Why Large Recruitment Firms are so Desperate to Sell Giant Advertisements to Their Clients

Posted on 12. Feb, 2009 by in Business ethics

Toby Marshall asked:

Do large newspaper ads work and are they value for money? In the days before My Career, Seek and Monster the answer was sometimes. Today it’s NEVER.

Australia is unusual in having large numbers of expensive recruitment ads at the front of the papers. Some countries have a few but nothing to the extent that we do. We have a mass of recruitment agency-controlled ads and all are large and expensive. And these ads are bought in blocks by the recruiter ahead of time – and at wholesale prices.

Why is there incredible pressure to sell mass media ads at the big firms? There are at least five reasons:

1. It’s great free advertising – the ads raise the ‘profile’ of the firm, making them top of mind with clients and applicants. Their clients are unknowingly paying for their corporate positioning – or perhaps they do know but just feel they have no choice.

2. Applicants who are not suitable for the advertised role (that the client paid for) are sold to other companies. If he can’t get a quick sale, the recruiter gets new resumes that he can ‘reverse market’ to lots of other employers at the same time.

3. Many firms buy the ads wholesale, and sell retail. Some even put hidden ‘production costs’ on top of the retail price – they get two hidden fees. One firm I know adds 15% for ‘production costs’ as part of their normal business practice. This brings in a lot of $$s their clients are never told about.

4. All space is pre-booked. What page your agency’s ads run on is decided by how many you sell each week. On a regular basis, the newspaper assesses each group’s usage. If yours has fallen, another recruitment firm may be allocated some of your space. Or, even worse, you swap places in the paper – they come forward and you slide back to the pages few readers reach. Talk about strategic pressure to keep selling.

5. At least one of the major firms in Australia pays a hidden commission to their recruiters for each ad sold. As at mid 2005, this was $900 pretax. Quite an incentive for them to persuade their clients that an ad is the best solution. An even bigger incentive are the bonuses for reaching their ad sales quota for the quarter – which can earn them $10,000 or $20,000 extra.

Try this question on ‘consultants’ who are pushing a mega ad onto you:

“Ok, you clearly believe this expensive ad will find us good people. Are you happy for a panel of recruitment experts to evaluate it’s effectiveness at the end of the campaign, and then allow them to publish their conclusions? And if those are negative, will you rebate me some of the cost of the ad?”

Tough question! Should sort out the women from the girls!

Who would be on the Panel? Me for one and happy to find some more volunteers.

The panel’s brief? Assess the costs versus the salesman’s claims, and identify where good applicants were actually sourced.

For example, how many came from Search if the role is a senior one – and ask for their research files to see if they actually did any Search. Easy for them to claim they did, so asking for proof will keep the basta.ds honest.

The panel would then publish their conclusions in the mass media (or after August 16th at www.recruitershamefile.com) – in most cases this would be deeply embarrassing. Of course just asking the question makes it unlikely you will have wasted your money. Only a very brave or foolish ‘consultant’ would persist with selling you an ad on these terms – or one who was totally convinced that in this particular case it would work.

The pressure on the ‘consultants’ to sell these ads is intense, and the main focus of their internal weekly sales meetings. Directors often prowl these meetings intimidating ‘consultants’ – where I used to work, they walked around the table where we all sat waiting for our turn to be picked on! When I started my career over 19 years ago this was the practice – from talking to people who have recently left the large firms, the not-so-subtle intimidation may have become even worse. At least in my day my commission cheques weren’t linked to having to sell ads and no-one slipped $500 into my pocket when I did.

So, the large ads benefit the agencies and the media. Not the sucker that paid the bill.

How do they get away with selling so many expensive, wasteful ads?

There are four reasons why this incredible con continues:

1. Their sales pitch is built around the plausible sounding ‘attract the browser’ argument – the absurdity of this argument is shown below.

2. “They are a big, successful firm who are experts in recruiting – they know about these things, and if they tell us we need to spend $12,000, then we had better do it.” Remember, most managers or professionals only recruit once or twice a year and few know much about the secretive recruitment industry.

