A guide to pay-per-click for recruiters, not marketing GURUS

4th Jan 2018 by Manuel Engelbrecht
6 minute read

Over ten years ago, search engines introduced performance-based recruitment, which was born from existing advertisement approaches. Besides those pay-per-click (PPC) models, services recently also started to provide billing by application (PPA).
How do those alternative pricing models work and what are the differences to traditional pay-per-placement?

Contents

1. From traditional pay-and-pray to pay-for-performance
2. Advantages and Pitfalls of PPC
3. Is pay-per-applicant the future?

From traditional pay-and-pray to Pay for performance

In the old offline days it simply wasn't possible to track how many people would see your job ads. You paid an upfront fee, your posting was published on a job board (literally) and you waited until the applications arrived. The ability to measure interactions (impressions, views, clicks) and sources of applications online opened new worlds.

“Performance ads charge the advertiser for an outcome rather than for "space" or "time". 

First, as in many other industries, the offline-solution of conventional job boards was simply transferred online, where duration-based based job postings were predominant. Indeed.com was among the first to introduce pay-per-click job advertisement for their advertised jobs in 2006. Since then, the number of PPC providers drastically increased, and as of today 30%+ of recruitment advertisement budget is spent on pay-for-performance.

“Search engines have revolutionized the advertising industry with a pay-for-performance model, and now Indeed is the first to create a pay-per-click network for classifieds advertising,”

- Paul Forster, CEO of Indeed, 2006.

That's why nowadays, compared to 2007, there is an almost endless amount of services that offer PPC recruitment advertisement. Instead of organic search results, you appear in a featured section, often above the other results or in a highlighted section. Then, you are charged by a variable amount depending on the search term multiplied by the number of times your listing is clicked on.

Now, it is important to understand what makes PPC recruitment so awesome and what are drawbacks when deploying it.

ADVANTAGES AND PITFALLS OF PPC

Advantages

Disadvantages

  • Only pay if candidates really engage with your ad
  • No direct incentive for provider to deliver applications
  • Customizable budgeting 
  • Rise of mobile Recruiting makes applications more costly
  • No costly testing and modifications
  • Possible overspending on easy-to-fill listings
  • Permanent visibility
  • Vulnerability for click fraud and inaccuracies
  • Enhanced tracking and reporting
 
 
ADVANTAGES
  • Only pay if candidates really engage with your ad. As the name pay-per-click states, if the job site doesn't drive job seekers to your ad, you don't pay. Thus, you are only charged when candidates actually show first interest in your posting. This is a clear advantage to a pay-per-post model. Uncertainties about if the ad is visible to an sufficient and suitable audience are decreased dramatically.
  • Customizable budgeting. The budget you set for a listing is totally up to you. In contrast to an fixed price for an duration-based pricing, you can adjust it based on your financial restrictions, company and job type. Furthermore, for jobs that are easier to fill, you may start with a lower budget, whereas though nuts can receive more monetary attention.
  • No costly testing and modifications. If you get no or almost no clicks on your ad, this can have a lot of reasons. Maybe the title and description of the posting is not convincing, or the job board you are using simply isn't suitable for the positions you are trying to fill. In a PPC model, you can adjust, modify or delete your posting without worrying about upfront fees
  • Permanent visibility. In contrast to traditional job boards, where ads are sorted by date, pay-per-click ads usually only show up if the algorithm of the search engine judges them as relevant. Thus, you don't have to worry that the ad does disappear in the depths of the internet after some time.
  • Enhanced tracking and reporting. When excluding the number of impressions and clicks you get on an ad, you omit sections of the recruitment funnel that deliver valuable information. If the conversion from click to application (number of applications divided by total clicks on the ad) is low, for example, this might be an indicator that your posting is ambiguous or not particulars exciting. You can then optimize the different recruitment funnel stages to get the most out of your posting.

PPC RECRUITMENT FUNNEL.png 

Disadvantages:
  • No direct incentive for job board to deliver applications. Paying for clicks does not guarantee suitable applicants, which is commonly the desired result for companies. The conversion from click to application is disconnected from the compensation of the service provider, and thus no strong incentive to maximize clicks.
  • Rise of mobile recruiting makes applications more costly. Over 30% of job searches are conducted from a mobile device or tablet nowadays. That means a lot of clicks on your ads come from mobile - at a terrible conversion rate. Consequently, our data suggests that one application from a mobile in a PPC model is over 9x more expensive than from a desktop. 

Mobile Infographic.png

  • Possible overspending on easy-to-fill listings. On runaway positions you will receive more clicks and, consequently, pay more a lot more for the jobs that are easier to fill. Critical jobs, that are hard to fill, on the other hand, see only a few clicks coming through. Costly monitoring or the implementation of tools might be possible, but just displace the problem.
  • Vulnerability for click fraud and inaccuracies. PPC pricing is exposed to publishers or job boards that may abuse clicks to increase their fee. To add to that, many job boards count one click by the same person after a short time period as a new, unique interest on the posting, which rises the total significantly. 

IS Pay-per-Applicant the future of Recruiting?

Cost-per-Applicant (CPA) recruitment is considered to be the third stage of recruitment advertisement. You pay a fee per applicant you receive, not per listing or click on the ad. The limitations of the pay-per-post model are eliminated. Also, the mobile conversion risk and other pitfalls of CPC recruitment are moved away from.

Massive RISK reduction

In pay-per-applicant models, the billing is transferred on one stage further down the recruitment funnel. No need to worry about paying for clicks that lead to no application. You will only pay when a job ad generates a candidate that applies. Furthermore, since setting a target for the number of applications instead of conversion, the risk of over-delivering candidates is mitigated.

PUBLISHERS AND EMPLOYERS ARE ON THE SAME TEAM
The incentive for PPA providers is to drive the maximal number of applications to their clients. In pay-per-post models, there can arise strong mistrust that the listing is not advertised properly. When billed per click, the incentives of recruiters and companies are also divergent. Applications are generally a better benchmark for recruitment success. Thus, a alignment of incentives strengthens 

POTENTIAL TO OUTPERFORM OTHER MODELS
When you pay per applicant, you can avoid many pitfalls of CPC and traditional models. The rise of mobile traffic on recruitment sites fuels the advantages of PPA even more. Now, the wheels of the most innovatiove HR-Tech companies are turning to make the model the standard in performance-based recruitment.  Until then, suppliers have to get comprehensive pricing and implementation in place to make it a reality. 

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Tags: CPC, CPA, Cost per Click, Cost per Application

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