Danny McAskill’s Imaginate
Shortlist (subscription required) run an article yesterday detailing Fairfax’s move to making MyCareer a free job board.
The key reason for this move as per the quoted execs at FFX was the deterioration of value to clients provided by the online classifieds product. In turn, this is attributable to the ‘evolution’ of recruitment and consequent lack quality candidates visiting job boards.
As per the article, MyCareer will become a mass market, low-cost (to maintain) website. The print MyCareer will also continue to run.
In lieu, Fairfax will concentrate on selling targeted advertising solutions on their various platforms (displays, etc.).
Shortlist reports that “insiders” think that this is the best move against Seek’s dominance in the generalist job board space, particularly in the context of less money being spent on these properties.
• If the real reason for Fairfax to walk out of MyCareer is because there are no quality candidates to deliver to advertisers, this will not change because the job ad price drops to zero. Someone called this “the sushi dilemma”: the cheaper sushi is the less desirable it becomes. There are a number of free job boards that never got (or will get traction) because of this.
• A low-cost (to maintain) website will produce even less results to advertisers than a higher/normal cost (to maintain) website. Less investment in product innovation, SEO, etc. will likely produce less applications. Free is starting to not sound like a bargain after all.
• It is highly unlikely that FFX’s move will make a dent into Seek. Seek’s revenue and profitability may continue to slide, but it will not be because MyCareer is now free. This is because at the core, Seek and Fairfax were selling products of dramatically different grade and quality; just because a shop is giving again rubber beach sandals, it does not follow that this will impact the sale of hiking boots.
• Specially for large(r) advertisers, jumping onto a new job board always carries work and some expense, however palatable. Job ads distribution, infrastructure set up to process online applications from a new website, etc; all these ensure that “free” ends up being “no totally free”.
• The MyCareer service is effectively being degraded and priced accordingly. This is perhaps a step toward a total, already-agreed shutdown in the future.
• A total shutdown may have not been desirable immediately because it could have alienated clients even further (which could re-engaged and sold more effective ad products); the delay could also respond to sheer management hubris.
• Even though it is a free job board, Fairfax will still need to sell its value proposition, however diluted. An avenue to pursue could involve focusing on selective SEO, linking ad postings with the higher-engagement display ads, content marketing. All these potential propositions cost a bit of money, though.
• Perhaps the most regrettable outcome for the employment market are the implied assertions by the FFX execs that a) active job seekers are of lesser quality and b) that active job seekers only visit job boards.
On the latter, go to LinkedIn and type “seeking current opportunities” in the keyword section; active job seekers, by definition are active everywhere.
Regarding quality of candidates, I have never seen data-based evidence. Anecdotally, agencies and hiring organisations find great people in the platform that they use (spend) the most, or the one they are the most expert at using. You certainly find different types of candidates in different platforms but quality candidates (whichever way you want to measure quality) is not the garden-walled asset of any database or network.
You must have also been following the thread re. Seek raising their prices and how unfair that is in the context of the recruitment industry being in uncertain times, etc.
The main charge: Seek is making a ton of money!
Well, there are a few reasons why Seek’s destiny (read profitability) is not the same as that of the recruitment agencies:
1/. Most, if not all, of Seek advertisers are in the recruitment business. But Seek is not; Seek is in the online advertising vertical. And because of their business model, they’re now driving an NPAT that is 10 times that of the commercially viable agencies (don’t quote me to the cent; I am not running an analyst briefing). There are drastically different economics driving each industry.
2/. Seek’s goods are price-inelastic, which means that changes in price levels will not dramatically change customers’ demand for it. Recruiters as well as hiring companies that need people cannot do anything else other than continue posting jobs. Conversely, companies that are not hiring will not advertise for roles no matter how affordable a job posting is. So why not up the price? If I were a shareholder I would have cheering for a 19% rise, not 9%.
The assumption here is that there is either a belief or hard data that indicates that Seek still gives placeable candidates to its advertisers. Knowing that you’re keen on price-inelastic goods, you better be damn sure that they return to you what is expected of them.
3/. I reckon demonizing Seek is significantly less effective than voting with your feet. Perhaps now (better late than never) is the time to think about what else do you do as an agency or employer to get the talent you need and reduce your dependence on a single source of people.
What if you invest half of you what you spend on Seek on building other sourcing channels? This is what we did when we swapped newspapers for jobs, right?
My clients are all recruitment agencies; none of the guys and gals I have spoken to are overly worried about Seek’s price increase. What they are thinking is: how do continue ensuring my business model works? How do I keep my profitability intact, or how can I better it? Do I need to diversify? Move out of Aus?
Which are the right questions to ask.