3. Some ads actually do work. They do catch some browsers – it is just that they are atrociously wasteful in terms of the ‘cost per appropriate applicant’ – surely the only valid measure of value. And given the Mega recruitment firms obsession with tracking and reporting on activity and results, it might surprise some people that they don’t track this. If they do, no surprise that they don’t share it.

4. Finally, who is to know whether the ad worked anyway? The applicant who finally got the job could have come from anywhere, and rarely is any tracking done. Remember that big firms have a high profile because they sell so many ads with their logo and other branding taking up a huge chunk of the expensive space. So applicants come to them directly, even if they didn’t see the ad (and that would be fine if they were blo.dy well paying for it).

The ‘browser’ sales pitch

I learnt this pitch 19 years ago when I worked at a giant recruiter with hundreds of ‘consultants’: it was drummed into us at the weekly sales meetings. We were made to practice it on each other and in front of the mirror. You had better believe that this pitch is the foundation stone of Australia’s major recruitment firms.

The pitch is simple, plausible and seemingly valid: people read the front of the newspaper, and their eye is caught by an advertisement so they become interested in it and apply. They are argued to be better applicants because they are more likely to be happy in their current job and therefore likely to be good at what they do. And of course, would not see jobs where active job seekers go to look – online or in classifieds.

Who could argue with something so self-evident??

No surprises that I’ll have a go. There are 3 counter arguments that rubbish the whole sales pitch:

Firstly one that came to me at 4.30 a.m. on a recent Cold August Night, the hour when all good ideas roam in a fevered brain. In the 3 years since I wrote a version of this Rant in my book, Get Great People, I had thought there were only 2 main counter arguments. This final one is the Big Momma – the last and very large nail in what is now virtually a metal coffin:

That we have moved to a world of Free Agents and the Internet. Where people manage and assess their careers constantly (even if usually not particularly well!). A world where people under 40 (Gen x and Gen Y) consider themselves independent of their employers, even if they enjoy their jobs. That they have a life outside work, or in more extreme cases, that they have a life, and work is just a small component of that. Something that many of us Boomers have also come to believe and live our lives by.

In this world, the Free Agents browse 10 or 20 or a 100 websites a week (even I, a geriatric, am on at least 20 different sites every week). And one of the sites they go to is MyCareer, Seek or Monster. Just for a look. To keep in touch. Because you never know. And what about all those niche job boards attached to professional forum sites: LOTS of browsers on those. And what about the snowballing LinkedIn and Facebook and all the other social networking sites. Full of browsers. Full of recruiters.

And because it is so easy to apply for jobs with just a few clicks they are more likely to make an enquiry than that browser reading the paper in a cafe or their garden.

Now, if the price was about the same, the ad salesman just might have a point. But we are talking chalk and cheese on cost. Not in the same ball park. A $100 versus many thousands.

So, you tell me:

Who are the browsers? Where are the browsers? And, in particular, where do the browsers go who in this ageist world are the most sought after by employers? Reckon there are way more of these valuable young applicants on the job boards and social network sites than there are reading the Early General News in the Saturday papers.

Maybe the ad salesman is looking a bit like a seller of dodgy cars – even before we get to the other two reasons ….

Secondly, we read the Saturday pages ‘eyes up’.

If there were only 2 or 3 job ads on a page, and they were designed to attract the eye, no problem attracting eyeballs. That’s the argument of all advertising agencies and media sales people and it’s completely valid.

With recruitment, all the ads are in a block at the bottom of the page. Or, even worse, they are on a whole page by themselves when you get towards the back! Great for browsers!

I can remember the incredible hubris one Friday when I was at a Mega Firm and we had sold a whole broadsheet page of ads – it was all us! We were so proud! We were the champions! But hey, didn’t we forget something: what sort of insane browser browses a whole page of ads!? Maybe a desperate job seeker?

