Should employers be upset by Indeed's shift to pay per application?

Inside Job Boards and Recruitment Marketplaces

Indeed is the world's biggest job board and has long charged its employer customers on a cost-per-click (CPC) basis. In Q4 2022, Indeed announced at its annual conference, by email, and on-site that within months it would phase out CPC in favor of cost-per-application (CPA). Yet, when the calendar turned from 2022 to 2023, many of Indeed's small and medium sized business (SMBs) customers were shocked to discover that they were being charged per application and, in some cases, their monthly costs skyrocketed. Some customers reported paying $15 application instead of $1.00 per click and $1,000 a month instead of $100.

In today's episode, we attempt to get to the bottom of the situation including presenting Indeed’s statement to the AIM Group about the new pricing model. The statement does not shy away from admitting that the roll-out wasn’t smooth:

Indeed’s mission is to help people get jobs, and one of our values in support of our mission is pay for performance. As part of this, we are continuing our transition to a model of pay for results, which includes pay per application and pay per started application. Employers have given feedback that they would prefer to be charged when they see greater value, which is getting them closer to the hire with an actual application instead of a click.

We remain committed to helping employers with this change and have taken comprehensive steps to communicate with employers throughout the rollout, including via email and within the product as they use it on Indeed. We encourage employers with questions to contact Indeed Support.

When posting new job ads, employers are prompted to customize how they want to receive applications. This is designed to help ensure they stay within a budget that works for their needs.

- Determine a price: Before an employer spends on their job ad, they review and approve a price per application. The price is based on historical hiring data from jobs similar to the employer’s and the estimated number of applications the employer will likely need to help make a hire.

- Set application limit: For each job post, an employer has the option to set an application limit. Once the limit is reached, the job post will automatically pause. Employers can also manually pause or close the job at any time.

- Automatically reject unqualified candidates: Indeed offers the option to automatically reject an application if the applicant doesn’t meet predetermined requirements marked as ‘deal breakers.’

- Reject and replace applications: The employer will have 72 hours to reject a candidate’s application and not be charged by Indeed.

For a small handful of employers, there have been some instances where they did not have the option to set their budget limit or application limit with the new pricing model. We have since updated the product to ensure all employers now have these options. For affected employers, we are working with each of them on an individual basis.

We’re confident that Indeed’s pay for results model will bring the industry forward by both reducing the time it takes to hire and the quantity of applications to review by employers. We’re already starting to see signals that our pay for results model is providing greater value to employers. According to Indeed U.S. data, employers have 23% fewer applications to review per job for pay per application jobs than pay per click jobs. Employers also have 35% fewer applications to review per hire reported for pay per application jobs than pay per click jobs.

We expect that this won't be the end of the conversation. Instead, we're likely just at the beginning. More stories will come out from employers and Indeed will likely make changes to the program, hopefully with plenty of advance notice and clear communication. Employers and representatives of Indeed who wish to be a part of future episodes where we continue the discussion are encouraged to reach out to us at [e-mail].