Indeed, the world’s largest job search site, has publicly announced that it is changing its pricing model. Indeed has always operated in a pay-per-click pricing structure where employers pay whenever someone clicks on their sponsored job ad. The new pricing model is not based on clicks – employers only pay whenever someone begins or completes the application process.
Indeed expects to offer two different recruitment marketing pricing models beginning in 2023. The first is the pay-per-application option and the second is a pay-per-started-application model. While both of these models are still considered pay-for-performance, this is a very big shift from pay-per-click.
Indeed’s new pricing model benefits employers seeking value from the hiring process. Rather than paying for every click a job ad generates, organizations will only pay if a candidate starts or completes an application. The employer won’t pay for accidental clicks or individuals who find they don’t qualify for the position after reading the posting.
Employers who post jobs directly on Indeed will use the pay-per-application model. Under this structure, employers pay whenever a candidate submits their entire application through Indeed. This model is best for employers who use Indeed as their primary source of finding job candidates and don’t use an internal application system.
Other employers that don’t post jobs directly to Indeed, but instead have their current openings indexed by Indeed will follow the pay-per-started-application pricing structure, unless jobs are opted into using Indeed Apply.
Under the pay-per-started-application model, employers pay whenever a candidate begins their application by clicking on the call to action button on the Indeed site, such as “Start Application” or “Visit the Employer’s Site to Begin Application.”
Some smaller employers are already eligible for these new changes. Mid-sized, large and enterprise companies will transition to the new pricing structure at the beginning of 2023.
Maggie Hulce, Indeed’s Executive Vice President and General Manager, introduced the anticipated changes during Indeed’s FutureWorks conference held on October 13, 2022, in New York City.
How Does This Change Impact Employers?
Pay-per-click is a popular job advertising strategy marketers have followed for over a decade. However, its popularity is dwindling as organizations realize that simply clicking on an advertisement doesn’t mean that the person searching is genuinely interested in the subject of the ad.
While Google and other significant advertisers still offer pay-per-click, there has been much more interest in pay-per-performance pricing that connects more deeply to desired results. Under a pay-per-performance structure, organizations only pay for results (e.g. a conversion).
Conversion can mean different things to different organizations. For instance, one company may view a marketing conversion as a sale, while others consider a conversion as signing up for a mailing list. In this case, Indeed is offering two points of conversion, the start of the application and the completion of one.
Employers who are seeking a new employee will view a submitted job application as a conversion. While receiving a job application doesn’t necessarily mean the candidate will join the organization, it does add to the talent pool that employers have to choose from when making the hiring decision.
Pay-per-application eliminates fees generated by job searchers who may need more time to be fully ready to switch from their current employer or may not possess the qualifications for a job. The system ignores simple clicks in favor of actual job applications, which is what the employer using this form of recruitment advertising is truly interested in.
As you might imagine, pay-per-application may initially be more costly to organizations that use it. However, employers can benefit in the long-term since they will only be paying for applications that can result in a hire. They can use the platform to improve employer branding, and they won’t pay for frivolous clicks on their job advertisement.
PRO: In the long run, the expense of the pay-per-acquisition structure may be worth it and add substantially more value to the hiring process with a more predictable outcome.
CON: Many of the tactics and strategies recruitment marketers used to achieve great results at the top of the funnel in a pay-per-click model will no longer be valid and the cost per application will now be set by Indeed, limiting the controls to optimize results.
What Is the Cost of Indeed’s Pay-Per-Application?
Pricing won’t be the same for every company or for every job, location, etc. Indeed plans to enact a complicated fee structure that considers essential environmental factors, such as the job’s location, the title of the role and the current number of available job seekers.
Consider a hypothetical example of a mid-sized organization seeking a receptionist in New York City. 125 other organizations in New York City are also seeking a receptionist, and approximately 40 candidates are seeking the role. Given the increased competition for talent with fewer candidates available, Indeed could set the pay-per-application rate at $20 per applicant.
In comparison, another mid-sized organization in Lubbock, TX, is also seeking a receptionist. Ten other companies are also looking for a receptionist in Lubbock and 90 individuals are qualified for the role. Since there are many candidates to choose from, Indeed could set the pay-per-application rate at only $2 per applicant.
When a company decides to post their job on Indeed, they’ll receive an immediate notification of how much they will pay for each application. They can set specific parameters to limit their spending, like a cap on the maximum applications they receive or the amount they pay to Indeed. Once the employer feels they’ve found enough candidates to begin the hiring process, they can close the ad completely.
It’s entirely possible that organizations may find that their costs will vary depending on their timing. For instance, they may find their cost-per-application for an accountant is $15 in December but drops to $1 the following April. Costs depend entirely on the current labor market conditions and competition among employers.
What has many recruitment marketers talking is that Indeed will be setting prices. And the information of what those prices are, how they are calculated and how they can be predicated is not known, understood or well communicated by Indeed at this time. And that is going to make budgeting for next year, when this change will be applied, very difficult.