The ads are all the same size and all look pretty much the same – even better they are now in color so stand out like the proverbial dog ba.ls. They are also conveniently located in the bottom half of the paper – so handy for folding the broadsheet in half as I lie in my deckchair on Saturday morning!

So after 30 years of such ads, those browsers know where the ads are – they know to keep their eyes focused on the top of the page. That is where they find what they are looking for: something interesting to read.

I don’t have any major research to quote, but I have talked to a lot of people – it is quite common to read the Saturday papers ‘eyes up’. Don’t you?

Thirdly, the Saturday papers are now conveniently divided into sections.

The sections help readers find the bits they want to read. And in what order they want to read. And of course it helps in selling ads to particular demographics (now there’s a thought: recruiters could place ads in sections that attract who they are trying to employ?!)

With the sections, many of us have developed very idiosyncratic ways of reading. Take how I read the Saturday SMH (apologies for those who don’t live in Sydney):

I start with the front page; quick glance at the back page for some scurrilous gossip; Mike Carlton and Peter Fitzsimons for a laugh; rugby news; the rest of News Review; Spectrum; and sometimes the Good Weekend. And finally, if I get through all that, I turn to the news bits where the recruitment ads are – pages 2 to about 20 – and religiously keep my eyes up. But most weekends I don’t get to it.

Again, no research on readership that I can quote, just an informal survey of professionals; but it is common practice to read selectively. Of course the newspapers do lots of market research, which lead them to create sections in the first place.

So, three strong reasons that rubbish the browser sales pitch – just tell the advertising salesman masquerading as a consultant to go and spin his B.S. to someone else.

Love to hear your stories of ‘consultants’ trying to sell you ads. Or, even better, a recruiter defending them!

Spurious Advertising research by Mr Ad Salesman

Ad salesmen have a standard pitch that goes like: “Mr client, only a tiny percentage of applicants who end up on the final shortlist are ever on a recruiter’s database. The best candidates are not actively searching for a job – we need to attract them to apply with an advertisement that catches the eye as they are browsing through the Saturday morning papers.”

A regular speaker to our industry runs a firm that sells giant ads. At a conference 3 years ago he asked the 110 recruiters in his audience: “What percentage of those who are ultimately short-listed were previously on ANY agency’s database?” I proffered a guess of “less than 10%” – obviously he wanted a low number and I wanted my ‘gold star’ for the right answer!

Now he is one of the doyens of our industry and has been financially very successful. Most of what he was telling us was great stuff about how to be a more productive as a recruiter – overall a great presentation which was well received.

He triumphantly and emphatically came back with “research shows it is less than 5%”

Extraordinary and a great sales tool if true so I wanted to track it down. But as I doubted it was true, it would have been aggressive to challenge him publicly (I was also on the speaking programme, though with a much smaller role) – after he finished I asked “could you tell me where to find this research?”

The answer and his body language were classic: He looked down, started to turn away and said “Oh, it’s old research, not sure where it is now”. And continued to turn away, and started speaking to someone else!

And no, he didn’t know me (it was before I published my book), and I had had a shower that morning.

Now, that got me thinking. Firstly, doing such research would be virtually impossible, as it would mean tracking each candidate’s job search. Very time-consuming and also candidates might not want to admit how hard they’ve been trying (and by definition, not successfully). Also, having just been rejected by an agency they may not be favourably inclined to help an agency do research. It would also be very expensive – who would care enough to spend maybe $50,000 with a research firm?

Easier to invent a figure that sounds plausible in front of an audience that wants to believe it.

Takes some chutzpah to create facts that are so easy to challenge, particularly when you are being paid a hefty fee to provide expert training. But …. maybe not. No-one else seemed to notice.

Secondly, on reflection, I believe the figure is actually much higher, more like 20 or 30% – remember it was any agencies books. But, as with the presenter, I have no evidence, just a feeling from years in the trenches – and I have no particular axe to grind. I don’t sell $12,000 ads that are virtually useless.

