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Should employers be upset by Indeed's shift to pay per application?

Feb 16, 2023

Indeed is the world's biggest job board whether you're measuring by revenues, traffic, or just about anything else. Unlike most job boards, Indeed has long charged many of its employer customers on a cost-per-click (CPC) basis. In Q4 2022, Indeed announced at its annual conference and then by email and on-site to its customers that within months it would phase out PPC in favor of cost-per-application (CPA). Yet when the calendar turned from 2022 to 2023, many of Indeed's small and medium sized business (SMBs) customers were shocked to discover that they were being charged per application and, in some cases, their monthly costs skyrocketed. For example, some customers reported paying $15 application instead of $1.00 per click and $1,000 a month instead of $100.

There's been plenty of criticism by Indeed haters about the pricing shift with some upset that customers are now being forced to pay per application instead of on a traditional, duration or CPC basis while other crtiics have focused their attention on when and how Indeed communicated to its customers the radical change to its pricing model. In today's episode, co-hosts Peter M. Zollman of AIM Group and Steven Rothberg of College Recruiter attempt to get to the bottom of the situation in a measured and, hopefully, thoughtful manner instead of just yelling at Indeed for anything that it does. To help ensure that the information presented is fair, AIM Group sought and received from Indeed a statement about the new pricing model. The statement, as one might expect, presents the change in a positive light and yet does not shy away from admitting that the roll-out was far from smooth for a small number:

Statement from Indeed:

Indeed’s mission is to help people get jobs, and one of our values in support of our mission is pay for performance. As part of this, we are continuing our transition to a modelofpay for results, which includes pay per application and pay per started application. Employers havegiven feedback that they would prefer to be charged when they see greater value, which is getting them closer to the hire with an actual application instead of a click.

We remain committed to helping employers with this change and have taken comprehensive steps to communicate with employers throughout the rollout, including via email and within the product as they use it on Indeed. We encourage employers with questions to contactIndeed Support.

When posting new job ads, employers are prompted to customize how they want to receive applications. This is designed to help ensure they stay within a budget that works for their needs.

- Determine a price: Before an employer spends on their job ad, they review and approve a price per application. The price is based on historical hiring data from jobs similar to the employer’s and the estimated number of applications the employer will likely need to help make a hire.

- Set application limit: For each job post, an employer has the option to set an application limit. Once the limit is reached, the job post will automatically pause. Employers can also manually pause or close the job at any time.

- Automatically reject unqualified candidates: Indeed offers the option to automatically reject an application if the applicant doesn’tmeetpredetermined requirements marked as ‘deal breakers.’

- Reject and replace applications: The employer will have 72 hours to reject a candidate’s application and not be charged by Indeed.

For a small handful of employers, there have been some instances where they did not have the option to set their budget limit or application limit with the new pricing model. We have since updated the product to ensure all employers now have these options. For affected employers, we are working with each of them on an individual basis.

We’re confident that Indeed’s pay for results model will bring the industry forward by both reducing the time it takes to hire and the quantity of applications to review by employers. We’re already starting to see signals that our pay for results model is providing greater value to employers. According to Indeed U.S. data, employers have 23% fewer applications to review per job for pay per application jobs than pay per click jobs. Employers also have 35% fewer applications to review per hire reported for pay per application jobs than pay per click jobs.

Peter and Steven expect that this won't be the end of the conversation. Instead, we're likely just at the beginning. More stories will come out from employers and Indeed will likely make changes to the program, hopefully with plenty of advance notice and clear communication. Employers and representatives of Indeed who wish to be a part of future episodes where we continue the discussion are encouraged to reach out to us at [email protected].

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Transcript

Steven (00:09):

Welcome to the Inside Job Boards and Recruitment Marketplaces podcast. I'm Steven Rothberg, the founder of College Recruiter, job search site at College Recruiter. We believe that every student in recent grad deserves a great career.

