?Employers posting jobs with Indeed will have a choice between the traditional pay-per-click (PPC) model and a pay-for-results (pay-per-application or pay-per-started-application) plan, at least through 2023.
In a reversal of its planned rollout of pay-for-results pricing, the world’s largest jobs site has halted efforts to require employers to pay for submitted applications—a big change from PPC pricing—after customers expressed some confusion and pushed back.
The migration from a PPC plan to a pay-per-application (PPA) model had already begun when Indeed announced in October 2022 that it would transition all its U.S. customers to PPA pricing by sometime this spring. But over the last few months, complaints started popping up across social media—specifically from small and midsize businesses (SMBs)—that employers were caught off-guard by the new pricing and were incurring significantly higher costs.
Indeed has confirmed to SHRM Online that it is holding off on requiring PPA pricing for now— while still believing that it is the best option for employers—but will continue to advance the transition from PPC to pay-for-results over time, in line with customer feedback.
“We feel giving people a choice between PPC and PPA while we make the transition is important,” said Raj Mukherjee, executive vice president and general manager at Indeed. “We will continue to offer that choice throughout 2023, and perhaps longer.”
Indeed’s pay-for-results offering has two options: PPA pricing for customers who buy sponsored job ads on the jobs site, and pay-per-started-application pricing, which applies to job ads indexed by Indeed that redirect to the employer’s careers site. Both options operate on dynamic pricing that varies based on job title, job location and the expected number of candidates the ad will attract.
Mukherjee added that Indeed plans to scale the pay-for-results model to more customers across the U.S. and U.K. this year. Customers will also be able to split postings between the two pricing models to see which one may work better for certain roles. Indeed will continue to A/B test the pricing models to improve how pay-for-results pricing works before making a full transition.
“I don’t know when the final transition will take place,” Mukherjee said. “We will offer a choice until we get PPA to a point that people say this is the product they want.”
Seeking to Better Serve Customers
Already the dominant pay-per-click jobs site, Indeed said the reason for the change was to move the job advertising industry forward by improving candidate quality and reducing the time it takes to hire.
“Our customers tell us that they are pained by application quality, the time-to-hire and the lack of applications for certain hard-to-fill roles,” Mukherjee said. “Employers have given us feedback that they would prefer to be charged when they see greater value, which is closer to the hire with an actual application instead of a click. The majority want to pay for results, so we are evolving our business model to make that shift. It will take time, and we will continue to learn from customer feedback until we get it right.”
‘The Bare Minimum Was Done Here’
Experts agree—and Indeed concedes—that the rollout of PPA could have been smoother.
“Apart from whether PPC or PPA is better or worse for individual customers, the rollout was mishandled,” said Jeff Dickey-Chasins, a job board and recruitment marketing specialist known as the Job Board Doctor, based in Grinnell, Iowa. “Usually when you make a major change, you try to overcommunicate. You let people know the change is coming, you remind them that it’s coming, and you try to explain why it’s coming. The bare minimum was done here, so it was almost inevitable that there would be a backlash.”
Another observer concurred. “Indeed had to make an about-face,” said Chris Russell, a job board consultant and managing director of RecTech Media, a recruiting technology consulting company in Trumbull, Conn. “They were taking a lot of flak from customers. There were a bunch of examples of customers reporting posting a job and getting a $1,000 bill when they thought they would be charged $100.”
Mukherjee explained that some SMBs didn’t have or were unaware of the option to set a budget limit or application limit with the new pricing model. The new higher cost associated with applications spiked as a result. The product has since been updated to ensure all employers have the limit options.
“The rollout went badly … but to their great credit, Indeed took care of the small businesses who got burned,” said Peter Zollman, founder of AIM Group, which provides business intelligence services and initially reported Indeed’s decision to slow down its pricing transition.
Indeed worked with dissatisfied customers on a case-by-case basis and provided a mix of credits and refunds, Mukherjee said.
In addition to slowing down its planned implementation of PPA pricing, Indeed made some changes to its “safety guardrails” to improve the model. When posting new job ads, employers are now prompted to customize how they want to receive applications to help ensure they stay within a budget that works for their needs. Employers will be asked to:
- Review and approve a price per application.
- Set an application limit for each job post so that applications and charges don’t blow up. Employers can also manually pause or close a job listing at any time.
- Automatically reject unqualified candidates through predetermined screening requirements.
- Reject applications within 72 hours to avoid being charged. “We initially had offered a 24-hour rejection period for employers, but [we] heard customer feedback that 24 hours isn’t enough,” Mukherjee said. “So we moved it to 72 hours. And that has led to a significant improvement in satisfaction.”
Zollman said the situation reminded him of the “old startup adage: ‘Fail fast, learn something and move on.’ I wouldn’t call this a fail, because PPA is the direction for the future, but they screwed up, they owned it and now they will do it more elegantly.”
The Future of PPA
It’s been repeated over the years that employers ultimately want to pay for job ads that lead to qualified hires. The main advantage of a PPA model over a PPC model is the reduction of unqualified, uninterested “clicks” that the employer pays for.
Indeed is betting that employers will pay more for its upgraded experience, as the value of a legitimate candidate is higher than that of lots of unidentified clicks, and that in the long run, PPA will save employers money, as recruiters can zero in on higher-quality candidates faster.
“With PPA, the employer is closer to getting what they want,” Dickey-Chasins said. “But it will take multiple releases of PPA and multiple refinements of what it can do and how it’s presented before it becomes a standard. And that lines up with every major change I’ve seen in the industry over the last three decades.”
He noted that when Indeed introduced cost-per-click pricing, people were likewise initially skeptical. “Although it’s widely accepted now, that shift took a long time, and it was a process of educating employers on why it might make sense for them,” he explained.
Experts have noted that recruiters will have to be more intentional with job advertising using PPA to avoid being billed for extraneous applicants. The move pushes recruiters to focus on optimizing spend and drilling down on applicant quality when analyzing return on investment (ROI)—all best practices for talent acquisition.
“It creates more work for employers,” Russell said. “Employers have to come up with screening questions and stay on top of applications coming in, so as not to be charged more than they want to be.”
Mukherjee said that the majority of SMBs using PPA are finding value in it. Indeed’s market research shows that 52 percent of employers chose results-based pricing as their top model, versus 22 percent for pay-per-click and 22 percent for pay-per-post.
In addition, employers needed to review 35 percent fewer applications per hire reported for PPA jobs than for PPC jobs, according to Indeed, supporting the idea that the PPA model leads to improved application quality.
Experts agreed that complete acceptance of a total transition to PPA will take time. “PPA can be a positive, especially for those employers who care about performance-based ROI,” Russell said. “But the benefits of the PPA model may not equal the cost for the typical small business. It’s likely still cheaper and sufficient for SMBs to get the applications they need through pay-per-click, rather than fewer but more-qualified applies through PPA.”
Dickey-Chasins said plenty of employers are still happy to place a duration-based post on a niche-industry job board where they know they will get quality attention.
“The PPA model works best where there is a high volume of jobs that are commonly held across multiple industries and the applications are easy to quickly ascertain whether the fit is good or not,” he said.
In short, PPA “is part of the future of job advertising, but it’s not the end-all, be-all for everybody,” Russell said.