DRAFT subject to revision

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TSL Education
Business Plan Support Summary Report
L.E.K. Consulting (International) Limited, 40 Grosvenor Place, London SW! "#L, $nited Kingdom
%& 44.'0."()*."'00 +& 44.'0."()*."440 ,,,.le-.com
19 April 2013
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NON-DISCLOSURE RULES AND LIABILITY DISCLAIMER
To: TSL Education Ltd (the Customer)
L.E.K. Draft Report dated 19 April 2013 (the "Draft Report")
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Context of report and focus of work
TSL has asked L.E.K. to provide support in relation to the development of a 5 year business plan
L.E.K.s support has been focused on the outlook for TES Hiring Solutions, covering five main areas:
- market volume of job ads
- TES share of jobs by segment
- split between online only and print
- price and yield trajectory
- opportunity to expand internationally
Other areas of the business have not been covered in this project
This work has been mainly undertaken over a 10 week period to 17 January 2013
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Key Themes
Teacher recruitment market is cyclical and will return to pre-recession levels
TES has a high and sustainable market share in online and print in the main segments it addresses and
a growing position in primary and support staff
Online penetration will continue to grow but is not a threat to the business
TES can continue to increase yield through continuous price increase and growth in upselling
There is substantial potential opportunity to roll out TES Hiring Solutions in International markets
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Context
Market volumes
Teaching is the largest single profession in the UK with 550k total teachers (c.490k FTEs) and an additional c.780k state
funded support staff (many part time)
The total number of teachers is broadly stable and has grown by an average of 0.2% over the last 25 years
- growth is principally driven by population trends
- it does not fluctuate significantly due to economic conditions or policy changes
Teacher turnover is impacted by the economic cycle and as a result ad volumes decline in a recession. However, c.50% of
average teacher turnover is driven by factors that are largely unrelated to the state of the economy
- retirements and maternity-driven turnover represent c.35% of average turnover and are principally impacted by age
demographics
- leavers, is partly impacted by the general job market but a large proportion of teachers leave the profession within
their first five years of teaching in the job due to other reasons
The fundamental characteristics of the teacher recruitment market are attractive.
It exhibits lower volatility and uncertainty than recruitment markets for other professions
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TES ad volumes are cyclical and declined during the recession but are now well
into recovery
Market volumes
Note: *Calculated based on YoY change W1-20 FY13 vs. W1-20 FY08 **Scotland volumes have been adjusted to remove lineage ads
Source: TES data; L.E.K. analysis
FY11
41.4k
FY10
52.5k
FY09
59.6k
FY08
73.1k
100
80
60
40
20
0
YTD FY13* FY12
52.0k
61.8k
Annual TES ad volumes by sector
Percentage change vs. FY08
Trough
(FY11)
YTD
(FY13)
Total
(43.3) (15.4)
(45.0) (10.2)
(91.8)
(56.2)
(53.7)
(4.9)
(58.8)
(50.5)
(25.5)
LA
Special
Scotland
Overseas
General
FE
Independent
(FY12)
(28.8)
(27.3)
(89.8)
(41.8)
(41.7)
17.4
(53.7)
(32.3)
(24.0)
(24.9)
Index 07/08 volumes =100
State Schools
(E+W)
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State school ad volume, representing c.66% of FY12 volume, is well correlated
with teacher turnover which is impacted by the economic cycle
Net turnover rate and number of TES jobs per 1,000 teachers* - state sector (E&W)
(1985/86-11/12)
Recession
2008 Q2 09 Q2
Note: *Regular qualified FTE teachers in state funded primary and secondary schools in England & Wales
Source: TES; NFER; DfE; L.E.K. analysis
Recession
1990 Q3 - 91 Q3
Market volumes
TES jobs
per 1,000
teachers
Net
turnover
School years
FY86
0
2
4
6
8
10
12
14
16
18
20
0
20
40
60
80
100
120
140
160
180
200
Index [TES jobs per 1,000 teachers in FY08=100]
Percent
(NFER net turnover)
FY12 FY10 FY08 FY06 FY04 FY02 FY00 FY98 FY96 FY94 FY92 FY90 FY88
One off impact of
change in
retirement policy
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Teacher turnover comprises five elements. Churn is the largest component and is
impacted by the economic cycle but attrition is more stable (typically 4-5%)
Estimated permanent FT net turnover state funded sector (E&W)*
Note: *Excludes churn from FT to PT positions; Retirement includes retirement due to ill health (10% in 08), reaching retirement age (43%) and early
retirement (46%); Leavers to other and not known jobs have been prorated across the categories; **extrapolated based on change in market ad volumes
net of change in teacher volumes 2008-11
Source: NFER; DfE; L.E.K. analysis
Calendar year
(2)
0
2
4
6
8
10
12
14
16
02 01 00 99 98 97 96
Percent of teachers
12 11 10 09 08 07 06 05 04 03 95 94 93 92 91 90 89 88 1987
Extrapolated**
Churn
(Movements
within state
funded sector)
Leavers
Retirement
4
Maternity
2
3
1
5
Change in
teacher numbers
Market Volumes
Attrition
Impact of
economic cycle
High
Medium
Low
Low
Low
Principal driver
The health of the public
sector driving
expectations of changes in
education funding
Partly impacted by the
state of the general job
market
Age demographics
Changes in pupil numbers
and pupil/teacher ratios
Component
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Teacher churn is influenced by the state of the public finances driving
expectations of future budget cuts and concerns around job security in a new job
Churn (movement within state school teaching) is the most volatile element of teacher turnover
- It ranges from a low of c.3% at the trough of economic cycles and a high of 8-9% at the top of cycles
The decline in churn in a recession is principally driven by concerns around job security caused by an anticipation of cuts
in education spending
- teachers are reluctant to change jobs due to fears of being made redundant in their new position if the new schools
budget comes under pressure
- schools are cautious in recruiting due to uncertainty around future budgets
As a result, the decline in churn significantly precedes any actual cuts in education expenditure
The increase of public sector net borrowing (PSNB) is a good proxy for the growing concerns around the state of the public
sector finances and the perceived likelihood of future education spending cuts
- there is a high correlation between churn and PSNB as a proportion of GDP
In this recession, the high level of public borrowing caused the government to undertake the Comprehensive Spending