Peter (00:23):

And I'm Peter Zollman, founding Principal of the AIM Group, the leading global business intelligence service for marketplaces and classified advertising companies. We consult with recruitment marketplaces, companies and publish aim group, recruitment intelligence, and a free weekly digest. We also host the annual Global Rebus Conference.

Steven (00:44):

This is the podcast for you to learn more about how to create, manage, and work with general niche and aggregator job boards and recruitment marketplaces. Hey, Peter, it is great being with you on what promise us to be a very special episode.

Peter (01:02):

Interesting episode to be sure. It's just the two of us, but we're gonna raise questions about the gorilla, the monster, lowercase m in the room. <Laugh> indeed. The new monster. Indeed, we will.

Steven (01:19):

Indeed we

Peter (01:20):

Are indeed. But first you drove back from New Mexico to Minnesota, Minnesota in February. What, what are you thinking?

Steven (01:30):

Well, so spending January in Minnesota is not nearly as nice as spending January in, in New Mexico. But at some point you know, the, the expression chickens come, come home to roost. Well, so, so I, I needed to come home at some point also. So we did miss the two massive polar vortexes, and it is 40 degrees outside, which for here in the wintertime is, is bombing. I don't see anybody outside in Speedos, but it's getting close to that point.

Peter (02:02):

Yeah, but you could get another two polar vortexes or vortices and hush huk for all of our European and normal around the world guests, 40 degrees is about three and a half to four Celsius. Yes. The important temperature gauge, the real, the real smart temperature gauge.

Steven (02:24):

Yeah. As, as someone who grew up in Canada, 50 50 Fahrenheit is 10 Celsius. I should, I should be more.

Peter (02:30):

Eight is 82. So and I'm in New Orleans because I am taking a couple of days off and going to museums and going to eat some beignets and going to a restaurant tonight and going to a restaurant tomorrow night, flying home Wednesday, and then Friday I will be heading out to visit the grandkids in New York. So.

Steven (02:56):

Hmm. You, you win.

Peter (02:58):

Yeah. Well grandkids is the winning, the winning ticket for sure. And soon to be another grandkid, God willing, <laugh>. So indeed. Oh, lots of employers were surprised when indeed cut over to pay per application in the US and Canada, which they did very recently. Yeah, we both agree, and I think almost everybody in our audience would agree indeed, as a private company, they can charge whatever the heck they want to charge. Yes. So the real question becomes, did they handle this cut over? Right? employers were getting bills for thousands of dollars when they had typically gotten bills for 40 and 50 and a hundred dollars. Did they handle it correctly? We heard from Indeed. We asked them what the heck's going on here? We'll get to that in a minute. We want to talk about the whole paper application. Is that the right approach? We want to talk about? Did de did indeed handle it correctly? In an ideal world, what does an employer really want to, to find the candidates they need?

Steven (04:16):

College recruiter that, the job search site that, that I founded I think it was like 472 years ago. We've partnered with Indeed for a long time, and we've seen Indeed really grow. We've seen indeed become very dominant, and we've seen indeed implement a number of changes that made a lot of employers very uncomfortable, very unhappy, but were the right thing to do for the industry and for the candidates. So, for example, salary transparency, a lot of employers in 2022 were upset when they discovered that they could either choose to include their actual salary ranges or that indeed would estimate those salary ranges. And I thought that Indeed did the right thing for the industry, and they're taking a leadership role in that. And I, I kind of see the pay for performance as, as similar. The questions I have is, is, is around the communication because it really seems to be a situation where there are a lot of small employers who were very upset and claiming that they didn't know anything about the change to a paper applicant based. And like you said, they've gone from getting bills of, say, a hundred dollars a month to a thousand dollars a month. And then I think that's the real issue in my mind.

Peter (05:37):

Well couple of notes. First of all you said they've done the right thing for the industry. Maybe, maybe not, but certainly they ticked off a lot of job boards and they were at best they took a scuzzy stand when they invited all the job boards to work with them and feed them in data. And they then turned around and used that data to compete with, and in many cases, damage or destroy the job boards job boards perhaps made their own, you know, you make your bed, you lie in it. But that's one thing. Second thing is the question of whether they communicate, communicated it correctly, and whether it's the right thing or the wrong thing I want to get to that in a minute by, just by saying when the manure hit the fan last week, you notice that I'm not <laugh>, I'm, I'm not Chad and Cheese.

