June 22, 2016   view past issues

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Job Board Journalist: 1 + 1 = 3

Sure, the Microsoft acquisition of LinkedIn will affect our industry, but an earlier announcement will likely have a greater impact on job boards.

Last month, Entelo announced the closing of a $12 million Series B round of funding. The news was interesting on two counts. First, it signaled that venture money was still flowing into online talent acquisition solutions, providing the fuel for continued innovation and development. And second, the bet by the company’s investors highlighted an important directional dynamic – a compass line for success – in the talent acquisition solutions industry.

Now, venture capitalist are far from prescient, but in this case, I think they’ve got it right. While there’s no definitive information on what Entelo intends to do with their money, I suspect it will be used, at least in part, to refine and promote its latest product. Called Entelo Stack, it “uses data science, machine learning, and directed scoring to automatically rank inbound applicants ….” Translated into English, that statement means it’s created an automated staffing capability.

Entelo is telling employers it can now use technology to evaluate the candidate flow generated by a job posting and deliver a slate of pre-qualified applicants rank ordered according to criteria set by the employer. Just as software can now conduct research to identify key legal precedents in court proceedings and cull through millions of alternative stocks to decide where and when investments should be made, software can also evaluate hundreds (or even thousands) of job applicants’ qualifications and organize them according to some target talent specification.

I’ve not tested Entelo’s product, so I have no idea how good it is. Moreover, I suspect there are similar capabilities that are already in the market or will be shortly. What’s more interesting and important, I think, is the commercial direction suggested by this development. In essence, it’s telling us that job boards and other employment sites need no longer be captive of a limited business model.

A Double Barreled Business Strategy

Depending on whose numbers you believe, the online recruitment advertising market currently comes in at about $3-5 billion. Not chump change, to be sure, but down significantly from the early years of this century, when it was estimated at $10-12 billion. So, what can we conclude?
• First, despite the wails of the gloom and doom crowd, recruitment advertising ain’t going away. It may be different in the future than it has been in the past, but employers will continue to use advertising to reach out to talent – whether they are a sophisticated Fortune 100 enterprise or a Mom and Pop company.
• Second, given the low barrier to entry in this market, that $3-5 billion pie will be divided into ever smaller slices for each of the players. Sure, there will be some winners, but even the biggest of winners will be limited by the market’s upside cap – employers simply have too many other alternatives for the market to grow significantly.

Which brings us back to Entelo’s move into the staffing market. According to Staffing Industry Analysts, that market is already at $100+ billion and, unlike recruitment marketing, it has no upside cap. Indeed, some would argue that the “gig economy” portends a new expansion in employers’ need for staffing services. As the Entelo product indicates, however, competing in this market requires more than a job board in a box.

Job boards have three possible courses of action to make a credible play in this market. They can develop a technology-based product for e-staffing, using either their own funds or those provided by investors (ala Entelo); they can partner with another company that already offers such services (ala the ASAE Association Career Center’s partnership with an executive search firm) or they can implement a hybrid of the two.

Whatever the strategy, job boards will likely be perceived as “newcomers” in staffing services despite the fact that many of them have been posting ads for part-time and contract positions for years. To gain entry in the market, therefore, they will probably have to price their services below those of staffing firms. That tactic will undoubtedly make them more competitive with those firms but no less important, it will also position them for a significant economic bump. Even at the lower prices, job boards will generate more revenue at higher margins than they ever earned with their traditional business model. It is a real life example of 1 + 1 = 3.

Food for Thought,

The Job Board Journalist by Peter Weddle is brought to you by TAtech: The Association for Talent Acquisition Solutions.

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This Week on Jobboarders

This week, Jobboarders features:

Why Job Boards Are Adopting Programmatic Job Advertising by Rene Bolier. If you haven’t, you should. Here are five reasons why.

Can You Name the Conference?. There are dozens of recruitment conferences, but only one that is truly unique. Can you name it with just one hint? Two? How about with three or four?

Jobboarders Book of the Month: “The New Golden Rules of Job Board Success: Four Principles for Optimizing Operational and Bottom Line Performance in the 21st Century” by Peter Weddle. This thought-provoking book examines the challenges and opportunities facing job boards in today’s rapidly evolving online employment services marketplace and identifies four key maxims for sustained site success. It is a quick read, but one that will nudge you out of your comfort zone and into a more dynamic, more fulsome vision of what your site can and must be. Get it in the TAtech Bookstore.

So visit Jobboarders today and ready your business for a successful tomorrow.