Review (CSR) which resulted in significant uncertainty amongst teachers and schools and depressed churn levels despite
a relatively mild impact on the total school budget
- expectations of up to 25% cuts in the budget prior to the publication of the CSR in Oct 2010
- better than expected outcome for schools overall but continued uncertainty around individual schools budgets post
the publication of the CSR
- the impact was not played out until the beginning of FY11/12 when volumes started to recover, to a large extent due
to an increasing number of teachers changing jobs
Market volumes
1
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Teacher churn is projected to return close to pre-recession levels by 2017
Full time permanent teacher churn* within the state funded sector (E&W) actual vs. predicted
Calendar years
Note: *Churn = 5.9 + (42.5 x PSNB as a % of GDP) + (1.2 for years post 2000)
Source: ONS; OBR (Dec 12); NFER; L.E.K. analysis
+1 Standard Deviation
-1 Standard Deviation
Predicted
Actual
Market volumes
Explanatory variables:
PSNB as a % of GDP, lagged by 3 quarters
Dummy variable (from 2000) to capture the impact
of policy changes, most notably the academy
programme
R
2
= 84.8
0
2
4
6
8
10
17 16 15 14 13 12 11 10 09 08 07 06 05 04 03 02 01 00 99 98 97 96
Percent
95 94 93 92 91 90 89 88 87
1
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Proportion* of permanent full time teachers leaving state funded
teaching jobs actual vs. predicted
Note: *1 / proportion of leavers = 0.4 + (5.7 x unemployment rate) (7.2 x lagged annual growth in total employment)
Source: NFER; ONS; OBR; L.E.K. analysis
Calendar years
The number of leavers is partly influenced by the state of the general job market
and is expected to recover slowly to reach 95% of FY08 levels by FY17
R
2
= 74.2
Explanatory variables:
Unemployment (%)
Annual growth in total employment (lagged by 1 year) (%)
Market volumes
A large proportion (25-30%) of new
teachers leave the profession within
the first 5 years due to a variety of
reasons, unrelated to the economic
cycle
However, the % of leavers in any one
year is partly influenced by the state
of the general job market
There are fewer leavers in a
recession due to fewer external jobs
and reluctance to leave relatively
secure teaching positions
The number of leavers increases as
the economy recovers due to:
- job opportunities in the private
sector (when public sector may
still be subject to cuts)
- lower private sector job
uncertainty
- greater private sector pay
increases
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
99 98 97 96 95 94 93 92 91 90 89 88 87
Percent
17 16 15 14 13 12 11 10 09 08 07 06 05 04 03 02 01 00
+1 Standard
Deviation
-1 Standard
Deviation
Predicted
Actual
2
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Projected % of retiring full time teachers (state funded sector, E&W)
(1987-2017)
Note* 1997 Pension reform required schools to pay a share of the cost for teachers retiring early and required teachers to be regarded as permanently
unfit to teach to qualify for ill-health retirements. This caused many teachers to retire prior to the reform being implemented and overall retirement rates
to settle at a lower level post 1997
Source: NFER; DCSF; L.E.K. analysis
0
1
2
3
4
5
Percent
15 14 13 12 11 10 09 08 07 06 05 04 03 02 01 00 99 98 97 96 95 94 93 92 91 90 89 88 17 16
Calendar years
The number of retirements is expected to decline slowly due to the changing age
demographics amongst teachers
Forecast
Caused by 1997
change in early and
ill-health retirement
policies*
PPT change
(2012-17)
(0.8)
Market volumes
1987
Retirements are expected to
decrease as the proportion of
teachers at or near retirement age
(>55) is declining
Recent changes to teacher pensions
are not expected to impact the
propensity to retire
- increases in contribution rates
are modest and unlikely to
increase retirements
- changes to accrual rates and
retirement age only impacts
teachers with more than 10
years to retirements as of April
2012
3
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The number of teachers is broadly stable and projected growth is in line with
history
Note: * January of following year for 2009 and all years prior to 2009
Source: DfE; L.E.K. analysis
0
100
200
300
400
500
mid
17 16 15 14 13 12 11 10 09 08 07 06 05 04 03 02 01 00 99 98 97 96 95 94 93 92 91
high
low
90 89 88 1987
CAGR%
(1987-11)(11-17)
0.3 0.3
1.1
Forecast
Projected number of FTE teachers in state funded sector
Thousands (November of year*)
Market volumes
(0.4)
Pupil/Teacher
ratio
YoY growth %
(1.7) (1.1) (0.5) (0.9) 0.6 (1.1) - 0.3 0.7 1.0 0.4 0.2 0.4 (0.6) 0.1 1.3 0.4 0.1 0.9 1.0 0.9 1.0 2.3 1.5 1.2 0.8 (0.4) - 1.1 0.5
18 18 18 19 19 19 20 18 18 19 18 18 18 18 18 18 18 18 18 18 19 18 19 20 20 20 20 20 19 19 18
1.1
5
High case:
- If pupils go up, then teachers
increase at the same rate
- If pupils go down, teachers
remain flat
Low case:
- If pupils go up, then teachers
remain flat
- If pupils go down, teachers
decrease at the same rate
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Resulting total teacher net turnover is forecast to recover to be broadly in line with
FY08 levels by FY17
Note: *Gross turnover + net changes in teachers. Net teachers has been adjusted to school years based on the distribution of ads across the year
Source: OBR (Dec 12); NFER; OEF; ONS; DfE; L.E.K. analysis
Net full time permanent teacher turnover*, state-funded schools (mid case)
(2007/08-16/17)
School years
n/a
YOY Change (%)
Cumulative
decline (%)
0 (32) (5) 23 8 (1) 3
n/a 0 (32) (35) (20) (14) (15) (13)
7
(1)
6
(8)
Market volumes
High
Low
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
(2)
0
2
4
6
8
10
12
14
Percent of teachers
Net turnover:
mid case
Net change
in teachers
Retirement
Leavers
Maternity
Churn
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There are a number of expected policy changes which may modestly impact
teacher turnover
More rigorous criteria for admission to teacher training but not a change in number of
places
Additional measures to combat bad behaviour could modestly reduce churn (teachers
say bad behaviour is a key driver of resignations), but impact is likely to be marginal
Teacher training
Pupil behaviour
Source: The importance of Teaching: Schools white paper 2010; Guardian; Telegraph; DfE
Market volumes
Potential impact
on turnover
Dictates schools to be measured on GCSE performance in 5 core subjects
Could lead to mix changes in required specialisms increasing turnover in near-mid term
Potential further reform of GCSEs / A Levels in longer term
English
baccalaureate and
exam reform
School inspections
Increasingly demanding school inspections (shorter notice given, and satisfactory to be
regarded as requires improvement). Pressure on teachers could increase turnover
Performance based increases: no further automatic pay increases based on tenure.
