Social Recruiting Won't Be Cheap Forever

While examining the pros/cons of using social media tools for recruiting, I've often seen arguments highlighting the cost of these tools as a determining factor in adoption. Currently, many of the most popular social media tools like Facebook and Twitter do not charge for using their services. In comparison to recruiting via job boards or third-party recruiter, the lack of direct financial expenditure for Social Recruiting seems compelling. Just because the services are free right now, doesn't mean they will stay that way. Even if these services remain free (doubtful), this does not mean that Social Recruiting is cheap.

Business Model Experimentation

Despite having massive user bases, Facebook and Twitter are still experimenting with their business models. Their investors (some of the best in the business) are happy to be patient with these companies because they have successfully grown their number of users and have many potential revenue streams. In the case of Facebook, simply earning $1 dollar/month/user ($12/year/user) would result in annual revenue of $4.8 billion dollars. These revenues may come from corporate advertisers, application developers, or individual users. Given their wealth of demographic information, I believe that ultimately Facebook will be able to earn much higher rates due to precise targeting. Highlighting this potential revenue stream, Facebook states in their terms of service for developers that, "We do not guarantee that Platform will always be free". Even without this explicit statement, there should be no doubt that these companies are interested in building a profitable business not simply providing free services to millions of users.

What Really Works?

Another reason that these tools are cheap is because no one has yet figured out what works and what doesn't in Social Recruiting. The reason why job boards are able to command a defined price per posting(s) is because they have proven that if companies advertise their openings using their services, they will receive responses. Of those responses, an acceptable number will become new employees. Even though companies may not be happy with job board rates, no solution has yet emerged that enables companies to shift their recruiting spend to a viable alternative. Remember, prior to the economic slowdown, Monster earned over $1 billion dollars in revenue for the past several years. In fact, by consolidating the industry with the recent acquisition of HotJobs from Yahoo, one could argue that Monster will have even greater pricing power over job advertising once the economy begins to recover.

Employee Time/Energy Is A Real Cost

Even with those two points in mind, Social Recruiting is not cheap from the perspective of resources expended. Unless your recruiting team is filled with volunteers, Social Recruiting is not free or cheap. The main reason being the amount of time it takes to properly define, get buy-in, execute, measure, and repeat a campaign. Much of the time it takes to conduct these initiatives is because of the existing fragmentation of social media tools. From maintaining a Facebook fan page, tweeting on Twitter, writing blog posts, searching for candidates on LinkedIn, and monitoring Google Analytics; the recruiting team can spend a significant amount of time and energy on these free tools. Individual company recruiting teams that are taking a leadership role in this new space are developing solutions that don't necessarily scale well. In fact, one could argue that it is in their best interest not to share strategic elements which are most beneficial to recruiting top talent via social media.

So, What Does Matter? Utility

As solutions begin to emerge that unlock the secret to successfully recruiting candidates using social media for a majority of companies, providers will seek to monetize their insights. This will move the discussion from using Social Recruiting simply because its unsustainably cheap to using Social Recruiting because it provides greater utility when compared to available alternatives.

-Omowale Casselle

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About the Author: Omowale Casselle is the co-founder and CEO of mySenSay, a social recruiting community that connects college students and corporations.

Views: 67

Comment by Phil on March 24, 2010 at 8:35am
Excellent post, Omowale. I'd definitely concur that social recruiting (and its cousins social marketing and the social networking business model in general) is still in its infancy. An example that bears out your point is the recent product changes that LinkedIn made to try to attract more recruiting dollars. They're offering recruiters unlimited access to their database for a much higher per-month fee. Sounds a lot like Monster's business model, doesn't it?

In addition, like all new uses of technology, social recruiting still lacks a lot of the metrics one needs to really establish whether you're really getting a return on your investment. As you point out, there are a lot of soft costs associated with blog posts, tweets, etc., but equally important there is usually at best only anecdotal information about what the actual return is in terms of positions filled and employees retained over time.
Comment by Omowale Casselle on March 24, 2010 at 8:56am
Phil,

Thanks for the comment. Glad you enjoyed the post. I think the changes (re: LinkedIn) agrees with the intuition that the better targeting you enable for customers, the higher the monetization rates. This seems comparable to Facebook eventually being able to command higher advertising rates than Google.

I agree that much of the actual proof is not yet public. But, I would bet that companies that have figured out what works aren't going to be shouting their solutions from the rooftops for a variety of reasons.

I think those metrics and corresponding analytics are being developed because that is the only way to provide evidence of utility. Overall, the combination of increased communication, better targeting, and measurable analytics is going to greatly simplify recruiting. The question is when?

Cheers,

Omowale Casselle

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