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Up to one-half of recruitment ad dollars are wasted, research finds
Employers can save money and increase their recruitment results by optimizing how job ads are used.
About $4 billion is spent on job advertising in the U.S. each year—representing, on average,
33 percent of an organization's overall recruiting budget, according to 2016 data from IBISWorld, a global business intelligence firm based in Los Angeles.
But research from Appcast, a recruitment advertising technology company based in Lebanon, N.H., showed that about half of that money is typically wasted, "meaning [much] of your spend on recruitment advertising is most likely wasted as well, due to ineffective ad buying," said Chris Forman, Appcast CEO and founder.
The most common way advertising dollars are wasted is by not paying attention to which jobs are being cross-published, said Elaine Orler, founder and CEO of Talent Function, a recruiting consulting company in San Diego. "Specifically, are employers being strategic about what they are paying to publish, versus what may be getting scraped from their site and republished? The lowest hanging fruit for employers is to re-evaluate what they are paying to have published."
Orler explained that companies might have multiple openings for the same type of job, and based on their relationships with distributors and fee-based job boards, all of the open jobs are picked up and spread across the Internet. "Instead of needing one advertised paid ad for a clerical support job, you might end up paying for all of the same jobs getting cross-published."
She added that cross-publishing multiple listings for the same position encourages job seekers to apply to all of the postings, creating more applications for recruiters to sift through.
Not understanding how many applicants are necessary to find one good candidate to fill a role, ineffective job postings, and the lack of a recruitment advertising strategy and a metric to measure results are other basic reasons job ad spend often doesn't meet an acceptable return on investment.
The following are some fundamental ways to optimize your job advertising dollars.
Know how many applications you need. The average number of applications that generates one hire for each open position in your organization is a foundational metric that is absolutely necessary to have to begin optimizing your recruitment advertising spend. The metric is based on historical hiring data and typically varies by job type, location and hiring manager requirements.
"For example, one employer may need 40 applicants to generate a hire for a field sales position while another employer may only require 10," Forman said. "Setting it effectively will enable you to identify when to stop spending on the jobs that already have enough applicants."
This will be especially helpful when advertising for "runaway jobs," those positions that attract hundreds and even thousands of applications, he added. "Most employers don't need nearly close to the number of applicants that runaway jobs receive. By limiting spend on these [job ads] to a proportional rate, you could reduce or reallocate the advertising budget by close to 20 percent."
Adjust for low-yielding ads. Appcast found that 50 percent of job ads generate approximately 2 percent of applicant flow. Underperforming ads deliver scant applications or fail to convert enough interested job seekers to applicants or they may be advertising for truly hard-to-fill positions.
Simple fixes here are making sure that job postings are clear and engaging and that the application process is easy and functions well.
[SHRM members-only HR form: Job Ad Template]
"Employers would save so much money with better written job postings," Orler said. "Whether or not organizations get more strategic about pay-per-click or pay-per-apply advertising models, they've got to get smarter about the information pushed out to the person making a decision about whether they should or should not apply."
The job description itself is the most important part of the ad, experts agree. All the prettiest dressing in the form of banners and video won't save a poorly written description, said Kevin Regan, vice president of digital strategy at TMP Worldwide, a global digital recruiting technology company headquartered in New York City. "Move away from company speak and think through the posting to determine what you are trying to tell a candidate," he said. "Organizations fall short in customizing their job ads, telling their unique story about what it's like to work there."
Employers don't want to risk missing the right people by casting too wide a net with broad, generic descriptions, Orler added. "Most companies don't even put salary ranges on the post."
Another important action to take is to find out why applicants are being rejected, Regan said. A goal should be getting fewer applications from people who are not good fits for the job, he said.
"Don't just use the same job description over and over again. Look at the reasons why applicants are or are not the right fit and then revise what you advertise accordingly."
Strategize spend across job publishers. This may be easier said than done due to the increasing types of job advertising models available to recruiters, such as cost-per-applicant, cost-per-click and free sources.
When budgeting, HR needs to decide on an advertising strategy that best fits the organization, including where to advertise and who to target.
"Understanding where the audience you want is, knowing what each job site's capabilities are to reach them, taking advantage of what's free, and complementing that with a paid effort is the right formula for optimizing job ad spend," Regan said.
A lot of organizations get all the exposure they need through the organic results aggregated by Indeed, for example, yet they pay to sponsor every job, Regan said.
When deciding among paid media publishers, there are two primary ways to go, Orler said. Employers can purchase a subscription with a vendor that runs an automated search for all open jobs on the company's careers site and pushes that information out to the public and to third-party publishers. "This is great if you're not publishing the same job 20 times on your website because it will be scraped 20 times and republished 20 times," she said.
Employers can also use distribution tools that promote the job on their site, as well as on fee-based and free job boards. "HR manages where that job is going to show up, and how long it will be up, on a job-by-job basis, and each company typically manages their own per-post contract with those boards," Orler said. "They might agree to spend $200,000 on Monster and $500,000 on CareerBuilder and that buys X number of postings. Once they run out, they have to buy more. That method offers the employer more control over what will be paid for or not."
Organizations can set a budget for each job or job group and distribute those jobs to several different sites while only paying for performance in the form of clicks, "apply" clicks or applicants, Forman said.
"Every job site has a different performance profile for how well they will be able to deliver you the right candidates," he added. "A job site that returns high volumes of quality applicants for sales positions might offer terrible returns for financial services, and vice versa."
When it comes to measuring results from paid media sources, Forman advised that HR choose a common metric and "run the math so that you're measuring all your sites on the same performance metric."
Cost-per-applicant or cost-per-quality-applicant are the two most consistent metrics to utilize when measuring performance across all your sources, he said.
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