Could increase turnover as teachers move in response to poor pay rises Teacher pay
Description Policy changes
School Direct
Allows schools to offer training places direct to graduates. Targeted 9k places of which 59%
replaces GTP
May have small impact on school recruiting in the long term as trainees are expected to get
permanent position. However, the number of incremental places are relatively modest and
uptake to date has been low
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Ad volumes are projected to see similar rates of growth across the state funded
segments. Overseas is seeing significant growth whilst the volume of LA funded
jobs is likely to remain depressed
Market volumes
Source: TES data; L.E.K. analysis
110
100
90
80
70
60
50
40
30
20
10
0
FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08
Market volumes by sector
CAGR%
FY12-17
Total 5.3
4.9
14.8
1.0
14.4
4.5
(0.2)
4.4
4.4
LA
Special
Scotland
Overseas
General
FE
Independent
Cumulative
% change
FY08-17
2.2
3.3
(55.5)
150.8
1.7
(12.5)
Index FY08 volumes =100
State Schools
(E+W)
Remains low due to budget pressure
Historical strong momentum projected to
continue albeit at a slowing rate of growth
Slightly below state schools due to lower
teacher population growth (Scotland)and
short term funding uncertainty (special)
Recovers as real earnings increase and
job market improves
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The combined market volumes across all sectors are projected to have fully
recovered to pre-recession levels by FY17
Source: OBR; NFER; OEF; ONS; DfE; L.E.K. analysis
School years
+1 Standard Deviation (16%)
-1 Standard Deviation (84%)
Central forecast (50%)
Market volumes
n/a
YOY Change (%)
Cumulative
change (%)
(6) (25) (7) 20 9 0 4
n/a (6) (29) (34) (21) (14) (13) (10)
7
2
6
(4)
0
20
40
60
80
100
120
140
160
FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08
Projected market volumes index*
Index FY08 volumes =100
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Key Themes
Teacher recruitment market is cyclical and will return to pre-recession levels
TES has a high and sustainable market share in online and print in the main segments it addresses and
a growing position in primary and support staff
Online penetration will continue to grow but is not a threat to the business
TES can continue to increase yield through continuous price increase and growth in upselling
There is substantial potential opportunity to roll out TES Hiring Solutions in International markets
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TES has a very strong position across all segments in which it participates
0 20 40 60 80 100
79.8
Secondary teachers* 87.5
Secondary leadership 93.8
87.4 Independent
Scotland 75.7
FE 58.6
Primary Teachers 45.7
Primary leadership*
TES market share of jobs by segment
(FY2012)
Market share
Note: * Permanent positions including heads of department; **Share is calculated using Guardian adjustment
Source: TSL management data (EDS)
Unique (jobs only advertised in TES)
Shared (in TES and one or more other sites / publications)
3.4
48.9
6.4
10.4
5.7
1.6
% of TES
2012 ads
16.1
Summary of TES position
Traditional core segments
TES has clear leadership with 80-90% of jobs
and very high reach of teachers
Historically not a focus but increasing position
on the back of the new proposition
Lower share is due to lack of historical focus.
However, this represents a future opportunity
TES successfully defended its position vs. the
Scottish public sector job board (myjobscotland)
Percent of jobs**
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Despite different competitive dynamics in print vs. online TES has successfully
established a leadership position in both areas
Market Share
TES has a very strong share in print, underpinned by its long history as the leading
publication for Teachers
Few credible print competitors, mainly regional press.
Online is naturally more competitive than print, with a large number of smaller competitors,
due to lower barriers to entry
TES had no online presence until 2006
Despite this, TES has been uniquely successful in establishing a clear leadership position
online as well as in print.
A key drivers of this success was that online ads were made mandatory for all print
customers ensuring instant liquidity and a very high share of all teacher jobs advertised
online
Online-only i.e. ability for schools to buy an online ad without the print component was
introduced in FY08 to compete in the emerging online only (OLO) market (defined as jobs
that are uniquely advertised on online sites and not in any print publications)
Since FY08, TES has rapidly grown its position in the online-only market and its share of
online-only jobs and is now trending towards its share of print
As a result, unlike most publishers in other sectors, the impact on TES overall market share
from migration to online-only advertising is limited
Print
Online
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TES has successfully maintained its strong position in its core segments through
very strong share performance in online-only
Note:*Including Heads of department; **Includes Headteachers, Deputy Headteachers, and Assistant Headteachers; ***Does not include temporaries;
^Share is calculated using Guardian adjustments (5% for secondary teachers and leaders, 25% for primary leaders, and 0% for independent)
Source: TSL management data (EDS)
96
71
89
96
74
87
97
78
88
0
20
40
60
80
100
Secondary permanent teachers
TES share of jobs*** (%)
Total
90
Online only
86
Print
96
99
74
95
99
83
95
99
85
94
0
20
40
60
80
100
Secondary leadership**
TES share of jobs*** (%)
Total
94
Online only
88
Print
99
97
44
91 93
55
85
94
69
87
0
20
40
60
80
100
Independent (all)
TES share of jobs*** (%)
Total
89
Online only
78
Print
94
99
55
87
97
67
84
97
67
80
0
20
40
60
80
100
Total
74
Online only
65
Print
97
Primary leadership**
TES share of jobs (%)
FY12
FY11
FY10
FY13
Market share
1 2
3 4
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TESs implied share of incremental^ online-only ads is very high exceeding 100% in
some segments. As a result, the impact of migration to online-only is marginal
Market share
Note: :*Including Heads of department; **Includes Headteachers, Deputy Headteachers, and Assistant Headteachers; ***Does not include temporaries;
^Ads migrating from print to online only in any given year; ^^Share is calculated using Guardian adjustments (5% for secondary teachers and
leaders, 25% for primary leaders, and 0% for independent) and incremental online only share is the share of new online ads captured by TES
Source: TSL management data (EDS)
TES implied share^^ of incremental online only jobs vs. print and OLO
1 2
3 4
0
50
100
150
11
83
FY10
87
Secondary permanent teachers*
TES share of jobs***
13
118
12
95
0
50
100
150
13
101
12
89
11
103
86
FY10
Secondary leadership**
TES share of jobs
0
50
100
150
Independent (all)***
TES share of jobs***
13 12
104
125
11
66
FY10
66
0
50
100
150
63
Primary leadership**
TES share of jobs
13
54
12
69
11
84
FY10
OLO share
Incremental
OLO share
Print share
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The Primary teacher segment has traditionally not been a focus for TES but
represents a large potential incremental opportunity
Market Share
TES has a very high reach of primary teachers, in
print and online
- supported by primary teachers high use of
TES Resources
but historically a relatively low share of
Primary teacher online only jobs, principally due to
lack of focus
However, the primary teacher segment represents
a large incremental opportunity for TES:
- c. 2.6k schools use TES for some but not
necessarily all permanent teacher ads
- c.3.4k primary schools use commercial
media for teacher ads but have not
historically used TES
- total potential incremental addressable
market of 4.2k permanent jobs
87
76
96
46
34
82
0
20
40
60
80
100
OLO Print Total
TES share of primary teacher jobs
vs. core segments (FY12)
TES share of jobs**
Core segments
Primary teachers
Note: *Share is calculated using Guardian adjustments(25% of Guardian unique teacher ads removed); **Excludes temporary
Source:TES
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To address this opportunity, TES launched Primary+ in January 2012, specifically
designed for the Primary School segment
Market share
Note: *Share is calculated using Guardian adjustments(25% of Guardian unique teacher ads removed)
Source: TSL management data (EDS)
Uptake since launch has been encouraging:
- c.1,000 schools signed up to primary+ in
