Twenty years after it disrupted the newspaper game, online recruitment specialist Seek now finds itself having to bend its model to the will of a rampant, global insurgent – in this case LinkedIn.
For the first time the company will charge its recruitment industry clients to access its databases via its Talent Search system, according to a financial analyst report.
In the report by Morgans, obtained by Which-50 off the back of the usual truck, analyst Ivor Ries notes, “SEEK managing director Australia Mr Joe Powell yesterday confirmed that the company has commenced negotiations with major recruitment firms on charging for the ability to access candidates via the Talent Search system. While clients would be granted credits for the volume of current business, any consumption of candidate data and access above a set data limit would be subject to charging.”
The report estimates the size of the recruitment placement fees market at $4 billion and suggests the industry will have to cop five to eight per cent of that pool being directed to the cost of database access in future.
Ries is bullish in Seek’s move, buying the company’s spin that the decision to pull forward the new model is a measure of its strength and acceptance by the recruitment sector.
There is no escaping the reality though that Seek’s moment alone in the sun following the decline of News and Fairfax in the 90‘s and noughties as tier one recruitment channels is long past.
From ancient grudge break to new mutiny
LinkedIn has reset the rules around recruitment in two important ways. Firstly for many companies LinkedIn isn’t necessarily a better way to advertise – but rather it has removed the need to advertise altogether, or at least mitigated against it as anything but a last resort, especially in senior white collar jobs.
And just as importantly LinkedIn has reframed the recruitment industry game through the provision of new subscription based services levels of which database access is just one component.
News and Fairfax bore the brunt of the first change, and Seek, the market leader for online jobs down under must now respond to the second.
Don’t write them off, but watch them closely
Seek has a long track record of success and unlike the companies it usurped, it has a native understanding of what disruption looks like, and the chaos it can unleash on slow moving incumbents.
Its problem however – just like local banks going up against tech giants in the transaction space, or retailers battling Amazon and Alibaba – is the tech stack.
It will be battling a global technology superpower and ultimately it will struggle to match the levels of investment in that stack. It will have to find a new way to respond.
And while LinkedIn’s users are permanent and highly engaged, that’s not a claim a job’s board can credibly make.
In his report, Ries writes, “The importance of a successful launch of the Talent Search database product – sometimes dubbed SEEK 2.0 – cannot be underestimated. The market for job advertising is limited and job ads only result in approximately 25-30% of job placements. Only by penetrating the market for candidate data can SEEK grow its domestic recruitment business to provide a larger share of successful job placements, and thus the value created.”
He cautions however that some cannibalisation is inevitable.
“Every job placement made via the database means that no job is advertised and SEEK loses revenues. Therefore it is reasonable to expect that the gains in revenues projected from the database will result in some erosion in advertising revenues.”
Morgans estimates Seek will deliver Ebitda of $371 million this year.