of personnel ranging from mid-level executives through clerks and was also engaged in temporary contracting and human resources consulting.
TMP Worldwide entered the executive search field in March 1999, when it agreed to buy LAI Worldwide Inc., a firm based in New York City, for more than $80 million in stock. According to Joann S. Lublin of the Wall Street Journal, McKelvey told an interviewer, "We are [now] going to be a big player at the upper end ... starting with [college] internships running through the whole gamut ending with CEOs." LAI was merged with TASA Worldwide, TMP's executive search division, with Robert L. Pearson, LAI's chief executive officer, to run the operation jointly with Michael Squires, TASA's president.
During the first quarter of 1999, temporary contracts accounted for 30 percent of TMP Worldwide's sales; recruitment advertising for 24 percent; search and selection, 22 percent; Yellow Pages, 13 percent; and Monster.com, 11 percent. McKelvey indicated that the company name would probably be changed to TMP.com when the bulk of its revenue was coming from the Internet. He said that he believed recruitment advertisements, Yellow Pages ads, and executive searches eventually would converge on the Internet and that TMP wanted to acquire businesses promoting online advertisements to Yellow Pages advertisers.
Principal Subsidiaries: McKelvey Enterprises, Inc.; Worldwide Classified Inc.