CY2012
- of these c.30% are new to TES
Online only share increased from 23% in FY11 to
34% in FY12 of which 8ppt are primary+ ads. Further
gain in FY13 with YTD FY13 share of 37%
Guided by progress to date, TES share of Primary
Teacher ads is projected to increase from 46% in
FY12 to 72% in FY17
- TES OLO share increases from 34% in FY12 to
71% in FY17
- Primary+ ads as a proportion of total TES ads
increase from c.5% in FY13 to c.16% by FY17
Launched 6 January 2012
499 annual package:
- unlimited ads for teachers and teaching
assistants
Competitively priced vs. main competitors
- 499 vs. e-teach at 1,000 and Guardian
schoolsjobs at 350
offering higher reach of primary teachers
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The competitive landscape consists of 3 main types of participants
Market Share
History in print
Typically cover a broad set of sectors
but may have education supplement
Online offer delivered via own site or
partnerships
Traditional
Publishers
Online
Specialists
Public
Regional press
Online presence only
Typically small and positioned at the
lower end of the market
Mainly generalists except eteach
which focuses on the education
sector
Main competitor Examples of other participants Type Description
LA funded job boards
Typically free to use but some LAs
have recently introduced fees
Mainly used by primary schools
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TESs strong position vs. its competitors is underpinned by its significantly higher
reach driving very high ad effectiveness
Market share
Note: * TES number of unique visitors based on Hitwise. The % of visits to jobsite based on management internal data
Source: TSL management data (EDS), Hitwise
91
84
88
0
20
40
60
80
100
% of jobs advertised in TES that are filled
Primary Secondary Independent
0.5
4.4
1.1
3.3
Monthly unique visits (Millions, Oct 2012)
6
5
4
3
2
1
0.03
0
TES
eteach
schoolsjobs
Job
site
Rest
of site
Total
Higher Reach
High Ad effectiveness
20
30
10
FY12 number of Teacher and Leader jobs
Primary, Secondary and Independent
Thousands of jobs
40
0
schoolsjobs
4
eteach
7
TES
33
Larger inventory of Jobs
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TES has successfully maintained its strong position despite aggressive
competitor attempts to gain share (1 of 3)
Market share
Note: *Head teachers, Deputy/Assistant Heads in England and Wales; **Permanent Teachers in England and Wales; ***excludes jobs in 2 or more TES competitors
Source: TSL management data (EDS); L.E.K. interviews
Guardian has a strong position in public sector jobs in general but has always been weak in education. To address
this sector, Guardian launched schoolsjobs in March 2011 with an aggressive offer directly aimed at taking share
from TES
Its initial strategy focused on building the inventory of jobs with the hope of eventually driving teacher visits and ad
effectiveness
- at launch all ads were free of charge, initially up to Jan 2012 but the free offer was subsequently extended
- mainly focused on LAs, aiming to set up automatic links from job boards to capture large number of jobs
Limited impact to date:
- limited share of jobs in TES core segments
- majority of jobs on the schoolsjobs site are from LAs and Guardian has had limited traction with schools
- has failed to build up demand side (teacher visitors)
- poor perceived ad effectiveness relative to TES
Minimal impact on TES position in core segments.
Schoolsjobs has not managed to establish a sustainable competitive position
Example 1: Traditional Competitor (Guardian schoolsjobs)
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TES has successfully maintained its strong position despite aggressive
competitor attempts to gain share (2 of 3)
Market share
Note: *Head teachers, Deputy/Assistant Heads in England and Wales; **Permanent Teachers in England and Wales; ***excludes jobs in 2 or more TES competitors
Source: TSL management data (EDS); L.E.K. interviews
E-teach was founded in 2000 but remains small with total revenue of c.4m
Its model focused on LAs, rather than schools:
- It offers highly discounted all-you-can eat annual packages
- in some cases it manages the LA job board under outsourcing deals
As a result,
- the majority of its jobs are primary school jobs
- its share in TES core sectors is low due to a lack of access to schools and perceived poor effectiveness
relative to TES
- its revenue per job is very low
Eteachs reach amongst teachers remains significantly below TES
It has lost some share in FY12, partly due to Guardian schoolsjobs, targeting the same customers with a free offer
Example 2: Online Specialists (eTeach)
Despite its early mover advantage, eteach remains a small player in the market
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TES has successfully maintained its strong position despite aggressive
competitor attempts to gain share (3 of 3)
Market share
LA job boards capture a small share of jobs, mainly from
primary schools
The number of jobs on LA job boards has grown below the
number in commercial media, indicating a loss in share
Significant LA budget cuts are causing many LAs to scale
down their recruitment support to schools
We no longer have a budget to support a web site of our own
Richmond upon Thames LA (Nov 2012)
or to start charging schools for using it
The budget cuts must have affected all LAs across the country.
Since April 2012 we do not receive any funds form the government
and have had to start fending for ourselves. This has meant
charging schools for the service we provide.
Kent LA (Nov 2012)
Note: *Includes data for Oxford, Dudley, West Sussex, Bedford, and Suffolk;** Adjusted for free use of Guardian service
Source: LEAs, LEK analysis
In 2009, the government launched an online recruitment
tool, SRS, aimed at cutting the cost of recruitment for
schools and reducing TESs market share
SRS was essentially a free jobs site with an application
tracking service front end. Target market: the LAs
In response, TSL developed its own free service
(HireWire) which launched in Feb 2009. Target Market:
the schools
SRS failed to gain scale and was closed down in May
2012 having cost the government a total of close to 2m
Since 2009, TES has build a strong relationship with
government, and is now seen as part of the solution
Small and weakening position of LA job boards
Failure of government
SchoolsRecruitmentService (SRS)
Example 1: Public Sector competitors
Public sector job boards are not a threat to TES position
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Going forward, TESs share is projected to increase slowly assuming core segment
performance in line with the recent past and growing share of primary teacher jobs
Market share
Note: *Excludes Overseas, LEA and General
Source: TES data; L.E.K. analysis
The forecast assumes TES
continues recent share performance
in its core segments:
- maintains existing high share
in print
- gradual increase in online only
share as TES maintain its high
share of incremental online
only penetration
Primary share grows due to
continuing penetration of the
Primary+ package
No share gains of commercial sector
from public sector are assumed
(despite LA budgetary pressures)
0
20
40
60
80
100
TES all sector* market share forecast
Percent
16/17 15/16 14/15 13/14 12/13 11/12 10/11 09/10 08/09 2007/08
(3.0) (0.5) 1.5 1.7 0.7 0.5 (1.1)
Central case
(1.5) 1.7
Mid
Low
High
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0
20
40
60
80
100
120
140
160
Projected TES volume index (all sectors)
Index [FY08 volumes = 100]
FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY2008
Note: *Probability that the outcome will be the predicted value or better
Source: TES data; L.E.K. analysis
Probability*
Based on market volume and share projections, TES total volumes are forecast to
recover to FY08 peak volumes by FY17
16%
(35) (23) (12) (8) 4
(7) (32) (39) (28) (19) (17) (11)
(43) (32) (26) (26) (25)
Cumulative
change from
2007/08 (%)
(27)
(36)
(4)
(10)
YoY change(%)
(7) (26) (11) 20 12 3 7
High (16%)
Central (50%)
Low (84%)
Central (50%)
14
(5)
(23)
7
24
2
(17)
8
Market share
50%
84%
TES actual changes in volume
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In addition, TES is growing its position in support staff; projected to generate an
incremental 19k ads and c.1.5m of revenue by FY17
Market share
Note: * Assuming there is no overlap in upsell between bronze/silver/gold and modules
Source: TES, L.E.K. analysis
Support staff advertising represents a substantial
unaddressed market
- 800k support staff and 70k vacancies p.a.
