Appcast White Paper: Pay-Per-Applicant, Not Per-Click. The New Way to Pay for Job Ads

Pay-Per-Applicant, Not Per-Click.The New Way to Pay for Job Ads.

WHITE PAPER

In this white paper, you will learn:

Why pay-per-click is risky.

How the pay-per-applicant model aligns the interest of employers& job boards.

How to spend only on jobs that need applicants...not the ones that don't.

A new, easy way to boost the ROI on your sourcing efforts.

Thirty years ago when a company needed to advertise a job, it simply called the local paper, provided copy, bought an ad slot and then waited for resumes to arrive. It was a simple decision and the ad ran until the role was filled.

Since then, job advertising has moved almost exclusively online. Job boards, such as those operated by Monster and CareerBuilder, moved employers away from the limitations of per-word ad buying into the revolutionary world of pay-per-posting. For a one-time fixed fee employers could suddenly draft bespoke ads that were capable of being seen by thousands of job seekers across the globe.

Times change, of course, and as recruitment budgets tightened, duration-based job posting became a gamble at a time when every dollar was vital for a business to thrive. In the worst case scenario, the job ad could sit there, attracting few or no candidates, and the company would have wasted the posting fee. The industry responded by adapting their pricing models to market conditions. Cost-per-click (“CPC”) advertising, which charges the employer only when an applicant clicks through to an ad, heralded a new dawn in performance-based pricing. Today, cost-per-click advertising is the industry's predominant pricing model.

The model is not without its flaws. Our data, gained from a longitudinal study of every major applicant tracking system in 15 different industries, shows a disconnect between the results a CPC publisher can offer and the results that employers wish to receive from that offer. Mobile recruiting is becoming the new normal and this, combined with ill-conceived apply processes, is radically reducing apply-rates in some industries. On a pricing model based entirely on clicks, this lack of follow-though means that employers must spend a lot more money on clicks to get an acceptable number of applies. At the moment, employers are carrying most of the risk.

A lot of my job is to think about what's coming next in the industry. The new kid on the block is cost-per-applicant (“CPA”) advertising, a pricing model that charges when the employer receives an application, not a mere click. CPA aligns the amount employers spend on advertising with the revenue (in terms of job applications), it generates for their business. Used intelligently, CPA can generate a 100% return on recruiting spend.

This white paper takes a look at the short but heady evolution in internet recruitment advertising models and assesses how the industry's latest offer, CPA, can meet an appetite for greater risk sharing between employers and publishers, to maximize advertising impact and minimize financial risk.

I do hope you find it useful.

Chris Forman,Founder and CEO

of Appcast

Pay-Per-Applicant, Not Per-Click. The New Way to Pay for Job Ads.

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“Last year employers spent $16 billion on advertising and marketing to find candidates for open jobs.

The overwhelming majority of it went to online media, making Recruitment, at $19 billion, the largest single online advertising category.” Borrell Associates, 2014 Recruitment Advertising Outlook: The Long, Gray Line, March 2014

Executive SummaryOver the last 20 years, the internet has revolutionized how job advertising is undertaken compared to the conventional classified ad.

Risky up-front pricing and limited candidate reach have caused some employers to abandon the pay-per-post ad model in favor of performance-based solutions. One such solution is the cost-per-click (“CPC”) pricing model which ties the advertising charge to a performance trigger, namely a click on the employer's ad. However, CPC is not without its problems.

Candidates clicking an ad on a mobile device are significantly less likely to apply for a job than candidates clicking through from a desktop. Currently, over 40% of job seekers are mobile, which is leading to very low conversion rates.

Lengthy apply processes also cause job seekers to abandon a job application. On a cost-per-click pricing model, low conversion rates massively reduce the ROI on advertising spend.

Employers can avoid most if not all of these problems by switching to a cost-per-application pricing method that charges the employer only when a qualified candidate applies for an open position.

IntroductionRecruiting is at heart an advertising strategy. Through the placement of ads, hiring managers try to tap into the best talent on the market. The channels and mechanisms for doing this may change, but the desired outcome is always the same: how to get more quality candidates through the door as cost-effectively as possible.