Thirdly, his usage of the words ‘old research’ is interesting. The world of advertising has changed a lot – if the research is so old that he and can’t find it, maybe that is another clue that it ain’t true, in the unlikely event it ever was.

If you want to sell expensive ads, and he and his company do, “less than 5%, proven by research” is a seductive sales pitch. Shame it’s a bald faced lie.

The Day the Victory Bell Wouldn’t Stop Ringing – The Completely Useless $35,000 Ad Campaign

I briefly worked at a Mega recruitment firm, back in the day when the internet was just for nerds.

We had a large brass bell hanging in the middle of the office – you rang it when you made a sale of an ad or a body. Crass I know, but lots of sales teams have them and we were in no doubt that that’s what we were – the bell kept the team focused on what really mattered to recruiters!

The bell started ringing one day. And kept ringing. And ringing.

The ‘consultant’ had just returned from visiting new clients – a restaurant chain was opening in Australia and needed 200 staff. The ‘consultant’ had sold the client the equivalent of 4 large ads in the front of the Herald, more than $35,000 in today’s money. He had sold 40% of the firm’s maximum pre-booked space for the week. He was only one of 15 recruiters in Sydney so it was quite a coup – our biggest ad sale in about 4 months.

That night we went off to celebrate with the Managing Director shouting the first drink. Later I asked the excited and merry ‘consultant’ about it, saying it seemed unlikely applicants would come from the front of the Herald – not the first reading choice of many kitchen staff.

His response with a huge smirk on his face? “Hey! My client also paid $2000 for lineage (classified) ads in the back of the Herald and Telegraph, that will fill the jobs.” And the cheap ads did, with barely one applicant from the quarter-page extravaganza.

His client, the poor restaurant chain, had made a sizeable and greatly appreciated donation to our firm’s profile and helped us hold onto our much valued position on pages 5 and 6.

Does it still happen? You bet.

Friday Night Specials – “Have we got a deal for you!”

I cringe remembering Friday Specials from my 12 months working at Mega Firm.

About every 3 weeks, usually late in the morning on a Friday, we were summoned to a quick stand up meeting around the Victory Bell and told “we have some discount ads to offer our clients”.

Our Director would ask each of us for the names of 2 or 3 clients to call – if we were reticent, he would suggest a few names.

We then trotted off to ring them and offer them a discount on ads in Saturday’s newspapers. The discount often started at 25%, getting rid of our wholesaler’s profit. By 2 p.m. it would fall to half price. Occasionally, if it was still not sold, we would have to run a filler ad for ourselves – a big loss so the company hated this.

One Friday I rang a good client with the special offer and got a very aggressive response

“Why do you have all these ads to sell?? Why is there such a panic? You don’t even know what I need! What’s in it for you?”

He was simultaneously both angry and confused – unusually he had been rung 3 times in just 6 weeks. As a good ad salesman who still half believed they worked, I gave him the company line: That we had had a last minute cancellation so are offering our good clients “the opportunity to be at the front of the paper at a great price”. But it got me thinking about these constant specials, and what this new industry I had joined was really up to.

The real reason why Friday Night Specials happened so often? Because on Tuesday we had to commit to how much space in Saturday’s paper we could sell to our clients. And there was always pressure on management to take a couple of extra ads to ensure we maintained our spot at the front of the paper (your position is based on how many you sell over the quarter versus the other firms). So we often had trouble selling the last few spots that our optimistic and hopeful managers believed we could achieve so they would get their bonus (remember, the entire strategy of these firms is based on their position in the paper and the free publicity from the ads.)

The loss to the firm if they couldn’t sell the ads, given the exorbitant prices, was significant. So the kudos you got for flogging these specials to a gullible client was huge – and lasted until the next time it happened. When you had to prove you had cojones once again.

Still happens? Of course.

Now, I can hear some of you say: Ok, guess we got the message that you don’t like the big ads at the front. What do you say about those at the back of the newspapers? The Classifieds.

Not one redeeming feature. Nothing. Zip. A complete waste of money. They just clutter up the job market and make it more inefficient.

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