- a significant proportion advertised in
commercial media (in particular in
secondary schools)
TES is building its position in this market by:
- offering free basic ads to build up inventory
- establishing partnerships with organisations
with existing inventory or traffic e.g.
jobcentre
- monetising via upselling (of bronze/ silver/
gold or premium modules)
YTD FY13 (w1-12) progress is promising
- placed 2.8k support ads
- 9% of ads included a premium upgrade
(module, silver or gold)
Millions of pounds
1.2
1.0
0.8
0.6
0.4
0.2
0.0
High
Low
Teaching
assistant
Office-based
admin
Non-office
based admin
FY17 FY16 FY15 FY14
1.8
1.4
1.6
Forecast support ads revenue mid case* (FY14-17F)
13 15 17 19
Number of TES ads (000s) **
37 49 62 76
Average revenue / ad
(/ad)
236 225 225 229
Average revenue /upsold ad **
Total (mid)
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Key Themes
Teacher recruitment market is cyclical and will return to pre-recession levels
TES has a high and sustainable market share in online and print in the main segments it addresses and
a growing position in primary and support staff
Online penetration will continue to grow but is not a threat to the business
TES can continue to increase yield through continuous price increase and growth in upselling
There is substantial potential opportunity to roll out TES Hiring Solutions in International markets
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Online only penetration is growing across all segments and reached c.50% for
FY12
Online only penetration varies significantly
by segment
It is higher in primary than secondary:
- secondary schools are traditionally
high users of print due to the need
for national reach (not required by
primary). Many are moving to online-
only but a number of schools remain
loyal to print
- for primary schools, online-only is
better suited to their needs
For leadership positions schools are less
likely to use online only
We advertise online with TES and we no
longer advertise in print unless it is a
very senior position
Head teacher, Secondary School,
Oct 2010
Online penetration
0
20
40
60
80
100
Online only jobs as proportion of total jobs in commercial media (MAA)*
(FY2006-Jan 13)
Percent of jobs
Independent
Secondary
teaching
Total**
Primary
teaching
Primary
leadership
Secondary
leadership
Aug
12
Aug
11
Aug
10
Dec
09
Jan
12
Note: *Adjusted for assumed proportion of free ads in total Guardian ads number; **Excludes FE
Source: Management information; L.E.K. analysis
PPT change
(FY11-12)
6.2
14.2
10.5
9.7
5.6
10.0
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However, the speed or extent of migration to online only is not a threat to the
business
Online penetration
Note: *Portion of market ads that move online only in any given year; ** Includes circulation and operation and marketing commercial; ^ Combined
TES and THE costs
Limited impact
on share
Impact on yield
historically more
than offset by
pricing and
upsell
Scope to reduce
cost associated
with print
TES already has a high and increasing share of online only
Its incremental share of online only is at or approaching TES share of print in most of its
core segments
Therefore the impact on TES share from higher than expected growth in online only is
likely to be limited
The historical dilutive effect on yield of migration from print to online only has been more
than offset by increases in online pricing and upsell
Significant headroom in potential to increase online prices further (estimated at 315-
425). Management plan only assumes an increase of 200
Any negative impact on yield from faster than expected migration to online only can
therefore be mitigated through further price increases
In addition, there is potential to offset loss in print revenue via upsell of premium online
products to migrating customers
Managements internal analysis suggests that if online only penetration exceeds 94%, it is
contribution positive to close print. Eliminated costs^ would total c.12m:
- Print and distribution: 7.7m
- Editorial: 3.2m
- Other costs**: 2.0m
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By FY17, market online only penetration is projected to reach 85%-95% in all key
segments, resulting in an average of 88%
Online only penetration: primary leadership
Note: Curve fitted using a Fisher-Pry form historical actual data weighted by the number of ads in each period; *Includes independent: 78%
(midcase) and FE: 88% (midcase)
Source: Management information; L.E.K. analysis
Percent
100
80
60
40
20
Online only penetration: secondary teachers Online only penetration: primary teachers
Online penetration
0
20
40
60
80
100
Percent
0
20
40
60
80
100
Percent
Low
Mid
High
Jan
08
Jan
09
Jan
10
Jan
11
Jan
12
Jan
13
Jan
14
Jan
15
Jan
16
Jan
17
FY17 Mid case=93%
FY17 Mid case=88% FY17 Mid case=93%
Fitted curve
and forecast
Actual market data
0
0
Online only penetration: secondary leadership
Percent
100
80
60
40
20
Jan
08
Jan
09
Jan
10
Jan
11
Jan
12
Jan
13
Jan
14
Jan
15
Jan
16
Jan
17
FY17 Mid case=83%
Jan
08
Jan
09
Jan
10
Jan
11
Jan
12
Jan
13
Jan
14
Jan
15
Jan
16
Jan
17
Jan
08
Jan
09
Jan
10
Jan
11
Jan
12
Jan
13
Jan
14
Jan
15
Jan
16
Jan
17
Average online only market penetration* FY17=88%
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TES proportion of online-only jobs is slightly below the market due to its strong
position in print
Online only penetration (all sectors)
Source: EDS; L.E.K. analysis; management data
0
20
40
60
80
100
Percent
FY17 FY16 FY15 FY14 FY12 FY11 FY10 FY09 FY08 FY07 FY06 FY05 FY04 FY03 FY2002 FY13
Online penetration
TES launched OLO in FY08
OLO market driven
by OLO competitors
(e.g., eteach)
88%
87%
Market
TES
Actual market penetration
Estimated market penetration
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Experience from other markets and TES success in upselling print to OLO
customers supports a view of <100% online penetration within the forecast period
0
20
40
60
80
100
12* 11 10 09 08 09 06 05 04 03 02 01 00 1999
International online penetration of recruitment
Percent
Note: *2012 year to September; **Estimated assuming constant TES FY09 ratio of online/print yield
Source: Seek Full Year Results Presentation 2010; ANZ; Morgan Stanley Research
Online penetration
100%
6.7
4.2
4.0
0
2
4
6
8
10
+2.5ppt
FY13 FY12 FY12
TES print upsell rates for direct OLO bookings*
Percentage of OLO ads booked direct
Weeks 1-8
4% of customers that
contact TES initially
seeking OLO are
subsequently upsold print
Australian internet
share of job
advertising volumes
US online recruitment
advertising value
US online recruitment
advertising volume**
It is true that there will always be a
few employers who do not switch to
online, but no more than 15% in
volume terms
David Hurst, CEO, Online
Recruitment Magazine
Calendar year
International benchmarks suggest that medium-term online
penetration is likely to be high but is highly unlikely to
