HotJobs' flawed strategy
HotJobs has un-embargoed the news, Charlene Li is reviewing it, and we’re interested!
Welcome back from vacation Charlene! My BlogLines missed you!
Charlene is right:
On the surface, this seems silly - why would they want to cannibalize the service's main source of revenues, paid jobs?
Well, it is silly, and it is a failed strategy.
Why? Free listings and free response lead to very low quality response and a very low quality experience.
Yahoo! tried the free classifieds approach in the late 90s and early this decade. The Personals site got crowded with the shady ladies and flim flam artists, the auctions boomed (b/c ultimately the buyer had to buy) but then busted when they started charging (99% decrease in listings), and careers was a dead-end area for Yahoo! except for the extent to which they could talk a sucker, first Dice.com, then Headhunter.net, into agreeing to their egregiously priced $17mm / year sponsorship deal.
So the past is prologue.
Now just because something has been tried before is no reason not to try it again. Most famously, Go pen-based computing and Newton, Apple's PDA entrant, failed spectacularly only a couple dozen months before the Palm Pilot became the iPod of the 90s.
So the mistakes of a past failure and the lessons learned can serve as a kind of fertilizer for the businesses of the future. Having a really good understanding of what your marketplace needs, and how prior solutions fell short, and where today's technology enables a new solution to prosper, can, in a way, lead to even greater success for the sharp-minded, customer-loving new product champion.
Does HotJobs' new initiative have those characteristics?
Charlene interviewed Dan Finnigan, HotJobs' GM. Dan’s a good guy and threw a great party with the Village People in San Diego at SHRM. What I'm not convinced of is that this new product is responsive to his customers' needs. Let's look at Charlene’s interview write-up:
He said that the #1 goal for HotJobs and Yahoo! is to provide a comprehensive job search experience.
The first great question to ask in any business is: "What business are we in?" It's amazing how few people, how few executves even, can answer this question at all, let alone well.
Dan feels that HotJobs is in the comprehensive-job-search-providing business.
I don't think it is.
(The guys at Monster should be dancing, if the guys at Monster even pay attention to Yahoo! HotJobs anymore (I don't think they do). )
HotJobs' business is to provide recruiters with targeted response at an attractive cost. That's what their customers are buying. To get there, HotJobs needs to attract a sufficient number of job-seekers as inventory.
That's quite a different, and perhaps mutually incompatible goal, with providing a comprehensive job search experience.
There have always been plenty of people that provide the 'comprehensive' experience already (long before the Indeeds and the SimplyHireds did, though they do so today with greater aplomb and panache), most notably the U.S. government!
So why should HotJobs enter into this market?
(Incidentally, Andy McKelvey and team have understood since way back in the day at TMP Yellow Pages that they are in the performance-based advertising sales business. That's why Monster ultimately succeeded in the job board business, and, frankly, how HotJobs' founder Richard Johnson vaulted from distant #17 to #2. Sales, sales, sales.)
They were noticing that consumers were starting to conduct job-related searches on the general Yahoo! search pages, and advertisers were buying up job-related keywords.
I don't believe this. I started the HotJobs' relationship with Google in May 2000 and Google quickly became our largest source of leads for candidate acquisition. At the time, all the search engines were doing a huge volume of business of job-related searches.
And little wonder. Companies like Yahoo! were heavily promoting careers and classifieds way back then.
For example, here's Yahoo!’s homepage from January 1998:
Employment and classifieds are both right up there at the top.
So short of a graph showing the sudden onset of job-related searches, I have a real tough time believing this one.
According to Dan, Yahoo!'s long term plan is to have another tab appear on search.yahoo.com for "Jobs", in much the same way vertical search engines already exist for shopping and local searches. Job listings would also appear in general search results.
HotJobs is already in the highlight box at the top of Yahoo!'s homepage. As there’s nothing technically sophisticated about adding a jobs tab, I’m surprised they have to wait.
The twist is that HotJobs plans to put the paid listings first in the search results, and first in the integrated search listings.
Here's Yahoo! Careers from early 2000:
Even way back then, Yahoo! was advertising over 1,000,000 jobs nationwide.
At the time, Yahoo! scraped and accepted jobs from any source available on the web. It was a free jobs listings model. It didn’t work. That's why Yahoo! acquired HotJobs.
As anyone knows from general search results, it's rare that people will venture beyond the first few pages of a search results. Here's an example of a search for "RSS" in San Francisco - when I did this search, there were a total of 41 jobs, with 31 of them featured listings. Those ten "scraped" listings came from just two companies - Juniper and Ask Jeeves - but I fully expect to see a more comprehensive list.
But if nobody is going to look at them, what's the value in having them there?
The "free" listings will benefit jobseekers who are looking for very specific jobs or jobs in locations that don't have a lot of online recruitment listings (here's another example).
In other words, the harder your job is to fill, the more likely it is we are going to give it away to you for free.
The secret to Yahoo's revenue preservation is that if a company has problems filling a position, they will feel the need to pay for placement in the featured listings – as well as access to resume database.
This product doesn't impact the resume database fees at all, agreed.
But if you have a hard-to-fill job that doesn't show up in searches often because people aren't looking for it, how is paying additional money to HotJobs going to solve it?
So Yahoo! really doesn’t have much to lose in terms of revenues
I don't see how this follows:
a) Recruiters who used to pay advertising fees to reach candidates will no longer have to.
b) Particularly for difficult to find, difficult to fill quirky jobs like online media sales rep in Troy, MI, where HotJobs' value to the recruiter is the absolute highest, we will be most likely to provide you highly targeted candidates for free.
And they also have a great deal to gain as they are third place player to Monster and CareerBuilder.
Sob. :(....
We handed HotJobs over to Yahoo! as the strong #2 player in 2002, leading the industry in many important (and some not so important) metrics. I always hate to see that third place curse in writing.
I fully expect Google to unveil a comprehensive classifieds search engine within the next few months.
If it's anywhere near as bad as Orkut, job boards will rejoice.
It's inevitable that job listing prices will feel pressure
I also don't believe this is true. The inventory of qualified response is shrinking, that's why Monster and CareerBuilder have been able to push through price increases.
Yet Yahoo! has alternative ways to monetize job listings throughout its network.
Banner ads and non-job related listing-like ads historically do very poorly on job sites due to the extremely low click-thru rate.
The problem with Yahoo!'s approach is that it's crawling company job sites and building a great index - but it simply means more jobs for candidates to apply to and get no reply.
The result: Look for the emergence of what I call "social classifieds", where the ability to connect people to each other will be the hallmark of success. In a world where listings are a commodity and easily crawled, the true differentiation will be the quality of the experience.
And again I agree with Charlene here. It is the quality of the response that always separates the winners from the losers in human-to-human search businesses. HotJobs new entry, which is an old, failed strategy, will not get them there.