Employers and publishers have constantly sought to address this basic question. From classified ads in the local newspaper, all the way to online job boards and social media, the goal has always been to extract a job application from quality job seekers at the lowest possible price.

As technology advances and old advertising models show their limitations, the industry has formulated several pricing models each offering a different set of perspectives. This paper looks at the prevailing models on the market and asks the question, which model delivers the greatest ROI?


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In markets where demand for applicants exceeds supply, the advertisement might return few or zero job applications.

Pay-Per-Post Job Ads Not so long ago, job boards such as those operated by Monster.com and CareerBuilder heralded a new age in recruitment advertising. Appealing to recruiters as an alternative to traditional pay-per-word classified ads, employers could (and still can) for one fixed fee post a job advertisement for a specified amount of time and receive resumes from candidates viewing the advertisement.

For employers, the advantages of pay-per-post advertising are clear:

Price uncertainty and poor performing job boards are just two of the reasons why employers have been abandoning the pay-per-post pricing model in favor of performance-based solutions that offer clear and measurable results.

Cost clarity.

Per-post rather than per-word pricing lets employers adapt the advertisement to the needs of the position, arguably attracting more, better candidates.

Applications come through when supply is there.

Risky up-front pricing. The pay-per-post pricing model provides no guarantee of finding qualified candidates. In markets where demand for applicants exceeds supply, the advertisement might return few or zero job applications.

Open-ended spend. Recruiters who do not get a result within the advertising duration have to pay to run the ad again.

Limited candidate reach. The pool of potential applicants comes from internet users who interact with the job board at the specific time an advertisement is running. There is little organic traffic or ability to target passive applicants elsewhere on the web. Consequently, recruiters may have to place multiple advertisements on multiple job boards, raising overall spend.

But there are downsides.


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If the job site doesn’t drive job seekers to an employer's jobs, the employer doesn’t pay.

More than 40% of traffic from job boards is mobile.

Runaway jobs eat into the advertising budget, while few clicks come through to the critical jobs that arguably have more value to the employer.

Cost-Per-Click Job Ads The cost-per-click (“CPC”) pricing model seeks to give employers greater control over their advertising budgets. By linking payment to a performance trigger, namely a click on the employer's ad, CPC ensures that recruiters are not spending money on posting when no-one is looking at their campaign.

At first sight, the CPC model is attractive.

The Rise of Mobile RecruitingConservatively, 40% of job searches today are conducted from a mobile device. It is expected that within the next five years mobile will be the primary source for job searches and applications.

Employers are coming into a new period where some of problems surrounding CPC are going to be exacerbated. Two trends in particular are impacting the ROI recruiters get when choosing a CPC model: the rise of mobile recruiting and the adoption of non-optimal application processes.

Employers gain the ability to adjust their budgets and extend or stop their ads any time. This gives a degree of control over their advertising spend and return rate not seen with pay-per-posting ads.

CPC reduces the employer's risk while generating traffic and applicants to open jobs. Put simply, if the job site doesn’t drive job seekers to an employer's jobs, the employer doesn’t pay. Sharing the risk with publishers arguably is a fairer way of doing business and makes the pay-per-post "pay and pray" model a thing of the past.

An employer may receive more clicks and, consequently, pay more money for the jobs that are easier to fill, even though they are willing to do the opposite.

These so-called runaway jobs eat into the employer's advertising budget, while few clicks come through to critical jobs that arguably have more value to the employer.

Despite the advantages, in some instances CPC may work in reverse.


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Mobile traffic converts at a significantly lower rate than desktop traffic.

Figure 1

Industry Blended

Aircraft Manufacturing

Auto Sales

Banking

Consulting

Consumer Telecom

5%

15%

13%

4%

9%

DeskTop

8%

18%

20%

7%

14%

Mobile

0%

10%

3%

0%

2%

CTA Delta

-

76%

650%

-

489%

Food Service

Healthcare

Insurance

Retail

Sales

Staffing

Technology

Transportation

7%

5%

10%

5%

5%

2%

16%

5%

13%

9%

12%

8%

7%

3%

19%

7%

2%

2%

7%

1%

1%

0%

1%

4%

430%

417%

78%

547%

807%

-

2209%

72%

Mobile applications are significant for one simple reason: the number of mobile click-through candidates that follow through with a job application ("convert") is significantly lower than for candidates viewing a job ad from a desktop device. Figure 1 shows data collected from over 500,000 job applications across 15 different industries, covering millions of clicks. The data clearly shows that desktop conversion rates are, at a minimum, twice those of mobile candidates.