reach 100%
TES success in upselling print to online-only customers
suggests potential for some continuing demand for print
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If online only penetration reaches 100% rather than the projected 87%, the profit
impact would be small
Online penetration
Impact on TSL profit if 2017 OLO penetration is 100%
(vs. projected 87%)
Millions of pounds
20
15
10
5
0
(5)
(10)
(15)
(20)
-25
Print and distribution
Editorial
TES print
High Low
25
Comments
Total of 3.0m revenue loss from THE
(print, print circulation, display print, and
WUR print revenue)
THE
TES circulation
(7.4)m
(1.3)m
TES display print
Eliminated
costs
Potential
price
opportunities
Marketing, circulation and operations
Revenue
loss
Additional online
price increase*
Note: *Currently calculated as 100 increase in bronze price, although exact mechanism to reclaim lost print yield uncertain; **
managements plan assumes increase in Bronze price of 200 by FY17
Source: TES management data
Assumes TES uses additional headroom in
online pricing above increases assumed in
managements** plan
Other unidentified savings 2m additional savings (to be identified)
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Key Themes
Teacher recruitment market is cyclical and will return to pre-recession levels
TES has a high and sustainable market share in online and print in the main segments it addresses and
a growing position in primary and support staff
Online penetration will continue to grow but is not a threat to the business
TES can continue to increase yield through continuous price increase and growth in upselling
There is substantial potential opportunity to roll out TES Hiring Solutions in International markets
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TES has successfully increased yield at 12% p.a. since 2007, despite an increasing
proportion of online-only ads
Yield
Source: Management information; L.E.K. research and analysis
1,129
1,079
1,014
920
786
639
0
400
800
1,200
1,600
Average TES revenue per ad total
(FY2007-FY12)
Pounds
FY12 FY11 FY10 FY09 FY08 FY2007
CAGR%
(FY07-12)
12.1
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This has been achieved through continuous increases in prices and proactive
upselling of premium products
Yield
Note: * Week 1-12 FY13; **FY08
Source: Management information; L.E.K. research and analysis
Annual increase in
online prices
Upsell to silver and
gold, priced 250 and
500 above bronze
Launch of new web
premium products in
FY12
Increasing print prices
Upsell from mono to
colour ads, at 10
higher price per CCM
Online
Print
FY07 FY09 FY12
Bronze entry online
price
200 400 600
% silver and
gold
% uptake of new
products
2% 17% 39%
12%*
22** 25 28
8% 21% 48%
per mono CCM
% of ads that are colour
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As a result, the dilutive effect from migration to online-only has been more than offset
by growth in online prices alone with further yield growth achieved via successful
upselling
Yield: Potential to increase prices
Note: *OLO and online component of print and online ads; ** excludes online component of print and online ads
Source: Management Accounts, L.E.K. Analysis :
1,129 77
19
88
786
0
200
400
600
800
1,000
1,200
Primary+
12
Colour
upsell
Price
(93)
Web
classified
FY12 SCC/ad Gold/Silver
upsell
Sources of increase in revenue per advert
(FY08 - FY12)
Pounds per advert
OLO%
294
Price
4
(237)
FY2008
Print**
Online*
From 6% in
FY08 to 45%
in FY12
Average increase
of 1.5/2 p.a.
(mono/colour)
From14% in FY08 to
48% in FY12
Average
increase of 90
p.a. since FY08
From under 9%
in FY08 to 40%
in FY12
Web premium
products
launched FY12
CAGR %
9.5
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0
200
400
600
800
1,000
1,200
Estimated monthly unique education visits* (000s)
1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 0
Guardian
schooljobs
secondary
eteach secondary
Guardian schooljobs primary
eteach primary
TES primary
Guardian schooljobs
eteach
TES bronze
Note: * For competitors which are not education specialists, estimated education visits have been estimated by multiplying total visit numbers by the percentage of
adverts in education; **Package price scaled assuming 1.6 vacancies per year for primary and 6.4 vacancies per year for secondary based on average number
of teachers per school and gross teacher turnover
Source: Company websites; Hitwise; L.E.K. research
Yield: Potential to increase prices
TES online pricing vs. competitors is more than justified by higher reach and
perceived ad effectiveness
We use TES almost exclusively for our advertising
needs. Admittedly, it is expensive but we get the
best response rates from there so we will not be
changing any time soon
Primary School, London (Dec 2012)
All permanent teaching and leadership positions go
on TES. It has the best reach and we have had a
good pool of candidates every time we advertised

Secondary school, Merseyside, (Dec 2012)

TES is certainly the place to go. Im not convinced
that other companies have anywhere near the same
reach. A few years ago we briefly used eteach but it
was not very successful
Secondary school, London, (May 2012)
TES has been the main paid publication we have
always used and it has consistently given us the
best response. TES has so far been clearly better
in bringing more and better candidates
Secondary school, London, (Dec 2012)
Guardian schoolsjobs is cheaper but TES has so far
been clearly better in bringing more and better
candidates
Secondary school, London, (Dec 2012)
Secondary package**
Primary package**
Single ad
Price for basic 1 month advert (), school year 2012/13
Entry price vs. implied reach by online competitor (Sept 12)
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and historical increases to online pricing have had no discernible impact on
share
Note: *For online change in price represents % change in Bronze price for print and online it is a weighted average of the change in the print and Bronze
prices; **Change in share of ads for schools that have not moved between print and online and only between the two periods; ***FY11-12
numbers distorted by the impact of the launch of Primary+
Source: Management information; L.E.K. analysis
Yield: Potential to increase prices
Change in TES price* Change in TES share**
10
10
25
10
25
0 5 10 15 20 25
FY10-11
FY10-11
FY11-12
FY11-12
FY11-12
Online only
schools
Secondary
Teachers
Primary
Teachers***
Print + Online
schools
Secondary
Teachers
Primary
Teachers
2.4
0.2
0.4
1.4
(0.2)
(1) 0 1 2 3
Implied elasticity
~(0.01)
~0
~0
~0
~0
% change ppt change
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There is considerable potential to continue to increase online prices
Yield: Potential to increase prices
0 100 200 300 400 500
Analysis of Price
premium of leaders
in other sectors
381
Comparison of Price
and Reach of TES vs.
