The next wave of job boards - staffing firms?

Ten years ago, you paid by the word for every job ad you placed. Today, you pay per job advertised, whether you get anything for that or not. Online advertising models have shifted to pay-per-value model and it stands to reason that job boards could and should do the same. Maybe this is why some feel like Monster's poised for an acquisition - do they know the next wave is coming? 

The challenge with the "disruptive" models I've seen so far though is that they don't really recognize where the value lives in recruiting. Take pay-per-click as an example (like Indeed) - what does a click represent to a hiring manager or recruiter? Just more applicants, which plays very poorly to enterprise customers but wouldn't be bad for a small or mid-market customer that doesn't get the same amount of unqualified volume. Even for enterprises, though, one could make an argument that at the end of the day, pay-per-click is more cost-effective than pay-per-post for an employer. But it's hard to swallow for an enterprise because it's so counter-intuitive and tough to scale to the real meat of the market (small and medium businesses) without an absolutely gigantic marketing or sales push.

How about "free postings" that lead to another set of business opportunities for the vendor (like Jobster is doing)? I haven't seen one that really has a high likelihood of what I would call "logical conversion" for technology tools. Maybe it's just me, but I just don't see a free job posting leading too often to a customer saying "I want to buy a social networking and CRM tool." Don't get me wrong, I'm a big fan of getting a customer engaged with something free and building value for them until their needs require a broader service that they're willing to pay for. Salesforce is an excellent example of this. Recently, I had to pick between Salesforce and SugarCRM for my own company's CRM needs. I went with Salesforce. The clincher for me? 1 user is completely free. Now I'll be loading my contacts in there and trying to develop business by engaging them on a more proactive basis, entering notes, creating opportunities, tracking billing and revenue, etc, all tough to migrate to another system. When and if I have more employees, Salesforce now has my business. It's a "logical conversion" for me into a paying customer.

So where's the logical conversion area in recruiting? I actually think that it's in services, not software, which is actually a much, much bigger piece of the pie than job boards ($30 billion for services, $3-5 billion for online plays). Think about it - you're a hiring manager or recruiter at a small employer that is starting to grow fast. You look at the options out there to post your job. One site wants to charge you $300, another $400, and another staffing firm run job board with a similar amount of traffic will charge you nothing in the hopes that you eventually buy some of their staffing services. As we all know, the job board will work SOME of the time. Then  eventually you'll need something more. Where do you go? If the staffing firm has set up their business model effectively to really convert and create barriers to entry, you go to the staffing firm running the job board that was nice enough to give you a free posting. Perhaps the firm has given them an ATS as well to keep track of candidates in. Or possibly something else that would be hard to replace.

I believe that this was the missed opportunity when TMP Worldwide had staffing/executive search firms, Monster, a light ATS and a recruitment advertising agency under one roof. They could never really make all the parts work together, but in the end, they suffered from the innovator's dilemma - why mess up a $1 billion a year cash cow? They talked about Intern-to-CEO as their mantra back then, but really, allowing the parts to work together too well would have been a disruptor to their own business models.

For an enterprising large staffing firm, a really big opportunity is out there. Just waiting. Tick... tick... tick...

Comments

[Adrianne]

Hej! You make a really good point about the effectiveness of pay-per-click job boards for large companies.

I have a jobsite for English speakers in Sweden (JobsinStockholm.com) that incorporates Web 2.0 tools for the user and offers either a pay-per-click of fixed price model for advertisers.

The reponse has been mixed as some companies prefer a flat fee while others prefer to pay by the click.

Our anti-click fraud system is transparent which makes it easy for me to show clients how many views their job received and how much they will be charged.

From my point of view it is crucial that I remailn flexible in my pricing and stay true to my niche and deliver a win-win situation for everyone involved.

[Rob]

your assessment of the pay per click model for job boards is dead on. Indeed.com is a little different in that the majority of their customers are job boards, not individual employers (though they are attempting to gain more traction in that area). Job boards don't look at the quality of candidates/resumes that are being driven to their customers, their job is to drive traffic...period. Individual employers will look at the quality of resumes they are getting thru ppc and the unfortunately, a huge majority will be unqualified, such is the nature of posting jobs on the internet. The quantity of resumes they receive (not clicks) will be directly related to the complexity of their ATS's application process. The easier it is to apply, the more resumes they will receive.