CTA (click-to-apply ratio) measures the percentage of job seekers who click to view a job posting that actually go on to complete a job application. If 100 job seekers view a posting, and 10 of those job seekers go on to apply, the CTA ratio is 10%. Mobile traffic converts at a significantly lower rate than desktop traffic, as Figure 1 shows.


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High mobile degradation rates significantly increase recruitment advertising costs when advertising is bought on the CPC model.

Using the food service industry as an example, one can see that 13% of candidates clicking through on a desktop device go on to complete a job application, whereas only 2% of mobile candidates apply for the job. On a CPC pricing model, the employer must pay for the clicks regardless of what the applicant does next. Assuming a cost of $0.40 per click, it is clear that high mobile degradation rates significantly increase recruitment advertising costs when advertising is bought on the CPC model.

Food Service ROI on a CPC pricing model:Desktop: ($0.40 CPC / 13% CTA) = $3.07 cost-per-applicantMobile: ($0.40 CPC / 2% CTA) = $20.00 cost-per-applicant

Weak Apply ProcessesIn the aftermath of the last recession, employers faced with hundreds of applications for each vacant role, sought ways to streamline the recruiting process by screening out the least suitable candidates upfront. They achieved this via lengthy and detailed application questions.

Whilst offering certain labor efficiencies, a lengthy apply process deters candidates. As the time taken to complete an application goes up, conversion rates go down. Application rates drop by a staggering 365% if an application takes more than 15 minutes to complete.

Figure 2, extrapolated from our data, shows how sharply the cost-per-applicant rises on a CPC pricing model, the more time the application takes to complete. The cost hike is entirely due to candidates clicking through to an employer's recruitment portal but quitting before they complete an application.

Figure 2: Cost-per-applicant according to length oftime it takes to complete an applicationbased on a $0.50 cost-per-click.

$12.00

1-5# of Minutes 6-15 15+

$10.00

$16.00

$14.00

$8.00

$6.00

$4.00

$2.00

$0.00

$4.01

13.85%

7.51%


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It is clear that the market demands a new recruitment advertising solution: one that will align the interests of publishers and employers.

It tells the employer and the publisher, in real time, that someone has applied from the work the publisher has done. Tags work with every major applicant tracking system.

Employers cannot hire a word, a posting or a click.

Under the CPA model, an employer pays for a job well done.

Cost-Per-Applicant Pricing

Methodology Step #1: Install a Tracking Tag

Employers cannot hire a word, a posting or a click. Cost-per-applicant (“CPA”) pricing, the latest evolution in recruitment advertising, lets employers pay for the result they really want: a completed job application.

Under the CPA model, an employer pays only when a qualified job seeker applies to one of their jobs. For the publisher, payment is effectively a reward for a job well done.

CPA methodology is similar across all providers. The key to making the model work is better analytics and rules-based buying.

CPA demands that both the publisher and the employer know when an apply has occurred in real time. This is achieved by installing a small piece of code, known as a tracking beacon, on the application-received page of the employer's recruitment portal. The beacon fires when someone lands on the page i.e. after completing a job application. The firing beacon is the performance trigger.

Publishers can work hard to attract mobile applicants and make their technology compatible with mobiles, but they cannot control an application process that deters a click-though candidate -- mobile or otherwise -- from applying. Current CPC pricing models thus show a disconnect between the solutions that publishers can offer and the results (in the form of completed job applications), that employers wish to receive from that offer. At the moment, employers are carrying most of the risk.

It is clear that the market demands a new recruitment advertising solution: one that aligns the interests of publishers and employers; one that is both efficient, predictable and effective; a model that will strategically allocate budgets in order to satisfy difficult-to-fill positions; a solution that can be measured and recalibrated based on real-time hiring data; and a model with price points that return an economic and controllable cost-per-applicant.

So what is the solution?


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By establishing sponsorship rules, employers ensure that only the jobs that need applicants are advertised.

