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Recruitment Advertising Opportunity Is Ripe for Picking

We haven’t talked about the elephant in the room – recruitment advertising.  The profit model of the old business media paradigm was built around job advertising.  For weekly titles the recruitment industry made the difference between a 10% contribution margin and a 30% margin.  Without substantial recruitment income the affordability of large circulations and content teams is undermined.

In this post we will consider what happened to the recruitment business and what if anything the media industry can do next.

Track back ten years when we first started to wrestle with challeng of the Internet.  Much of the internal debate was about how to exploit the opportunity presented by online without destroying the profitable print model.  There were some early experimenters such as Morgan Grampian/Miller Freeman that tried to build an online solution (dotjobs I think it was called).  Most media companies built a model that gave online recruitment away with the print sale.

The trouble with a model designed to protect the parent product was that  was always vulnerable to new entrants and that proved the undoing of the strategy.  Only RBI with invention of Total Jobs, invented following the demise of technology recruitment, attacked the new opportunity with gusto.  But even this intitiative is small compared with the largesse of riches once enjoyed from the print model.  The reasons for this are obvious.  The price point for online recruitment is low – say £100 whilst the price point for a page of rectruitment advertsing was high, perhaps based on up to £50 a single column centimetre.  In addition there is a raft of new competitors, monster, jobsite, fish4 and numerous specialist boards all driving down prices.  Worse, the value proposition for job boards is fundamentally different from the print model.

Let’s think about this for a moment.  A thriving recruitnment market depends on tightness in the labour market.  It requires more companies trying to hire than there are skilled staff looking for jobs.  When competition for talent is high, recruiters will advertise to find not just job seekers but also those who are happy in their current role but need to be tempted to move or consider a move.  This requires push marketing, high levels of creativity in copy writing and presentation.  With loyal audiences reading the leading business weeklies media selection was easy.  The job ads went where the response was.  The response was where the job ads were and one or two titles in each market would clean up in a monopoly or duopoly. 

In a recession job advertising collapses.  As soon as GDP grwoth falls below 2% rectuiment volumes satrt to drop.  Recession has always made it hard for media owners in recruitment and it is certainly tough now.  Some markets have seen revenues fall by as much as two thirds.

So what can be done?  In the absence of a better plan what many companies are doing is signing up with Madgex, the leading supplier of job board software for publishers.  Although Madgex is a pretty small company, (turnover less than £3m), their solution is definitly fit for purpose.  But there are two problems.

First, all the job boards on publishers sites present pretty much identical functionality leaving few points of difference between competitors.  General job boards also offer similar functionality but with more jobs and more traffic and more response.  Second, job board presentation mitigates against recruiter creativity. 

If the jobs model is to be a substantial revenue earner for media companies they must either compete and win against the general job sites which is hugely expensive and probably too late to do; or they must develop a distinctive model for their niche which presents opportunities for recruiters to spend more than £100/job.  Why?  Well lest imagine a b2b market with a universe of 100,000 people.  Let’s imagine that all of them are using a single b2b website.  Let’s assume that everyone changes their job once every three years.  On job board models thats a maximum market value of  around £3m if every job is advertised.  Not enough to keep to keep two or three players in the market. 

How can we make the oportunity bigger? 

1) Disintermediate the the recruitment agencies.  Although it is quick and easy to build job volumes through agencies, in the end, if you let them in, they will earn more from your audience than you will.  An agency will charge the client 20% or more of the first year salary.  Now we have lost most of our print recruitment what is stop media owners being the agency?  Recruiters don’t care about the cost of a recruitment ad – what they care about is the cost of the hire.  So charge for the hire not the ad. It requires some new skills but if you have a relationship with the job moving audience you already have a head start.

2) Develop models which nurture push marketing.  Create promotional inventory for job advertising which is digital and creative.  (There are many ways I can think of doing this).

3) Don’t worry at all about the impact on your print business.  If you can think of a way of killing it, so can can your future competitors!

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March 4, 2009 - Posted by | business media strategy, Uncategorized

2 Comments »

  1. The Analysis you made on the Recruitment Industry is quite interesting, and the suggestions you made are also can be implemented. Anyways, thanks for providing such a useful info.

    Comment by barryalden | April 16, 2009

  2. It would be great if you did a post on some of the push marketing models out there for recruitment, without giving too much away of course 😉

    Comment by Ross | May 6, 2010


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