Who benefits from pay per application?

Who benefits from pay per applicationIn 2023, any employ­er that is using Indeed (and let’s be hon­est, that’s a lot of employ­ers) will be using the pay per appli­ca­tion (PPA) mod­el. Why? Because Indeed says so.

OK, it’s a bit more com­plex than that, and things may change, mileage may vary, etc. But – just as in the good old Mon­ster days – whichev­er site is the biggest makes the . So if Indeed says jump, employ­ers say, ‘how high?’. Now, to be clear, Indeed will argue – and who knows, maybe they are right – that employ­ers using PPA will get bet­ter results in the long run (note that phrase!) than those using plain old pay per click (PPC) or (God for­bid!) dura­tion-based post­ings.

“This is a big change,” said Mag­gie Hulce, Indeed’s exec­u­tive vice pres­i­dent and gen­er­al man­ag­er for enter­prise. Ms. Hulce is, as you can see, a mas­ter of under­state­ment. In all fair­ness, Indeed has done this once before – when they intro­duced the PPC mod­el as first pio­neered by Google to the hir­ing indus­try. It took them a decade, but even­tu­al­ly they could say that their brand of PPC dom­i­nat­ed many hir­ing mar­kets around the world – includ­ing North Amer­i­ca and much of . Although dura­tion-based post­ings con­tin­ue to be pop­u­lar, the PPC mar­ket has grown sub­stan­tial­ly  (the mar­ket was esti­mat­ed at $12.6 bil­lion in 2019) since its begin­nings in the mid-2000s.

But for me, the real ques­tion is: who ben­e­fits from a PPA mod­el? Let’s dig into it.

As Indeed itself admits, the PPA mod­el only works on the job board side if you can fig­ure out: a) how many appli­ca­tions a giv­en job ad on aver­age should pro­duce; and b) how much that should cost, based on the job board­’s costs and how much employ­ers are will­ing to pay.  How can a job board fig­ure those two vari­ables out? Well, as the AIM Group has not­ed before, it takes a lot of data. So who is the first to from PPA? Job boards with lots of data. In oth­er words, job boards like Indeed (and per­haps Seek, Step­stone, etc.).

What about employ­ers? Indeed says employ­ers using a PPA mod­el pay only for what is tru­ly want­ed—a qual­i­fied . Not clicks, and not an unknown num­ber of applies gen­er­at­ed by a tra­di­tion­al dura­tion-based job post. Well, you can argue that applies are not nec­es­sar­i­ly the same as a qual­i­fied can­di­date – but they are get­ting clos­er. So for employ­ers, it becomes a ques­tion of how many appli­ca­tions they need to find some­one worth inter­view­ing and – hope­ful­ly – hir­ing. If a PPA is $50, then 6 appli­ca­tions will run $300 – and could prod­uct 2–3 inter­views, if they get lucky. But…if a PPA is $5, then 6 appli­ca­tions will run $30, for the same results. As with many things in life, it’s all about the price you pay ver­sus what you actu­al­ly get.

What about can­di­dates? Well, they don’t know or care, in most cas­es. Except…the PPA mod­el is new for almost all employ­ers, and thus they are more like­ly to want to test it. In oth­er words, they are more like­ly to actu­al­ly respond to appli­ca­tions – if only to eval­u­ate the qual­i­ty of the respons­es. Thus, for a brief time, can­di­dates can expect more response from employ­ers – which is all they real­ly want in the first place! So for now, maybe PPA is a win for can­di­dates.

In the mean­time, 17% of respon­dents to this Recruit­ing Site Trends Sur­vey say they PPA to their clients. Won­der what the num­ber will be year? Stay tuned.

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