By Mychael Robinson on the Appcast Blog
So, your CFO has either given you a budget or perhaps you are trying to propose numbers for what you think the budget should be in order to drive the hiring results you’re accountable for. You need to figure out where your recruitment advertising dollars should be allocated and how much you’ll need to ensure your hiring goals are met. Where do you start?
Let’s talk about ROI of job advertising
Recruitment Advertising is a pretty broad domain within talent acquisition and recruiting, and what is included will vary from company to company. Within that umbrella, we could be talking about all sorts of tools that will help you meet your hiring goals. Not limited to but most likely including: CRMs, hiring events, chat bots, recruiter seats, ATSs and of course, what we’re focusing on here – job advertising.
There are many reasons why companies invest a material percentage of their overall recruitment budget to actively advertise their jobs and build a proactive funnel of qualified candidates.
• It is cost-effective.
• It saves time.
• It produces candidate volume.
• It’s scalable.
• There are clear performance metrics.
I could go on but ultimately, there is a significant ROI.
Why nailing your job advertising budget is important
When you think about why advertising jobs on job boards produces such a positive ROI, think about why candidates go to job boards. They are actively looking for and applying to jobs. They are raising their hands and saying “show me {insert any job title in any location}”.
Job seekers don’t go to the Indeeds and ZipRecruiters of the world to mindlessly scroll through content on a small or medium size screen, while they watch other content on a…ahem, larger screen (not judging – I am guilty of it too!). This sort of “user intent” is a key indicator of why the job board channel has and continues to produce a large percentage of a company’s overall applicant pool.
How large a percentage of that overall applicant pool you ask? Companies are able to produce anywhere from 40-60% of their applicants and hires from job boards and, depending on the industry, even as high as 70%. So knowing this, how do we build a budget for this channel?
How to build a job advertising budget
Let’s say you need to hire 100 sales people. We can assume 50% of those hires will come from the job board channel. So, how do we figure out how much those 50 sales hires from job boards cost?
We work backwards from your hiring goals, and use the concept of application to hire ratio (one of the many useful metrics in your recruiting funnel!). In other words, how many applications does it take for you to make 1 hire? For example, if it takes 10 applications to make one hire (and we need 50 hires), then we know that we need 500 applications to generate those 50 hires.
10 applications = 1 hire
x applications = 50 hires?
X = 500 applications
Appcast can provide cost per application (CPA) data based on geography and industry/job function to help figure out how much we should budget here. In this example, we can use a weighted average of a $25 CPA for sales roles. So, now we know, we need 500 Applications at $25 per application to make 50 hires.
500 Applies X $25 CPA = $12,500
And there you have it. This is a relatively simple exercise but of course not every job is the same! Depending on your needs and priorities and the types of roles you’re recruiting for, you may need to build additional layers to this to get a realistic picture of what budget you will need in order to hit your hiring goals this year.
I’d definitely suggest you start by taking a peek at our 2022 Recruitment Marketing Benchmark Report and feel free to reach out to us. We’re happy to walk you through, and work with you to build a budgeting framework (backed by industry-leading data!) that will ensure your company meets its hiring goals this year.