Competitors
388
Pounds
343
Ratio of price
vs. reach in
other sectors
FY17 potential
bronze online list
price headroom of
315-425
above current list
prices
Analysis of list price vs. reach of
TES vs. eteach and Guardian
suggest potential headroom of
c.185 at current pricing
Estimated potential to increase TES online entry list price (Bronze) by FY17
Review of the list pricing of
market leader vs. competitors in
8 other sectors* suggest an
average price premium of
c.120%
Comparison of list pricing vs.
reach of competitors in
marketing and law suggests a
price headroom of c.250 vs.
eteach
Low (eteach price increases at half historical rate; 15 p.a.)
High (eteach price increases at historical rate; 30 p.a.)
High
Low
Note: *Includes recruitment, retail, finance & accounting, IT, marketing, law, medicine and public sector
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In print, TES print pricing is considerably below major regional newspaper and
there should be room to grow prices further
Note: *Price for a 30 single column centimetre (CCM) advert calculated using the price for a 13 CCM by 2 columns advert as no 30 CCM option
available; ^Online advertising is through fish4jobs; ^^Print rate is for Education Guardian supplement
Source: Company websites; NRS data; Premier TGI data, L.E.K. research
Pounds per mono colour SCC
(December 2012)
Yield: Potential to increase prices
TES print prices are
significantly below
regional press the
main competitors in print
Guardian schoolsjobs is
similar to TES but offers
lower reach amongst
readers
10-15 increase per
CCM by FY2017 appears
reasonable
77
65
106
30
31
0
20
40
60
80
100
120
Birmingham
Mail
Pounds
Guardian
schoolsjobs^^
Telegraph* TES Manchester
Evening
News^
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TES has been very successful in growing the uptake of premium online products
and this trend is expected to continue
Source: L.E.K. Analysis
Yield: Potential to increase prices
0
10
20
30
40
50
60
70
FY11
Projected online upsell rates
(percent of online ads that are silver or gold)
FY2009-FY17
Percent of total ads
FY10 FY17 FY16 FY15 FY14 FY13 FY12
Mid
27
PPT change
(FY12-17)
FY09
20
14
Forecast
High
Low
TES has been highly successful in driving the uptake of
premium online products (gold/silver ads) through proactive
upselling
for every 1 that comes in TES upsells an additional
0.46 (Week 1-15 FY13)
This trend is expected to continue albeit at a slowing rate of
growth, underpinned by:
Recent Agency initiative
agencies have historically been poor at upselling:
percent gold and silver in FY12 was 30% for
agencies versus 45% for directly booked ads
TES have now reached agreement with a number of
key agencies to approach schools directly to upsell
results to date are encouraging (c.10% uplift on
FY13 YTD applicable revenue)
Continuing migration from print
Online only penetration significantly higher than
print (already at 47% vs. 32% for print)
significant potential to upsell customers moving
from print to online only
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In addition, the recent launch of new web premium products is projected to
contribute an incremental c.5m revenue by FY17
Yield: Potential to increase prices
TES has recently launched a range of new web
premium products:
- Sponsored Job and Featured Employer in Jan
2011
- range of premium modules (e.g. logo, profile
pages), contextual ads, Featured Job and Job of
the Week in Nov 2011
Performance to date has been strong
- 12.2% of ads* YTD** FY13 has purchased a web
premium product
- annualised FY13 revenue, based on YTD** of
1.4m
Note: *Penetration of all ads (olo and online + print ads); **YTD is week 1-12
Source: Management, L.E.K. analysis
Web premium revenue
(FY2011-FY17)
Avg. yield per
premium ad
201 226 251 277 302 305 182
22.5%
Penetration rate
20.6% 18.7% 16.8% 14.9% 10.8% 1.9%
Forecast
7
Millions of Pounds
5
4
3
2
1
0
FY17 FY16 FY15 FY14 FY13 FY12 FY11
6
High
Mid
Low
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In print, TES has rapidly increased the uptake of colour ads and future growth is
expected to continue at slightly lower rates than historically
Yield: Potential to increase prices
Historically very strong uptake in colour following
2006 launch of new colour format
No theoretical limit to the proportion of colour.
Print is increasingly likely to focus on leadership/
hard to fill jobs which are more likely to take colour
Potential migration of all jobs to the magazine (100%
colour)
Limited cost differential between mono and colour
40
32
21
87
79
71
63
56
48
0
20
40
60
80
100
Percent of print ads
11ppt
8ppt
8ppt
FY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09
Colour upsell projections
(FY2009-FY17)
High
Low
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The resulting average yield is projected to grow by c.1% p.a. to FY17, slightly
below historical trends
Note: *Other includes print discounts and revenues from cover advertisements; **OLO and online component of print and online ads; *** excludes online
component of print and online ads; **before impact of Primary+
Source: Management Accounts, L.E.K. Analysis
Yield: Potential to increase prices
1,208 15
51
60
1,129
14
45
0
200
400
600
800
1,000
1,200
1,400
Sources of increase in revenue per advert
(FY12 - FY17)
Pounds per advert
FY17 Colour
upsell
SCC/ad Price
(62)
Web
premium
Gold/Silver
upsell
Primary+ Price
266
OLO%
(344)
FY12
Print**
Online*
CAGR %
1.4
From 45% in
FY12 to 87%**
in FY17
Increase of
3 per CCM
p.a.
From 48%
in FY12 to
78% in
FY17
Average
increase of
c.60 p.a.
From 39% to
59% in FY17
Continued
growth of web
premium 16% of ads by
FY17
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Key Themes
Teacher recruitment market is cyclical and will return to pre-recession levels
TES has a high and sustainable market share in online and print in the main segments it addresses and
a growing position in primary and support staff
Online penetration will continue to grow but is not a threat to the business
TES can continue to increase yield through continuous price increase and growth in upselling
There is substantial potential opportunity to roll out TES Hiring Solutions in International markets
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Teaching is one of the largest single profession in the world and there is a
significant potential opportunity to improve the efficiency of teacher recruitment
International Expansion
c.80 million teachers worldwide, of which UK is less than 1%
Homogeneous workforce and similar characteristics within and between
countries
Global K-12 education expenditure is estimated at c. 1,500bn of which the
majority is teacher salaries (in UK state schools, teacher salaries represent
c.85% of total expenditure)
Outside the UK, recruitment of teachers is often unstructured, highly
fragmented and very inefficient
However, recognising the importance to the quality of education, some
markets are starting to look for ways to improve the efficiency of teacher
recruitment
80 million teachers
world wide
Need for more
efficient recruitment
platforms
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TES is in a unique position to address this opportunity and roll-out TES hiring
solutions internationally
International Expansion
TES resources are accessed by teachers in 265
countries and territories
TES already has close to 500k registered users outside
the UK and a substantial implied share* of teachers in
many countries e.g.
