- Programmatic advertising for recruitment is limited. Why?
- Will it ever serve small and medium-sized businesses?
- ‘Cannibalization’ of existing business is a big concern.
What’s gone wrong with programmatic advertising when it comes to recruitment? Simply put, it’s underwhelming.
In 2018, PandoLogic, which operates the programmatic platform PandoIQ, predicted that “by 2020, 80% of all recruitment advertising will be based on programmatic campaigns.”
But it’s 2021 already and programmatic advertising comprises at most 10% to 15% of job board listings, according to Dennis van Allemeersch, director of online services for Belgium-based DPG Media, which runs a network of media sites in the Netherlands, Belgium and Denmark. And although van Allemeersch said that share could still grow to 50% in the next five years, we’re not holding our breath, based on the track record so far.
Compare those figures with the much higher uptake of programmatic for general display advertising at classified sites — as high as 70% at DPG, van Allemeersch noted. Percentages vary by country and recruitment site, obviously, but overall, they’re nowhere near the 80% that PandoLogic predicted just a few years ago.
Three main factors:
- Programmatic is effective for large enterprise clients, but there’s no easy-to-use option for small to medium-sized businesses.
- Unclear messaging about what programmatic really is.
- Too many bells and whistles that can be confusing to those in charge of recruitment at smaller companies.
“Programmatic has plateaued in the recruitment space,” Chris Russell, MD of RecTech Media, told the AIM Group. “It’s hit most of the high-value, high-volume companies by now. With a typical budget of $10,000 to $15,000 [needed for programmatic campaigns], there’s no way for an SMB to post just one job.”
Moreover, the average recruiter at a small business doesn’t know programmatic is out there, nor does he or she truly understand it, Russell said. “Programmatic works off job feeds; small businesses don’t even know what that is. Vendors have to do a lot of educating the market. It may be the golden age of HR technology, but it’s becoming much harder for recruiters to sift through all this stuff.”
Changes at recruitment marketplaces — especially due to the Covid-19 pandemic — have “recruiters’ heads exploding,” Russell added.
Van Allemeersch suggested the problem is actually “self-inflicted, with recruiters often old-fashioned and conservative in terms of technology and business model.”
The AIM Group spoke with some leaders in the field to find out why programmatic has been so slow to take off.
What is programmatic advertising?
First, a quick primer. The most basic definition of programmatic advertising is “where a computer makes decisions that a human would otherwise have to take,” according to Rene Bolier, co-founder and CEO of Netherlands-based programmatic vendor OnRecruit. “It has nothing to do with pricing models or channels. It’s just automation.”
Recruitment classified consultant Jeff Dickey-Chasins described it similarly.
“Programmatic simply means that the ad placement decisions are driven by algorithms,” he wrote on his Job Board Doctor website. Employers “load the jobs they want to promote into a programmatic ad platform. Then they set a price per job application that they’re willing to pay. They also set the number of applicants per job and the basic target audience. They push a button, and the ad goes out. The software does the rest.”
Programmatic as a term can get mixed up with other buzzwords, like performance buying, cost per click (“CPC”), where advertisers pay only when a user clicks on the advertiser’s link, and cost-per- application, or CPA. Programmatic technologies up the ante by analyzing which clicks on which websites are converting, and automatically reallocate an advertiser’s budget to sites with higher conversion rates or to different jobs from the same advertiser that need more traffic.
“There’s very little true programmatic” in recruitment, according to U.K.-based HR technology consultant John Salt, who managed sales and marketing for TotalJobs for 16 years. “If someone who works in brand advertising compared what we’re doing in programmatic with Samsung or Apple, recruitment is not even in the same league. Most of it is pay-for-performance advertising.”
Chris Forman, CEO of Appcast, a leading programmatic vendor, prefers to conflate the two terms. “Programmatic is the use of software and data to make your performance ad buying better,” he said.
The goal is to reduce ad spend, manage applicant flows to get just enough and not too many, and to identify perfect (or at least extremely well-qualified) candidates.
SMBs left out of the party
The ideal client for a programmatic advertising program now is one with at least 2,000 employees and an in-house recruitment team. That works for Fortune 1,000 companies, the bread and butter of most programmatic vendors, which include Appcast, Joveo, Perengo, PandoLogic and Indeed (following the latter’s acquisition of automated recruitment platform ClickIQ in 2019, now called IndeedIQ).
For SMBs, “unless you’re sophisticated, it’s hard to keep on top of the programmatic piece,” said Salt. “Some specialist agencies will do it, although it’s often not even true programmatic but involves a lot of manual intervention.”
Automated, but manual too
Vendors like Appcast regularly assign campaign managers who manually run programmatic campaigns for advertisers behind the scenes, Russell pointed out.
