Confused about pay for performance? Get a peek behind the curtain [podcast]
July 16, 2017 by Anna Peters
Anyone paying attention to talent acquisition trends or recruitment technology is aware of the rise of pay for performance recruitment advertising, and programmatic advertising. It can be a confusing space, at least technically. So for many recruiters, it unfortunately has the effect of scaring them off. Recruiters and HR leaders: if you admit to being confused, you can probably also admit that the trend is only rising. Here you can get a peek behind the curtain and clear up your understanding. HRExaminer interviewed College Recruiter’s founder and president, Steven Rothberg. Rothberg shares an insider’s view of what about programmatic advertising scares job boards, what job boards do better than employer career sites, and the problematic method employers measure sources like job boards.
Listen to the interview here, or read major takeaways below.
The job board is not dead. Enter, pay for performance.
There was an effort to brand job boards as dying, but it was really an effort by third party recruiters to convince their customers—the employers—to spend money in new ways. Whether that was social media, an executive search or whatever, the facts just weren’t there.
There certainly are many job boards that have died. There are also many social media sites that have died. Executive recruiting firms have died. Companies come and go, business models come and go. But what we’re really seeing is a remarkable transformation that started about three years ago. The job boards that are thriving have begun to migrate from a “post and pray” model (duration based postings where an employer buys a posting package for a certain period of time, regardless of the results). Instead they are rapidly shifting to pay for performance. Pay for performance is typically pay-per-click: the candidate sees the job on the job board, they click the apply button, they go over to employers’ ATS and the job board is paid for that click.
Consumer marketers started doing pay for performance about 15 years ago.
This model is entirely consistent with how Google got themselves on the map. Before Google, pay-per-click advertising existed, but Google was the first one in the consumer marketing space to really do it well. Now, 15 years later, the talent acquisition and job search industry is realizing it can work for us, too.
The duration-based model puts the risk of the job posting not performing well on the employer (or their advertising vendor). At College Recruiter, we know we have a lot more control than the employer over how many people see a posting, and how many people click to apply. Factors like salary and the quality of a job description are all relevant, but it’s our job to get people to the ad to begin with, so the risk should lie with us.
A lot of job search sites feel very threatened by the pay for performance model because they’re used to selling postings for, say, $250 bucks for 30 days. And they see a pretty fat profit margin, maybe 60-70 percent. But with pay for performance, the job board might get 20 or 30 cents per click. Now, the job board is forced to actually deliver enough candidates to that employer so they can hire enough people. That brings us to another discussion about metrics, which we’ll get into later.
Job boards are better than company career sites
What’s really exciting about the job search industry is that we are way better at marketing employers’ opportunities than the employers are themselves. Our sites tend to be much more mobile friendly. Our sites tend to have candidate-friendly features like the one-click apply button. We tend not to have password protection in order to see the postings. That creates a better experience for the candidate.
There is another reason job boards are better. Google has now introduced their own job search product, Google for Jobs. If a candidate searches for a job on Google, and Google see a job from some company using an awful ATS, they won’t send the user there, because chances are it’s going to be an awful user experience. But when Google sees that job posted on a job board like College Recruiter, and that site provides a much better candidate experience, they’re going to point that candidate to CollegeRecruiter.com, instead of to the employer’s career site.
Employers need to truly measure the effectiveness of job boards
Two years ago, virtually none of our employer customers were willing to have a conversation around how many candidates they actually needed us to deliver, in order for them to hire enough people. They didn’t even know how many applications they would typically receive for each hire. And they knew even less about how many clicks they would need to generate in order to hire one person. So it made sense that employers would have no way of knowing what kind of performance to purchase. Should they buy $10 worth of clicks? $100? $1,000?
Now, there are tools out there that will tell employers that if you get, say, a thousand people clicking to your site, you’ll probably see about 100 applications, and if you get 100 applications you’ll probably hire four people, for example.
This presents a great opportunity for job search sites to scale up, especially in entry level recruitment. Because large employers don’t have a need to hire just one intern; they’re hiring a dozen or 100 interns. If you run a posting for a retail sales associate in Kansas City, you’re never going to be able to hire 10 or 20 people from a single posting under the old, duration-based model. You just wouldn’t get enough candidates to apply. But under the new model, we can drive thousands of people to a job posting that is operating on a pay-per-performance basis. College Recruiter currently uses both models right now, but in two years, it’s likely that duration-based postings will be a thing of the past.
Two exciting things happening in talent acquisition
Employers now have the opportunity to better align their goals with those of their sourcing partners. For a long time now, executive recruiters have aligned their interests with the employers. They only got paid if they found a candidate that the employer decided to hire. Now that’s happening with recruitment media.
Within a year or two, it is very possible that nearly all ATS are going to allow an employer to post a job on their career site, then check a box to “sponsor” that job. Then they’ll be able to pick how much they want to spend, given the ATS’ recommendation, which would consider the number of candidates you need in order to make all your hires. It should be able to tell the employer that they need to buy, say, 2000 clicks at 47 cents per click, which job boards will be the best, and then programmatically send the job posting to those job boards.
Programmatic advertising is not the same as pay for performance
A lot of people get programmatic advertising mixed up with pay for performance . Programmatic means the advertiser uses a computer with a set of rules that determine which ads to post, which not to post, and when.
Some companies that do programmatic ad buying on behalf of employers will have a contract with a job board that gives them, say, 25 slots where they can post whatever job they want. They can post one job in that lot today and another job for three days, or their job for five days, etc. Programmatic advertising allows employers—without needing any human intervention—to always run the best-performing job ad. For example, a posting for a nursing position might generate a really good response for three days, and then the response tails off. Perhaps after three days, any nurses that are going to apply have already applied, and the programmatic advertising engine will automatically see that. It will then replace that nursing posting with a physical therapist posting, which might run for 10 days.
Programmatic gets tied to pay for performance because employers that are using one tend to use the other.
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