Job Boards – A New Business Requiring New Thinking

Job Boards – A New Business Requiring New Thinking

July 15th, 2014 // 12:13 pm @

jobsboardThe growth of job boards as a way of advertising for staff has revolutionized the recruitment advertising business. It is however a new business that requires a different mindset if one is going to be successful, and some companies have been more successful than others in navigating these new business drivers.

Firstly it is important to remember what a job board is, and just as importantly what it is not. The business is a pure advertising one, and in some areas has similarities to traditional advertising.

Job Boards are not a recruitment business, they do not attempt to match business needs to individuals in the way a skilled recruiter would do. Some attempts have been made to use technology to do this, but to date they have had limited success.

It has proven difficult to merge the business of recruitment with recruitment advertising with any success. The reason for this is that recruitment is a very personally driven business requiring very specific business and people insight from the recruiter, where recruitment advertising is a media business.

The market value of successful job boards remains high, with Monster valued at over $11b. This reflects the potentially very high profitability of market leading job boards, which is driven by the high value of recruitment advertising to users, and the low cost of advertising on the Internet.

Job board advertising has two other characteristics that have influenced its development. Firstly the costs of entry are relatively low, and therefore there are a plethora of job boards, many small and unsuccessful, but plenty of them. Secondly traditional geographical limits that old advertising had such as the physical distance over which you could distribute a newspaper do not exist. This means job boards are more open to set their target markets, those who have focused effectively have tended to be more successful than those that do not.

The most critical driver of job board success is to understand it is inherently a monopolistic business. That is to say the market leader will be very significantly more successful than the second player. (See – Online Monopolistic Business’s)

There are two key reasons for this, both linked to the market leader having the most job adverts in their industry and the most job seekers.

This impacts revenue and costs significantly. Firstly customers are trying to fill jobs, and the cost of the vacancy while difficult to calculate exactly is many times the cost of the job advert. Therefore the tendency to place the advert with whoever has the most relevant job seekers is high, and the cost of the advert is not critical. This allows market leaders to price up significantly.

Secondly marketing expenses are efficient for market leaders, as investment spent to get job seekers to your site will be efficient if you have the most relevant jobs for them, as they will come back and they will recommend your product.

These two drivers make leading job boards significantly more profitable than the number two who have to discount their adverts to get jobs and who’s marketing expenditure is less likely to drive repeat visits from job seekers as they do not have the most jobs.

Market leadership is therefore critical to business success, in whatever niece is chosen, whether it be an industry, a type of job or a geography. The trick of course is understanding how to drive such market leadership.

The key drivers of success for me have been:

  • Focus – Pick your markets and stay focused on them until you have achieved clear leadership.
  • Sales Economics and Structure – In a business where the cost of placing an incremental advert online is close to zero, and that extra job helps attract job seekers then it is both possible and prudent to have large and by traditional terms inefficient sales teams, the trick is to ensure they structured to ensure each additional piece of sales investment drives genuinely new business. (See –  Sales Structures Job Boards)
  • Marketing Message and Investment – Investing in job seeker growth is critical, and there are two key drivers. Firstly the message, one can change the tone, but the key thing job seekers want is too know you have is “The most relevant jobs for them” that is why they will visit your site. Secondly focusing this investment to job seekers that are relevant, the best tactical way to do this depends on your chosen market. (See – Marketing Job Boards)
  • Other Costs – All other costs are relatively fixed, one needs a good stable web site, but technological innovation has generally proven to be not financially successful. It is best to be a follower of the cutting edge rather than to be on it.

The job board market has a long way to go before it reaches maturity, there are way too many job boards around and considerable consolidation in the coming years is inevitable.

For those who can create clear market leadership and the profit that comes from it can still build valuable business entities.

 


Category : Blog &Business Strategy

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