I still cannot see why LinkedIn would buy Monster.
I’ve read it’d be a good move because LinkedIn could then be able to migrate the customer/revenue base from the job board over to them, and then a different revenue multiplier kicks in, and the rivers of gold continue to flow.
… bollocks, I say.
Why as I LinkedIn shareholder would I want to spend money on a job board?
Job boards are by definition antisocial. They are not antisocial because they are nasty or mean, or run by people with those traits.
Job boards are not social because they don’t foster relationships out of the transactions they thrive on (e.g the classified ads). That’s how they make their money. Meantime, LinkedIn’s value resides in the connectivity of professionally minded individuals and the networks it reveals.
If it wanted job ads, LinkedIn could have given them for free years ago. Instead they remain stubbornly expensive. And arguably, it already has a resume search product (and more). So they’re not buying features.
What do you think? The first person to comment with an agree or disagree mention, gets a coffee (in Sydney) if the transaction happens.
This got prompted by Peter Martin’s post in relation to inferior goods.
Inferior goods are defined as those for which demand decreases as their users’ disposable income increases. He mentions cask wine and International Roast coffee as a couple of retail/consumer examples.
Is your recruitment product an inferior good, based on the definition above?
When our clients are better off financially, do they seek out your services or do they seek to replace you with what they perceive is a superior product (DIY recruitment, a more reputable agency, employer branding consultants)?
Yes, there are many moving parts to offer a one true answer. This is an intrinsic limitation of the neoclassical economic model which relies a lot on the Ceteris Paribus (all other variables remaining equal) which never happens in real life.
However is it worthwhile asking this question as recruitment service providers, don’t you think?
Looking forward to being in touch during 2012
This sign is usually parked near the intersection of River and Shirley roads in Crows Nest; during peak traffic hours, the area is a nightmare to drive through, if you can drive through. I live half a mile down from where this ad is.
I am not sure when you last time paid attention to a You-Haul advertisement pushing a jobs website, let alone remembering to check it out once you got home. Seriously, I am just glad to get out of the bumper-to-bumper nightmare without getting too stuck.
Pretty dumb to spend money on this, huh?
Well, the ad is parked in a spot that is pretty much equidistant to The Royal North Shore and Mater Hospitals; surruounding them there is an entire ecosystem of labs, surgeries, private practices, physio centers, you name it.
My neighbour is a nurse. At the small primary school my kids go to, there are at least 1/2 dozen midwives who live in the area. They surely drive around River Rd all-the-time.
I’ve a had look at the advertised website. It is a bit of a substandard online experience, compared to best/better practice. It does what it needs to do as a jobs site, however.
Question is: What would you say is the candidate response due to the ad by the side of the road? I am not expecting huge flows of CV’s, but possibly high relevance levels and material volumes of applicants, given their geo hyper-targeting.
I will aim to get in touch with the agency guys and see if I can complete the picture. Just remember: you can have a niche campaign on wheels if you want to, outside Uni’s (graduates), coming out of Pyrmont (digital, IT), etc.
Have a good evening.
Over the past few months I have seen Facebook based apps/platforms (BranchOut, Talent.me, Monster’s BeKnown to name the ones I have signed up for and been using/testing) being touted as serious competition to LinkedIn.
The core reasons these and other Facebook-based services are being given a good chance of success against LinkedIn is not their technology prowess or unique business-commercial model; rather they are positively viewed by pundits due to the fact that they are hosted on Facebook, the largest social network at 750 million users (plus).
It is certainly possible that these FB-based systems do have great systems or unique value propositions for its users. These however seem to only come second to the “fishing on the biggest pond” advantage.
There are a number of reasons as to why I am sceptic as to this argument. Mainly, I am reminded of how China was viewed as a market a decade (or perhaps more) ago. I clearly recall many sales, marketing and business development presentations introducing China as a market with 1.3 billion “consumers” (which is as you know their entire population, more or less).
Closer inspection, of course, showed the fallacy of counting every Chinese national as a consumer without recognising their purchasing power, whether they lived in rural areas, etc. The rise of the middle class in China is certainly bridging the gap but it is still necessary to look deeper to understand they real size of the market for specific products or services.
The Chinese Market (size) fallacy reminds me of the volume advantage of the Facebook-based applications better-than-LinkedIn chances of succeeding. Even if these platforms were to grow large, recruiters know well that volume does not automatically imply quality (which drives candidate place-ability).
I am certainly not prepared to write off LinkedIn on the basis on the volumes argument. I’d love for other companies to continue innovating and making it easier for people to find jobs and for recruitment professionals to add more value to their employers/customers. I think this battle will be fought on the basis of benefits and value. I certainly hope so.