Online-Recruiting.net
The international Job Site News Blog
The job site pricing model: pay-to-post, pay-per-click or pay per hire?
I’d like to orient your reading to a few very interesting findings and discussions that are taking place in the US at the moment. Since the Internet in general works a lot on pay-per-click models, some of the recruiters would prefer to see job site pricing models that are entirely success-based. Of course, I don’t agree 
Please read yourself and share your opinion on this:
- Results of Jim Stroud’s online survey on Job Boards and online recruitment
- Why recruiters are abandoning the habitual pricing model
This is what I left as a comment on the second article mentioned above:
I do not agree with some of the ideas mentioned in the article. I’m aware that the Internet gives recruiters, agencies and companies better possibilities and tools to track candidate behaviour than offline media (assuming that recruiters advertise in several print titles at once). And I’m aware that the Internet is mainly based on the number of visits per site, visibility in general and clicks on links.
But I have never seen recruiters asking for a “success-based” pricing model for press recruitment advertising, and I’m sure that newspapers would never accept that. So why should online job boards do this? Compared to offline media, pay-to-post models are a lot cheaper and offer higher visibility among the target group. Of course, this can also mean that a number of unqualified applicants reply to a job role.
To be honest, as I’m working for an HR communication agency that is online-oriented exclusively, I see many job ads that are rather badly written (by the way, most of the time the texts and layouts are taken from the press adverts, but this does not work the same way on the net) and I’m not surprised that they attract unsuitable candidates.
As an agency consultant, I do not only recommend better targeted job titles, vacancy texts, etc but also the job sites that are best suited per position and per country. I know that the markets are very complex and that recruiters have lots of other things to do than research the best sites for their hiring needs. Be certain, there are suppliers who take care of that. And it is for that reason that I will stick to the pay-to-post model. This is also something I have been writing about recently.I’m looking forward to reading your comments on this.
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[...] Da konnte ich nicht widerstehen, aber es ärgert mich einfach, wenn ich lese, wie Online Stellenmärkte immer wieder schlecht gemacht werden. Und das meistens aus dem einzigen Grund, um Preise zu drücken. Mehr Details gibt’s auf der englischen Online-Recruiting.net Version. [...]
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[...] war eine Frage der Zeit. Wobei ich über den tatsächlichen Nutzen (und ROI) des Pay-Per-Click Modells schon immer skeptisch war und immer noch [...]
There is another article about this too:
http://jobnickel.com/headlines/why-are-recruiters-abandoning-the-pay-to-post-model/
Same discussion but many employers and recruiters seem to agree
That’s exactly the same article as on Jim Stroud’s blog but the discussion at Jim’s is a bit livelier (at the moment I only see one comment on jobnickel.com)
The discussion about jobboard pricing models is not far-reaching enough. Currently, most jobboards charge for a publishing / circulation model at a fixed price per month. No guarantee is given to finding the successful candidate. On the other hand, a pay-per-click model is at first sight attractive as it lets both parties (jobboards and employers)apparently gain control over ther budget and return rate (clicks, applicants etc.) However, it is always implied that the cost per click is a fixed price. This is a shortcoming, as it assumes that every click on a job ad has the same value. If you look at the Google Keyword model, you will notice that you can book advertising by keyword, you will also notice that every keyword click has a different price, depending on the supply / demand structure presently encountered in the online advertising market. Apparently, the Google Keyword model works fine.
Should you adopt a value-based pay-per-click pricing model in the online-recruiting market, you would end up not only with fixed costs per click but rather with a value-based price per click. Employers would offer a higher price-per-click for specialist staff in high demand (e.g. engineers, SAP Consultant etc.) and a lower price-per-click for applicants in sufficiently good supply.
The future of this model would be that every jobboard with a price-per-click (or better “value per click) would offer a dynamic range of prices based on supply and demand on the labour markets. Employers and recruiters would be totally confused about such a demand-supply-driven pricing model, I would assume.