(06:45):

I didn't use the [inaudible] hit the fan. <Laugh>. <laugh>. Oops. <laugh>. No. but when the manure hit the fan last week we asked Indeed because we were, we at the AIM group were writing a couple of articles about this whole debacle is the wrong word, this whole dust up, I think is the right word. Yeah. we asked them for comment and we got a comment back from them fairly quickly, which was very valuable. We also invited them to appear on the podcast, but we gave 'em very short notice and they couldn't scrounge somebody up in time. I think that's reasonable. If they want to join us sometime later, we would love to have 'em. Yeah, that'd be great. Here's what they said. They said employers want to pay for results. They have been given feedback from employers that they want to pay per application.

(07:39):

I quite doubt that because employers don't know what they wanna pay for. But they say they have taken comprehensive steps to advise employers of the change. You know, it doesn't look like they took comprehensive steps. They took some steps, but I'm not sure they took comprehensive steps. We had somebody at the AIM group Jess Baris who is our overall marketing wizard and so forth and so on, does a lot of our job advertising. We had her try posting a dummy ad. She said it was absolutely clear as mud. Mm-Hmm. <affirmative>, she couldn't figure out heads or tails. She had to inquire of Indeed support and she said it was not very well communicated. And then comes in the seventh paragraph or eighth paragraph, whatever it is, the disclaimer or the admission by indeed for eight. And I'll quote because I wrote it down for a small handful of employers, there have been some instances where they did not have the option to set a budget limit or an application limit.

(08:52):

We have since updated the product to allow that. So what they're saying in the deep in this response, but hey, we screwed up. We are fixing it. And we do know that they have given some refunds to employers. So, you know, it comes down to they allow employers to reject applications for which they are charged within 72 hours. It's not 72 business hours. Yeah. if they meet, don't meet certain criteria, well I will wait to see how that works in practice. But what that means to me at the AIM Group as a practical matter is we've gone back and forth be between Indeed and zip. We have settled on Indeed for the last 4, 5, 6 job postings we have made. We are now going to, at least in the US and north America, we're going to jump back to zip for a while and see how that works. That's my take. We'll get to the larger question later of is this just a bump in the road or is this gonna really hurt Indeed, but what's your reaction to Indeed's response and the whole structure and

Steven (10:20):

Function? Yeah. Well, so first of all, I think that at, at, at a high level that the, the shift from traditional duration based, you know, you pay a couple hundred dollars for a 30 day posting is easier to understand. And for large organizations it is easier to migrate to a performance based model, whether that's pay per click or paper application or something else, because they tend to be more sophisticated. You do have some small employers that are highly, highly sophisticated, but generally the larger the organization, the more likely you are gonna have a, an employment branding specialist, a recruitment marketing specialist, maybe even somebody in programmatic you can lean on your marketing department for support. So I think that the shift for large organizations has been simpler. I haven't heard large organizations kicking and screaming about, about this and complaining about the communication.

(11:19):

It's all coming from the small and medium sized businesses. The SMBs, the shift away from duration based to performance based, better aligns, indeed's interests with those of the employer. The closer you get to paying per higher than the more that Indeed or any other vendor wants to ensure that you're getting the candidates you want, rather than just running an ad for 30 days, you get what you get. If you don't get the results, the clicks to your site, the applications, if the candidate applies on Indeed, then ultimately both the employer and indeed are are gonna be unhappy about that. So at a high level, I think this was, this will be really good for, indeed, it will be really hard for some small employers that have a zillion things to do in a day. And you've got an owner operator who's flipping pizzas or whatever and just, or tossing pizzas and, and just wants to go out to the website, post a job, be done, get a bunch of applications and hire someone.

