Post-n-Pray vs Pay for Performance

Posted By: Thomas Shaw, 8:00am Monday 10 August 2009

Is the Australian online recruitment market ever going to see a shift away from the traditional 'pay-to-post' model to a 'pay for performance' (P4P) revenue model? Pay for performance is also commonly referred to as pay-per-application (PPA) or pay-per-placement (PPP).

The pay-per-application model has been long touted as the way forward for job boards. It allows advertisers to pay for results rather praying for candidates to apply. ie. Advertiser only pays $ per resume received (could be capped at #apps or when reach $ level).

Pay-per-placement involves a much closer arrangement with the advertiser to follow the tracking of each candidate when they apply for a role - right through to placement.

These two performance models take a lot of the risk out of advertising because you don't pay unless the site delivers.

But these models are unsustainable through the economic cycle. When jobseekers are applying in abundance, no one wants to pay for them. When advertisers are happy to pay for any candidate going - there aren't any candidates!

1. Traffic - Forget about all the other generalist and niche job boards, according to Nielsen NetRatings July 2009 statistics, our market is dominated by 3 main players - SEEK, CareerOne & MyCareer.
A job board needs to have enough candidate traffic (and application) for it to be profitable. How can you attract candidates if you have no money to find them? This is why most job boards fail.

2. Bypassing the System - How can you track or stop users directly contacting the advertiser and submitting the resume via another method? Nearly all job adverts will list the Recruiter/Employer, contact name, phone number, etc. If you can bypass the system, how can you charge the advertiser?

3. Quality - Is the site going to deliver quality candidates? The quality of an application is always going to be pretty subjective and difficult to measure.

4. Duplication - What happens if the candidate is already on your database? Will you still get charged?

5. Fraud - The models are subject to applicant fraud. Fake and bogus applications could push up the sites performance.

Overall, posting an online job advert in Australia is relatively inexpensive compared to other geographical markets. If one of the major job boards did change its revenue model - would the others follow?

Recruiters/Employers first need to better understand where the candidate comes from (see my previous blog post on Tracking Candidate Sources) and understand that a job advert is also an advertising opportunity your brand is on show.

I can't see how a pay-for-performance model is going to revolutionise our industry. I am keen to hear your thoughts on this topic.