Jobboards adopting a Google-ish value based model would benefit by indexing their pricing model to the real value of jobs in terms of qualification, education, skill, experience.
Eva, Recruiting Consultants like you would have a bonanza.
Regards
Richard
Dear Eva,
totally agree with you since it is not only the ad place that matters. Since job portals normally cannot influence ad text and visual layout they definitely cannot made responsible for the resulting success rate.
Next step would be that the applicants are not qualified enough and that would also be the fault of the online portals.
@Richard
sounds really good. I like your thinking. But do your ideas not rather represent (the future of) the job search engine pricing model (because some of them proceed like this already)? And why have different job sites then if one “Google” fits for all?
It is obvious that today, companies that are hiring talents from a shortage skills sector, have to find many different ways to attract candidates. Job boards can only be one part of their recruiting strategies because these applicants rarely look for work on career portals. So a value-based price model would not only explode hiring costs but it would almost certainly not lead to a better success. Those companies have to invest in complex media campaigns to contact the potentials who are not actively seeking work.
Apart from that, I fear that a value-based pay-per-click model would put off small and medium-sized firms, who have only started to have faith in online recruitment. Of course they could opt for a low budget but if that doesn’t work well (and it is bound to do), I’m sure they will abandon internet as a recruiting tool as a whole. That would be a pity, given that there are, in numbers, more small companies than big firms.
I like this discussion very much and have some additional thoughts. A Pay Per Click (PPC) pricing model would take more of the risk off of a posting employer but mere clicks of a job listing to unqualified people doesn’t provide any value to the employer either. Why do recruiters and employers post jobs, what is their goal? There is only one goal that I know of
? They want to find a qualified person that has the skills for that job and very importantly, that is interested in that job.
The employer/recruiter doesn’t care so much about how many people see or click their listing. This is the entire basis for contingency based recruiting. The recruiter is acknowledging the employers position by saying, “I don’t get paid until you acknowledge that the person I bring you is what you have been looking for”. To my knowledge, Realmatch is the only platform that combines online job posting, matching technology and applicant tracking with this pay for performance pricing. If you don’t like what you see, you have paid nothing…that’s pay for performance.
If I thought we could charge employers on a CPC basis, I might create an alternative product for Realmatch but based on our research, too many unqualified people click the ad for a CPC pricing model to work. That model still places too much of the risk on the employer.
“Why are recruiters abandoning the pay-to-post model” looks like a press release to me… a good one!
not necessarily a subject for deep conversation. Yet…
Additional post on the topic here:
http://www.therecruiterslounge.com/2008/07/17/pay-to-post-verses-pay-for-performance/
@Rafael
usually I delete commercial comments. I haven’t done so with yours because, in a way, it contributes to the discussion. I left another comment on this idea on the post Trisha mentioned above: http://www.therecruiterslounge.com/2008/07/17/pay-to-post-verses-pay-for-performance/
Please continue reading there.
We focus on a ” 1 Year flat rate” model,
that is a fair pricing for every “hiring” Company. And companies like it – so far! Best Thomas
From the job board owner’s perspective:
Pay to Post – simple billing and payment up front. Traditional like the newspaper ads.
Pay Per Click – or Pay Per Application actually – Sounds like a true Web 2.0 business model. Mimics what Google does with AdWords and we all know how well does it work for them.
Pay Per Hire – depends on the recruiter a lot, and is not really transparent to the job board owner.
My vote goes for Pay Per Application!
Ivan | http://www.JobsBlog.ie
Pay-for-Performance: could be a little bit scary for the larger Recruitment Firms!? Imagine rooms of Recruitment Consultants clicking on Candidate profiles throughout the day…likely to prove more costly than traditional Pay-to-Post?
Hotjobs just made an announcement about pay for preformace pricing and I was googling and this article came up. I wonder if realmatch was the first to offer a pay for preformance pricing model?