(12:29):

And, and I think that's partly what's happening here is that a bunch of these SMBs went through the process, posted a job, reap or renewed a, a posting and didn't really pay attention to what was happening and just wanted to be done and over with quickly. And then they got surprised. And then also, Peter, you know, you mentioned the, the admission by Indeed that for a small handful of employers is, was was their wording that they didn't have the option to set that budget limit or the number of applications. So clearly there were some small employers that should have had that disclosure and didn't, and they have every right to be frustrated, upset, get refunds, et cetera. And, and I, I trust that that indeed will will handle that. I'll tell you there, there have been a number of job boards and other HR tech, ta, tech work tech call it what you will including college recruiter that have come to the realization that small employers are really, really hard to work with.

(13:39):

They're really expensive to sell to because they tend to buy very little and they tend to need a lot of support. And if indeed loses the small employer business that will definitely hurt them. They have millions of small ELO employer customers. It will make their life easier. I don't envision that Indeed is gonna lose the SMBs. I do think that this is gonna help some of the other job boards in, in a short term. Z you mentioned ZipRecruiter. I think that's an excellent example and I think we'll see some equivalent examples in other markets. You know, zip is way, way stronger in the US than it is anywhere else. And when indeed starts rolling this out in, you know, Belgium, I think you'll probably see some Belgium job boards that that will gain some strength. One issue that I do have is, and, and you kind of mentioned it, that when an employer receives an application that's not well qualified, that they have 72 hours to reject it. I wish that Indeed had made that three business days because if that application comes in at four o'clock on a Friday, then you have realistically part of Monday to review the application and, and get back to them. It kind of reduces your time to like a day. I don't think that's really enough time. So I, I wish they had done three business days.

(15:10):

We'll be back right after this break. Welcome back to the inside Job boards and Recruitment Marketplaces podcast.

Peter (15:29):

One of the things I have long said is ultimately the perfect recruiting tool is the one and we'll never get there, is the one that you say, here's what I need. And it says, here is the perfect candidate, one candidate, and he or she is perfect. Mm. You don't have to interview 20, you don't have to reject 40 applications to a certain extent. Executive search, is that where they give you a, a slate of six? They narrow it down to three.

Steven (16:11):

Yes.

Peter (16:12):

And you've got three candidates, not a hundred. That that's the Yep. Ultimate right imperfection. We will never achieve that. And employers wouldn't accept that because if you said to them, here is the perfect candidate, they're gonna say Yes, but we're the others.

Steven (16:33):

Yeah. How do I, how do I know they're perfect? Cuz I don't, I don't, I don't see what they're compared to.

Peter (16:38):

So there's some of that. I I, to me, I think the issue is it's going to be difficult for Indeed to give me with unusual hiring requirements cuz we don't hire anybody. They're all contractors candidates who might nominally fit our needs. But when we look a little closer, they don't. Furthermore, we ask candidates, every candidate, even candidates for admin jobs and the like, write a cover letter because this job involves writing

(17:19):

And oh, at least half one half of 1% do that. Even the hundreds of applications we get for writers, 97.8% of them don't bother to write a cover lever letter. It's just too easy to hit the Apply Now button. And that's true with zip. That's true with Indeed that's in true with everybody. The screening mechanisms, indeed and ZipRecruiter and others have gotten better and better. The smaller the job board, no offense college recruiter, the, the, the less sophisticated the screening mechanisms have been, generally in the end, pay for performance is going to be better for employers, gonna be better for job seekers. But it has to be sophisticated. It is still too easy to hit the Apply Now button. And even somebody who is nominally qualified. And the key I think is the deal breaker's question. A lot of employers may not have set those deal breakers, or even if they have people nominally fit your profile, but they don't really, and you've now spent $15 times 30, which is 450 bucks on people who nominally fit the profile.

