• TotalJobs / Jobsite merger has failed to achieve dominance for StepStone
  • Scaled general, niche sites and aggregators all vying for market share
  • Is a bold move into the ATS market and programmatic necessary to win?

The U.K., one of the largest recruitment markets in Europe, is unusual for the region: It has no single dominant job site. Multiple companies are in the race, but the fragmented landscape may continue indefinitely unless one company is able to consolidate the market. Axel Springer’s StepStone may be best positioned to take the lead, if it can overcome multiple challenges.

Several companies are competing for market share in the U.K. The three major rivals are:

  • Recruit Holdings-owned uk.Indeed.com, supported by corporate siblings Glassdoor.co.uk and SimplyHired.co.uk. Combined, they have a dominant lead in monthly visits but are probably No. 3, maybe No. 2, in terms of revenue.
  • StepStone-owned TotalJobs.co.uk and its smaller sister JobSite.co.uk are No. 2 by total monthly visits but No. 1 in revenue.
  • Reed.co.uk, part of the Reed Global Group, is No. 3 by visits, likely No. 2 by revenue, possibly No.3.
  • Privately owned CV-Library.co.uk is a close No. 4 by visits, often swapping with Reed for the No. 3 spot.

Risky consolidation required

The U.K. environment has:

  • A high number of recruitment marketplaces compared to some other markets: multiple scaled general sites, a plethora of niches — many of which perform very well — and a number of aggregators.
  • More use of performance-based buying, including programmatic, than almost all other markets, with the U.S. being the exception.
  • A strong presence, and ongoing employer use, of recruitment agencies and consultancies. They have a vested interest in continuing a wide range of job board options, preventing any specific marketplace from dominating.
  • Highly commoditized advertising, at lower costs than in many similar-sized markets, making it more viable for advertisers to sustain multiple sites.

With Indeed leading on traffic and TotalJobs Group on revenue, there is no clear winner yet. How could one company take the lead? It could perhaps:

  • Consolidate the applicant-tracking market by building an end-to-end recruitment service that offers recruitment advertising optimized for hiring success.
  • Add programmatic capabilities based on quality metrics, building deep data to exploit.
  • Maybe also consolidate competitors to build a richer product offering and audience reach.

However, these are expensive and risky options, particularly for businesses that are successful and churning out revenue and profits using existing models. The U.K. market is unlikely to change fundamentally unless someone takes a bold step. The alternative is slow, incremental change, with nobody able to land a knockout blow.

Can StepStone break the deadlock?

In theory, StepStone, Axel Springer’s recruitment giant, the No. 3 recruitment marketplace business by revenue globally in 2019, should have the edge due to its scale and expertise in Europe and leading revenue position in the U.K. via TotalJobs Group.

Complicating StepStone’s U.K. ambitions are several strong second-tier recruitment sites below the Top 3, including CV-Library, many smaller companies, and a raft of aggregators including Adzuna and Neuvoo.

“The U.K. market is unique because there are so many recruitment staffing agencies,” John Salt, a U.K.-based recruitment consultant, told the AIM Group. “The market also uses CV databases differently from European countries. The unit cost per job for job boards is much lower, so they are slow to move to different models. Why would they unless they miss out on the best candidates?”

Louise Grant, former CEO of job board network JobG8, concurred, believing that the U.K. is “a bit slower in moving toward the pay-for-performance model dominant in the U.S., which is a market with a lot of aggregation.”

Interestingly, it’s economics and not brand loyalty that underpin the status quo. Quality of leads trumps source or quantity. Recruiters will adopt new services if they can deliver a step-change in quality (or price). “If I employ someone programmatically or on pay-per- performance to get the candidate I want, I’m less bothered about buying credits from TotalJobs, Reed or anyone else,” said Salt.

Is anyone bold enough, and willing to invest sufficiently, to up-end the status quo?

StepStone has scale, stability, and the technical and product resources, but it would also take very significant financial resources to execute and win big. Is StepStone willing to do this? The company spent around £230 million ($320 million U.S.) to acquire Total Jobs and JobSite, and €70 million ($79 million U.S.) on programmatic advertising provider Appcast, so they’re certainly capable of making big bets.