Matt Charney agrees.
“I’d guess that the future of products like IndeedIQ will be to manually put jobs into job slots via a shared sourcing center in India,” Charney, head of industry and product marketing for SmartRecruiters, told the AIM Group. He dubs the workaround as “sourcing-as-a-service.”
When it comes to cutting advertising spending, SMBs that have a few jobs to advertise don’t have much incentive to try programmatic.
“Will programmatic reach 50%? Yes, I think so,” Salt told us. “But it won’t go to 80% to 90% because a lot of smaller recruiters simply won’t need it. If you can pay £6 to £7 to put a listing on a job board and get 10 applications per job, that’s 60 cents . There’s no need to talk to programmatic. That’s cheap enough already.”
We saw that the number of clients programmatic providers like Appcast and GoldenBees have is a “few hundred to a thousand, mostly large corporations,” van Allemeersch pointed out. “SMBs are an underserved segment.”
The lack of a programmatic tool for SMBs may be the biggest reason programmatic has stalled, but it’s not the only one.
Fear of cannibalization
“Programmatic is not that popular yet in France and there are not that many recruiters in France that use it,” David Beaurepaire, CEO of HelloWork, told the AIM Group. Why? “The principal job boards do not allow the possibility of bidding on ad spaces on their sites via programmatic because they prefer to offer those spots and those services to their existing clients and maintain good relations.”
It’s possible that programmatic could arrive in five years, Beaurepaire added, “but it’s not guaranteed. I think we are quite a bit away from it, especially in France.”
The real problem with using programmatic is applicant quality, said Peter Weddle, CEO of the trade association TATech.
“The same job is being posted programmatically to multiple sites,” Weddle told us. “If one site is performing and another site is not, the algorithms are going to shift the buy. That’s a good thing. But applicant flow doesn’t necessarily mean applicant quality. Right now, at least, only the recruiter can determine that.”
Programmatic will take off “when the technology has improved to the point where we can not only improve applicant flow but quality applicant flow,” Weddle said. That would ideally be measured by cost per completed application, cost per accepted candidate or interview or even cost per hire. Some companies have even calculated metrics based on “cost per new employee who has stayed a full year.”
Gerry Crispin, who founded the CareerXroads community for corporate staffing executives, is more bullish on programmatic. “The only reason more companies don’t do it is because some of those companies still have legacy contracts with job boards that they need to get rid of at some point and focus more on programmatic operations,” he told the AIM Group.
IndeedIQ: Conflict of interest?
All of the people we spoke to were skeptical when it came to the acquisition of ClickIQ, a programmatic vendor, by Indeed, the world’s No. 1 recruitment site. The acquisition was supposed to bring Indeed more aggressively into programmatic, “but it’s not going anywhere yet,” said Salt.
Indeed may be taking its time due to the changes in recruitment during the pandemic; in fact, Salt said Indeed may still “be deep in the planning stage” for its programmatic playbook. But even if it launches a killer product, there’s legitimate concern that Indeed has not been an honest broker in the past and, as a result, shouldn’t be counted on this time to act any differently.
Quite famously, in its early days, Indeed courted job boards with free aggregation and distribution of job listings. Job boards happily signed up, only to be broadsided by Indeed when it began disintermediating them and encouraged employers to bypass the job boards and instead work directly with Indeed.
The fear is that Indeed could take a similar approach once its programmatic product is established, locking users into an Indeed- only ecosystem.
“Indeed will say that ClickIQ operates separately and that they don’t share any information with the main business,” Salt said. “I wouldn’t believe them.”
Van Allemeersch was equally blunt.
“Indeed is not perceived as neutral,” he said, so DPG has declined to work with Indeed in the Netherlands.
Working with IndeedIQ “would be strategically quite stupid. Why would I want to help Indeed build out its network and collect competitive data? There’s good reason to be suspicious of Indeed’s past behavior. History has taught us that Trojan horses are not usually gifts,” van Allemeersch said.
Indeed spokesperson Kristen Gehring told the AIM Group by email that the company is already serving ads programmatically to both Indeed and its corporate sibling Glassdoor and is “focused on integrating IndeedIQ’s capabilities — including its approach for optimization of spend across publishers to reach job-level goals — into Indeed’s core advertising solutions.
“We want these capabilities and benefits to be broadly available to employers using our advertising solutions. … Already today, any sponsored job on Indeed automatically benefits from the combined job-seeker reach of Indeed and Glassdoor. …
“We have continued to expand our Indeed IQ media network. Our intent is to give employers using our core advertising solutions the option to opt in to the expanded reach of this network. We look forward to sharing more about these capabilities later this year.”
Programmatic pivot: Diversity
Programmatic advertising is ideally suited to promote diversity hiring. That could be a catalyst for growth.