It tells the employer and the publisher, in real time, that someone has applied from the work the publisher has done. Tags work with every major applicant tracking system.

Which jobs are sponsored

When the sponsorship is turned on or off

Location metrics

Maximum budgets, by month, job or job group

How much an employer is willing to pay-per-application for each open job

The maximum applies the employer wants per position

Step #2: Set Sponsorship Rules

Figure 3:

Create job groupsusing your own functions,locations and job type.

By establishing sponsorship rules, employers can ensure that only the jobs that need applicants are advertised. Interfaces may vary, but typically an employer can specify:

Screenshot from the Appcast employerinterface

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Set ‘rules’ that focus yourbudget on jobs that need applicants

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Set the ‘cost-per-applicant’your are willing to pay.You can use the CPAestimator to optimizeyour spend.

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By establishing rules-based buying CPA enables employers in real time to divert funds away from jobs with enough applicants towards those that have too few. This eliminates wasted costs, which in turn makes a huge difference on ROI.

Massive reduction of risk: with no fee to list positions, employers can list all open jobs across a variety of locations for free. Employers only pay when a listing generates an application, so there is little risk involved.

Greater partnership between employers and publishers: CPA publishers are highly motivated to drive the most value, in terms of applications, towards the employer. In partnership with a quality CPA provider, employers are likely to see a reduction in their time-to-hire.

Real-time data enables smarter decision-making: real-time information enables CPA publishers to narrow-cast and make programmatic changes to the websites where job ads are displayed, in order to direct applicants towards those job ads receiving the lowest number of applies. For employers, real time data about application volume enables smarter decision-making about where to allocate budgets across the recruitment campaign.

Better ROI: an investment in CPA removes the gamble from duration based ads and eliminates the low mobile conversion risk and application length drop-off associated with the CPC pricing model. If used intelligently, CPA can drastically reduce the overall cost per hire.

Step #3: Pay When an Applicant AppliesBy charging only when a job seeker applies, CPA offers clear advantages over duration-based ads and CPC:

For corporate employers who measure the success of their recruitment advertising by the number of applications received, CPA delivers a 100% ROI.

For corporate employers who measure the success of their recruitment advertising by the number of applications received, CPA delivers a 100% ROI.


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ConclusionFinding the right talent continues to challenge organizations around the world. It's understandable employers and publishers are turning to new technologies to meet this challenge. The fact is, though, that fundamentally employers are seeking to do what they have always sought to do: attract talent by getting their jobs in front of the right candidates at the right time.

The new CPA pricing model comes from the growing acknowledgement that this exercise can be done more efficiently, with direct and immediate benefits to recruitment ROI. CPA moves away from "post and pray" limitations of duration based ads and the conversion rate disconnect experienced under the CPC model, to drive the right number of candidates to the right positions at the right cost-per-applicant.

In time it is expected that cost-per-applicant recruiting will emerge as the clear choice for successful recruiting campaigns. Almost all publishers now are looking at CPA either exclusively or in addition to the CPC pricing models they offer. This will create a significant opportunity to serve millions of new customers who seek variable job ad pricing.

Recruiting with AppcastOn January 1, 2014, StartDate Labs launched Appcast™, the industry’s first pay-per-applicant job ad exchange. Appcast allows talent acquisition leaders to focus their recruitment advertising budgets more efficiently by charging only when a job application is completed on an employer’s corporate career site.

Appcast brings advanced programmatic online ad buying to the human recruitment capital market. Above and beyond the pay-per-applicant pricing model, Appcast’s ‘rules-based buying’ engine delivers great applicants to the recruitment portal and ensures budget dollars are focused exclusively on hard-to-fill or critical vacancies that need applications.

Already utilized by many leading companies, Appcast is focused on maximizing the efficiency of recruiting ad spend in a streamlined, user-friendly way. Hiring managers set the rules on how they wish to sponsor jobs and how much they are willing to pay. There are no minimum budgets or long-term contracts.

Appcast offers a free trial to allow recruiters to test the app. To book your free trial, and for further information, visit www.appcast.io/freetrial.


Recruiting & HR

Appcast White Paper: Pay-Per-Applicant, Not Per-Click. The New Way to Pay for Job Ads