“With the investment StepStone has made in the U.K., they will not give up,” Salt told the AIM Group. “But they need to make some brave, potentially expensive investment decisions to kick on.”

Grant thinks StepStone’s acquisition of Appcast was a “smart move.” Appcast has been successful in the U.S. and “it will be interesting to see how it integrates with the product and if they can replicate that success in the U.K. market,” she told the AIM Group. It could certainly be one component of a more radical approach.

In contrast, StepStone’s attempt to dominate the U.K. by acquiring and subsequently merging the services of two leading job boards hasn’t gone as intended.

TotalJobs, JobSite merger hasn’t delivered

StepStone bought then No.2, JobSite, in 2014 to run in parallel to its No.1, TotalJobs. In 2018, it merged the services into one package for recruiters. The idea was to create one larger provider that could dominate, but it hasn’t worked out that way.

“The idea was that one plus one would equal two, but I don’t think it equalled two,” said Salt, who spent almost 17 years with TotalJobs in various roles and 18 months with CV-Library as MD before becoming a consultant.

“The problem for clients after integration was the rationale that they are worth more together, which was probably not the case.”

Matthew Moore, MD at CV-Library, thinks integration is difficult.

“It’s a long process,” he said, “and recruiters like to diversify and use different job boards, and there will have been a severe overlap of the client base.

“If you spent £10,000 with TotalJobs and £10,000 with JobSite, it doesn’t mean you will spend £20,000 with the combined organization, so you cannibalize some of that market without doubling up on revenue.”

Since StepStone acquired JobSite in 2014, combined TotalJobs and JobSite revenues have grown just 3.3% (approximately) per year on average to 2019, versus CV-Library at 24% and Reed.co.uk at 12%. StepStone has let JobSite’s traffic wither to just 630,000 visits per month (according to SimilarWeb). It now has just a twentieth of TotalJob’s traffic. Domination through consolidation hasn’t worked.

Could Indeed build on its dominance?

Indeed is perhaps the only other recruitment business that could really shake up the U.K. At its peak last year, Indeed had four times the monthly visits of TotalJobs in the U.K. In Recruit Holdings, it has a parent with vast resources and a long-term perspective.

“They could be the one to establish dominance in the U.K. market if they focus on quality and good candidates,” said Salt.

Salt believes Indeed’s cost-per-click model is good for the company in the U.K., but it needs to optimize for quality, not quantity: “Buyers are jaded by paying for a click that’s classified as an application, but doesn’t turn into one.”

If a recruiter knows how many jobs were posted — where, when, how many views, clicks, how many applications have been completed and where they come from — that’s valuable. This information is often held within an ATS but isn’t plugged into the job board itself, so the data isn’t connected.

“The owner of that data could potentially integrate with a programmatic offering to present the complete picture,” said Salt. “This could be a green flag for a client-facing business because they can understand which channel their hires come from.”

Indeed has programmatic capability through its programmatic service Indeed IQ. It also has the wherewithal to acquire a material position in the ATS market. (Indeed U.K. did not respond to the AIM Group’s requests for an interview.)

Manage the data, win the race?

The job boards that can extrapolate and exploit valuable data will be winners. This will create two groups: one that gives good insights on recruiter budgets, and one that provides quantity. The first will be much more valuable.

The bigger companies are likely to acquire to win the recruitment data war. StepStone and Indeed have already made useful acquisitions. This suggests they want to be recruitment businesses, not just job boards. They could buy, acquire or merge into the ATS space and get powerful data. But consolidating the ATS market is complex TotalJobs has maybe 70 ATS integrations now, illustrating how diverse and fragmented the market is.

“If you have Appcast posting the job, platforms StepStone owns staking the job and ATS systems helping employers manage the response, you have powerful end-to-end data,” said Salt.

If that works for one large company, others would follow and there would be consolidation, Salt said. But he doesn’t think there is value today in merging and acquiring job boards.

StepStone has the capability, but connecting all of the pieces is difficult. If it could combine its job board business with a great CRM system and solid ATS, that could be a winning formula.

“That would terrify a lot of their rivals,” said Salt. “It would take a huge investment and a huge risk, but it could potentially give a massive competitive advantage.”

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