- 80% in Ireland
- 28% in Australia
- 22% in UAE
c. 13k new users register every week from an average of
150 countries
6% of job ads are from overseas schools, up from
c.3.5% in FY09
Significant international appeal and reach
Unique capabilities and assets applicable
internationally
TES position in the UK and the characteristics of the
market are unique in many aspects and TES model is
not directly applicable in other countries
However, TSL has a number of core skills and assets
that are applicable in other geographies which would
enable it to:
- deliver superior reach of teachers leveraging
TES Resources
- provide a more efficient recruitment platform for
both teachers and schools
- monetise the inventory of jobs leveraging its
best-in-class upsell practices
Note: *Calculated as TES registered users divided by number of K-12 teachers in each country
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TES strategy will be adjusted to the local conditions in each market but will
typically be based on a set of common principles
International Expansion
Build job inventory via
- free (or low cost) basic listings
- aggregation of jobs advertised in other
channels
- direct marketing to schools (via own
resources and partnerships)
Once at sufficient scale, monetise through
upsell of premium ads
Over time, seek to move to a low fee for all
ads
TES
International
Hiring
Solutions
Inventory of job ads Teacher reach and usage
Volume of ads drives
attractiveness of site to teachers
Teacher usage drives efficiency of ads and
attractiveness of site as a recruitment
channel
Leverage TES Resources to drive initial
teacher traffic and usage (and thereby
efficiency of job ads)
Establish partnerships with organisations with
existing reach into the teaching community
e.g.
- partnership with AFT in the US
- agreement with Government and
Teacher Union in Australia
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TES has already launched in the US and India and are due to establish operations
in Australia
International Expansion
Very large and highly unstructured teacher recruitment market
TES already present via sharemylesson.com, launched in 2012 in partnership
with the American Federation of Teachers (AFT)
Agreement with AFT to develop jobsite to radically restructure teacher recruiting
Near term
geographic
focus
Next phase of roll-out
Significant English speaking market, (250k teachers) and highly fragmented
teacher recruiting
TES in 3-way partnership with Australian Government and teacher union to
launch resources and job site
Large market with very high expected growth in number of teachers. Emerging
online recruitment market with no clear leader
TES India launched in October 2012
In the medium term, there is a significant opportunity for TES to roll-out in further
geographies . The next phase is likely to focus on:
- other countries with large English speaking populations e.g. Canada
- Spanish speaking countries / regions e.g. Spain, Mexico, Central and Latin
America
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Significant opportunity to radically restructure the US teacher
recruitment market
International Expansion
Very large market with 3.6m teachers and c.500k
vacancies p.a.
Highly decentralised at a school district level
- total of c.1,800 school districts with on average of
c.153 teachers
Unstructured, fragmented and inefficient teacher
recruitment market
- jobs principally listed on school district sites with
low reach and poor usability
- no efficient state level or national aggregator of jobs
- no commercial competitor of significance
- high reliance on word-of-mouth (due to lack of
efficient advertising channels)
resulting in significant difficulties for teachers to find
suitable positions and for school to find the best
candidate for the job
Market characteristics TSL opportunity
Opportunity for TSL to radically restructure the teacher
recruitment market and provide a platform to better
match candidates and jobs via:
- aggregation of jobs at state level making it easier
for teachers to find jobs and providing greater reach
for schools
- more extensive and accurate information about
each job driving better quality of applicants
- greater usability for both schools and teachers
- more opportunities for schools to differentiate and
get higher visibility for hard-to-fill jobs
Existing position provides strong platform for growth:
- sharemylesson.com drives reach amongst teachers
- ability to leverage relationship with AFT to drive
uptake amongst schools and teachers
Initial focus on 3 largest states to test the proposition
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Opportunity to take leadership in online recruitment on the back of an
agreement with the Australian government and the teacher union
International Expansion
TSL already has significant reach amongst Australian teachers through TES Resources (1.9m downloads in 2012
implying an average of c.7 downloads per teacher p.a.)
TSL has been approached by the Australian government to establish a dedicated Australian Resource site and has
extended this agreement to provide job ads
Substantial market 250k FTE teachers (vs. UK of 350k FTE teachers ) and 35-40k vacancies p.a.
Relatively favourable market and competitive characteristics
- large non-government sector (representing c.35% of teachers) already using paid media
- government schools in largest states have access to recruitment budget
- no significant commercial competitor
Potential for TSL to deliver a differentiated proposition via:
- higher teacher reach (leveraging Resources)
- credibility and reach with schools underpinned by relationship with government and union
- superior usability for teachers and schools (e.g. more opportunities for schools to differentiate)
Initially free basic listings to build inventory but potential to move to paid model (for all ads) in the longer term
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Relatively small revenue opportunity in the short term but establishes
TES in prime position to capitalise on expected future high growth
International Expansion
Large number of teachers (c.7.6m) and vacancies
(c.210k p.a.)
Very rapid future growth: 2-3.5m additional teachers by
2022
Already high use of paid media for teacher recruitment
(albeit low spend per job, in particular for state schools)
Online recruitment market in emerging and expected to
grow rapidly
Current online competitors are small and unsophisticated
Market characteristics TSL opportunity
Soft launch of TES India in October 2012 with
encouraging results
Potential for TSL to take lead in online teacher
recruitment, leapfrogging existing online specialists by
offering:
- better quality and higher number of job ads
- higher liquidity (underpinned by digital content and
resources) driving higher response rates
- better usability for teachers and schools
Key medium term opportunity in the private sector (focus
on urban areas)
Initially offering free basic listings, monetising via upsell
when sufficient scale but potential to move to low fee for
basic ads given established paid-for market
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If successful, TES international hiring solutions could generate significant revenue in
the medium term and position the company for high sustainable long term growth
Source: L.E.K. Analysis
International Expansion
Phase I
Build scale and monetise via upsell
Phase II
Move to basic fee for all ad as business
achieves sufficient reach and inventory of jobs Limited coverage Nationwide
2-6m 7-22m
0.5-1.5m 1.5-4.5m
0.5-1.5m
21-47
3-8
2-5
Indicative scale of revenue opportunity (m)