(18:52):

But don't you know, I want writers who can write about business. They're writers who write SEO clickbait, you know, and they say so, and well, you know, Indeed's gonna see that as as good as a good fit. We don't and there're gonna be a lot. There's gonna be a lot of that over time. Will indeed get better, will zip get better? Will all of the job boards college recruiter get better actively screening and delivering quality candidates? They damn well better. But so far I'd give zip a 40. I mean, I'd give indeed a 40%. I'd give some of the others even lower marks. And that to me as a very small business where we don't technically hire, we just bring on contractors. That to me is a real problem. But we'll see how it goes. You know, because we are in this business of testing job boards and looking at job boards and talking and talking and talking about job boards, <laugh>, it's time for us to wrap up. We will probably try indeed. Again, I do have a serious concern about the timeline and about the quality of applicants who nominally on digital paper fit the description, but in reality really and truly don't. And you're stuck paying for them.

Steven (20:28):

No doubt. The SMBs are gonna have to get much savvier in choosing what positions to advertise, how to advertise them. They're gonna have to invest a lot more time, a lot faster reviewing applications because otherwise they're gonna get stuck paying for them. But at the end of the day, long term, I see this as being a positive for the industry. I wish that it had been rolled out a lot smoother and indeed statement that there were, what they said was a small handful of employers. I mean, literally if you're talking, they're, you're talking under five. But I think clearly it was, it was more than that. It was probably a small percentage, maybe three, four, 5% I think is, is kind of how I infer that statement. And that's, that's too many. But you know, Sherm and other organizations say that it costs four, five, $6,000 to hire an average employee.

(21:33):

And employers that aren't willing to pay $15 for an application, even if half of the applications are no good, so they're spending hundreds of dollars to hire some money. Quite frankly, those employers are probably more trouble than they're worth to Indeed and indeed may have made the calculation that if they shift those, the smallest employers that are spending the least amount of money, but taking up the most amount of customer support time, if they shift, shift those over to ZipRecruiter, Taru talent, you know, whatever, some other job board, then it's not such a big loss. The top line revenue goes down, but the gross profit might go up.

Peter (22:21):

Well, I don't like being considered more trouble than I'm worth <laugh>.

Peter (22:25):

But I often am. And and on that note, Mr. Mr. Rothberg, we would love to hear comments from our audience

Steven (22:37):

Yes.

Peter (22:37):

About Indeed email, you know, indeed in email podcast college recruiter.com or email podcast aim group.com. We would love to hear more from Indeed. They would be encouraged to send a spokesperson, spokesperson to talk to us about this and others. And this has been a quick 25 minutes, pal.

Steven (23:04):

Yeah, this was great. Yeah. Employers that have experienced this good, bad, ugly, we'd be happy to have you on as a guest. Like you said, somebody from Indeed comes on and, and sets the record straight, adds some nuance. That would be wonderful as well. So, Peter, enjoy New Orleans. One of the best cities in the world. Very hard to find bad food in New Orleans.

Peter (23:27):

You know, I reviewed restaurants here for several years long ago. It's a great city.

Steven (23:33):

It it is. It's, it's definitely, I I always look forward to going to New Orleans. Cheers my friend. We'll, we'll see you next week.

Peter (23:41):

Have a good one. Take care. Inside Job boards and recruitment marketplaces is a co-production of Evergreen Podcasts College Recruiter and the AIM Group.

Steven (23:53):

Please subscribe for free on your favorite app. Review it. Five stars are always nice and recommended it to a couple of people you know who wanna learn more about job boards and recruitment marketplaces.

Peter (24:05):

Special thanks to our producer and engineer, Ian Douglas. I'm your host, Peter Zalman of the AIM Group, the leading global consultancy in the field of marketplaces and classified advertising. Find out more about our reports on recruitment marketplaces, job boards and classifieds, including our new recruitment marketplaces annual at aim group.com/reports.

Steven (24:30):

I'm your host Steven Rothberg of job search site college recruiter. Each year we help more than 12 million candidates find great new jobs. Our customers are primarily Fortune 1000 companies, government agencies, and other employers who hire at scale and advertise their jobs with us. You can reach me at [email protected].

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