“The best way to do diversity-based recruiting is not to focus on diversity sites [but rather] to make sure your job ad is posted as broadly as possible,” Weddle told us. “That’s the sweet spot for programmatic.”
Programmatic “throws job postings in lots of different places and then sees what happens,” Weddle said. In the process, it tends to “oversample for people of color, to oversample for women, creating a more diverse slate of candidates coming into the organization. It’s not like smooth peanut butter — it doesn’t do it across the board. But in general, programmatic gets more communities of color and women to engage with the ads that are being promoted. As we understand it more, it’s going to be more of a use case.”
Salt said the algorithmic nature of programmatic promotes diversity. “With humans, it’s quite difficult even if you have had training in combating unconscious bias.”
DPG’s home grown alternative
When it came to programmatic, the question for DPG and van Allemeersch was, “Do you want to be the network, or do you want to be part of someone else’s network?” DPG decided it would be better to build its own, which the company did when it launched “De Performance Booster” in 2020.
De Performance Booster shops job ads around programmatically on DPG’s network of media properties along with Facebook, Instagram and Google for Jobs. The product was built to work independently of DPG’s infrastructure. Van Allemeersch told us DPG is considering spinning it out as its own standalone SaaS offering for recruiters and companies in Europe and abroad looking to get into programmatic.
“It would compete against Joveo, Appcast, GoldenBees, Vonq and others,” he said. “For job boards, the key strategic question is whether they want to take matters into their own hands to avoid becoming even more disintermediated.”
De Performance Booster is not pure programmatic — at least not yet.
“We’re offering it as an upsell for a fixed price for now to ease clients in. If we moved too rapidly” to pure programmatic pricing, van Allemeersch told us, “we estimated we could lose up to one-third of our revenue. So, for now, advertisers buy a slot and duration, and we steer the desired number of clicks per ad.”
Van Allemeersch said DPG hopes to switch to variable pricing later this year, but for other companies entering programmatic, a fixed price launch is a best practice. “If you don’t have the means, if you’re a job board with a traditional fixed price business model, don’t just jump into programmatic. You’ll kill yourself financially. You need a plan. But once you do get in, there’s no limit to how big you can become.”
De Performance Booster costs €399 to €799, including the fee for posting a standard job slot plus programmatic. If a client wants only programmatic with no job slots, it costs €250 to €500 depending on the package.
DPG could have bought or worked with an existing programmatic vendor, as Indeed did with ClickIQ and StepStone with its acquisition of Appcast. But that wouldn’t have addressed the elephant in the room — the lack of an easy-to-use self-service programmatic tool for SMBs.
An Appcast or Joveo might get there but “at best in only one to two years’ time. We believed we could do it ourselves, saving us the licensing fee,” van Allemeersch said.
He’s not dissing his more established competitors. “They built a product with a certain target recruiter in mind — a corporate recruiter or a recruiter at a Morgan Stanley. When you have that segment in mind, you build a product with lots of bells and whistles that gives the recruiter full control over the channel and budget. The problem is, you need a Ph.D. to steer and manage such programmatic campaigns. We wanted to build a full automated solution without any unneeded functionality, where the recruiter just clicks a button and the system delivers it.”
“The tipping point for programmatic will be when it is made more accessible for SMBs,” van Allemeersch said, calling it “the democratization of programmatic.” Otherwise, there will be “an increasing gap between the haves and have-nots in recruitment marketing and we will never reach a 70% penetration rate.”
DPG started working on De Performance Booster in 2019, before Covid-19, although the pandemic clearly “accelerated the move toward performance-based pricing,” van Allemeersch said. “We were lucky to already be working on this topic.”
Not everyone is a naysayer
While we’ve spent a lot of time in this analysis questioning why job boards have been slow on the uptake for programmatic ads and suggesting programmatic may never catch on in recruitment the way it has for display advertising across the web, some industry professionals are more bullish.
“Job boards that have found a way to adapt their business model to programmatic ad buying will be particularly well positioned for the [post-pandemic] business surge, if it occurs,” Weddle told us. “The capabilities of programmatic to support high volume, rapid recruiting are just unparalleled.”
Not surprisingly, Forman, the Appcast CEO, is all in on programmatic.
“If you have really good traffic, it’s good for you,” he told us. “If you’re a good platform that engages jobseekers well and does a good job of presenting jobs, programmatic generally is going to be a good thing for you. I would argue it’s a winner for job-seekers, too. It’s allowing job ads to get to the places where people play.”
The programmatic market for recruitment remains “nascent,” Forman told us. “We believe more companies will continue to adopt programmatic solutions and tools to better generate and manage job advertising, hiring outcomes and ROI.”