PRO: The cost-per-application will be known at the time of posting a job Indeed, and results can be predicted with the individual job budget.
CON: Not having a clear understanding of what, how or why the cost per application is calculated makes budgeting and planning for larger organizations very challenging.
How Can Cost-Per-Application Improve Applicant Quality?
As well as having the ability to budget per job or campaign, Indeed has also established certain limitations employers can take advantage of to ensure that they’re paying only for valid applications.
Indeed encourages all organizations to use gateway questions to discourage unqualified applicants. A gateway question identifies must-have qualifications that the application must have for consideration of the job. For instance, a company seeking a financial analyst may include gateway questions the applicant must answer before beginning their application.
Relevant questions for a financial analyst role include:
- Do you have at least two years of experience in a prior financial analyst role?
- Do you have a Bachelor’s Degree in Finance?
If the applicant can’t respond positively to both questions, Indeed won’t charge the employer for their application.
Gateway questions are also excellent for improving employer branding. For instance, the employer can ask specific questions about the organization to ensure the applicant agrees with the company’s values. Employers can customize their gateway questions for each role they post on Indeed.
Indeed also allows employers to review the applications they receive before charging any money. Employers have up to 72 hours to deny an application that doesn’t fit their hiring requirements and Indeed won’t charge for applications that an employer rejects within that 72-hour window.
PRO: This can provide better value by delivering more quality applications and forces a new process that includes a 72 hour review period that can accelerate the hiring process.
CON: Gateway questions for all jobs will need to be created in advance of posting jobs and new processes will have to be created to ensure applicants are reviewed within 72 hours. How this will operate on a large scale across systems that don’t integrate well today is unknown and yet to be determined.
Indeed Is Evolving Into an All-in-One, End-to-End Hiring Platform
It doesn’t require too much imagination to view Indeed as going in the direction of an all-in-one platform for hiring. With the features and updates it has made over the past few years, many analysts believe that Indeed may be only a few steps away from applying a new business strategy that offers all the technology needed for talent acquisition. Evolving the site from an index of available jobs to one that handles the hiring process from end-to-end.
Some of Indeed’s newest features strongly benefit employers who can use automation to eliminate the need to scan resumes or schedule interviews. Employers can now source candidates through the platform and screen their qualifications. There is no need to schedule online interviews through meeting tools like Zoom. Instead, employers can set up interviews through Indeed’s proprietary meeting software directly within the platform.
Job seekers also benefit from Indeed’s automation features. Indeed will recommend jobs to candidates based on their previous search and application history and location. As Indeed’s algorithm improves, candidates will receive recommendations that align with their experience and interests.
Indeed’s relevance to employers and job seekers will strengthen as the company continues to enhance its features. Stronger connections between employers and employees will improve the hiring experience and result in better leads and employer branding.
PRO: If companies choose to only use the Indeed platform, they could reduce or eliminate their need for additional technology systems such as career sites, job distribution solutions and applicant tracking systems and provide a more fluid experience for the job seeker that boosts quality applications.
CON: Employers will likely need to have a process for integrating Indeed in their hiring platforms and a separate process for everything else, which duplicates efforts and reduces resource efficiency. With more candidate management happening within Indeed’s platform, the value of the technology that supports candidate management off of the Indeed platform may diminish for some organizations that do not have diversified source portfolios.
Will Pay-Per-Application Improve Recruitment Marketing?
Finding the right candidate for a new position is a struggle that employers regularly face, and the skill required of recruitment marketers is constantly changing and evolving.
These new pricing models eliminate the need for employers to pay for frivolous applications from unqualified candidates. Instead, organizations can benefit from connections with suitable candidates with the experience and qualifications necessary to handle the job. This will also improve the candidate experience and potentially accelerate the hiring process.
While the cost to use Indeed may increase, these changes may bring added value to the service in the long run and allow employers to benefit from advanced automation features and more robust algorithms. Providing better recommendations to candidates with relevant experience can further enhance the platform’s success as applicants can expect to receive suggestions based on their prior search and application history.
Impact to Career Site Traffic and Consequential Applications
The biggest hit recruitment marketers will likely see (and have to answer for in their data as a result of this change) is that paying for a click most commonly brought traffic to an employer’s career site. With these changes, career sites will no longer receive this traffic since candidates will remain on the Indeed platform. For many companies, traffic to their career site and to jobs on their career site will fall and overall applicant volume from the career site will likely fall as well.
Traffic from Indeed to career websites often leads to “consequential applications”. Traffic from Indeed does not always result in a direct application to that specific job that they initially clicked on. Often candidates discover and apply to other jobs for the same employer as a consequence of a click from a job that they found on Indeed. Many employers will no longer receive these consequential applications, which often drives down the overall cost per application.
Pay-per-application will no doubt be an easier model to manage for those less skilled in the art of performance-based marketing. However, by introducing more automation and control, this means less control and fewer insights for recruitment marketers. Indeed is a top source for many and a change this significant will require new strategies and processes.
At this time, the lack of information from Indeed leaves recruitment marketers ill-prepared to respond to these changes.