I once took a course in grad school called Lessons in History. The premise was simple enough: for whatever reason, we humans pay less attention to history than we should and as a result, often repeat the mistakes we and others have already made. It’s an insight that many very smart business people and economists in particular still seem unable to grasp.
Recently, the business gurus at MKM Partners grabbed media attention for their decision to downgrade the firm’s rating on LinkedIn from “buy” to “neutral.” Now, I’m neither an investor in that site nor even a market player, but the rationale for the investment firm’s decision was a textbook case of missing a lesson in history.
According to The Wall Street Journal, the reason MKM was now less optimistic about LinkedIn’s fortunes was that, “While jobs growth has been healthy, many economists heading into 2016 warned that the pace of the growth should slow as the labor market approaches full employment.” A look at recent history, however, would indicate that exactly the opposite was a more likely course of events.
During the late, unlamented dot.com bubble, the labor market was the tightest in a generation. Economists were even wailing about the unemployment rate falling to below their definition of full employment. So, what happened? We had the greatest surge in job board spending in history. Employers didn’t stop competing for talent because the market was tight; they competed harder, and they did so by spending more money not less on employment sites.
Another Lesson in History
The propensity for employers to spend more in tight talent markets wasn’t the only lesson we can draw from history. While advertising budgets went up during the dot.com bubble, so too did the scrutiny of corporate executives. Recruiters weren’t simply given a blank check, but rather were charged with a much more explicit and rigorously audited fiduciary responsibility. They were expected to spend the company’s money wisely and evaluated on their ability to do so.
That same dynamic is likely to re-emerge as the talent market tightens once again. Ad spending will increase and with it a requirement for ever better returns on that investment. Job postings have been under price pressure for some years, so they are unlikely to provide significant cost savings. What else is there? More and more recruiters are considering a technology that’s revolutionized advertising in e-commerce: programmatic ad buying.
Programmatic ad buying uses data, analytics and software to make instantaneous adjustments in where an ad appears and for how long. It moves job postings around the sites participating in an ad network to optimize the candidate flow for each ad and minimize the time and cost to achieve it.
Will programmatic ad buying replace traditional job postings? I doubt it. A more likely outcome is that sites will adopt it as yet another product they can offer to employers. Doing so, however, raises a host of questions. For example:
- Where do you go to acquire this capability and what criteria should you use to evaluate alternative sources?
- How do you position it with employers so you don’t cannibalize your traditional job postings?
- And, what will adding this capability do to your current business model?
The technology of programmatic ad buying is already here. What remains is the development of best practices and policies that will enable job boards and other employment sites to implement it successfully.
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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