SEEK’s surge pricing – the response and some 2020 predictions

It should be a very interesting few days on the Gold Coast this week.

The World Employment Conference, co-hosted by the RCSA and the World Employment Confederation (with SEEK, along with Indeed, as Platinum Sponsors) as a kicks off at the Sheraton Mirage on Main Beach this afternoon.

No doubt the hot topic of the conference will be SEEK’s announcement last week about their move to surge pricing and the removal of extra discounts for recruitment agencies customers, compared to direct hire and RPO employers.

SEEK’s bombshell news had its first release late the week before when SEEK’s regular intimate gathering of their top recruitment agency customers was held at Lindenderry at Red Hill one of the beautiful boutique hotels located on the Mornington Peninsula (only 15 minutes’ drive from my home, as it happens). A dozen or so owners and directors representing SEEK’s largest spending recruitment agencies gathered to enjoy a day of professional development and evening of socialising.

SEEK Group CEO Andrew Bassat was accompanied by a handful of SEEK executives, including new-hired Group COO and Asia Pacific and Americas CEO, Ian Narev. Narev has been decidedly low profile since his appointment seven months ago, carefully navigating his way back into corporate life after the recent banking Royal Commission exposed his ethics and professional judgement, in his former role as the Commonwealth Bank CEO, as not befitting the holder of such a role.

Late on Friday afternoon Bassat chose to drop the news on surge pricing and no-preferential discounts to the customers who will, almost certainly, be losing the most from both decisions

Bassat framed up both decisions as ones that were incredibly difficult for him to make, given what he saw as a very long and mutually beneficial relationship between SEEK and the recruitment industry. Bassat hasn’t forgotten that the Australian recruitment industry provided the commercial foundation of his company’s full-scale tilt at Fairfax Media’s overwhelming dominance of the employment classifieds and the Early General News display advertising across the 1990s.

Reactions were mixed across the room; as they have been from the owners I have spoken to since the announcement was made public, ten days ago.

Here’s a sample of what I heard.

Our SEEK account manager was on the phone to me within minutes of the email landing in my inbox. Naturally, I wanted to know what difference these changes were likely to make to our 2020 SEEK contract. There were lots of caveats and generalisations but the bottom line was that if I spend in 2020, what I spent in 2019, then my ad volume will basically halve.”

“Frankly, I am not surprised. The likelihood of this occurring prompted us to target our SEEK spend a few months ago. When we implemented new guidelines for sourcing our vacancies, ensuring our database was thoroughly searched before we posted an ad, we were able to reduce our ad volume around 30 per cent and it’s made no difference to our fill rate. Clearly we have been wasting far too much of our SEEK spend.”

“I’ve had the SEEK email for four days and I’m yet to hear a thing from our SEEK account manager. In my long experience of dealing with many vendors SEEK have the worst customer service. They are the worst communicators. It’s just another example of how little they value our business. And we spend over six figures with them every year! We’ve been conducting a rigorous analysis of our total sourcing spend and at this stage pay-per-click stacks up really well against all the other options and we’ll be doing everything we can to reduce our SEEK spend as quickly as possible.”

“Have I heard from our SEEK account manager? Ha! I don’t even know who our SEEK account manager is. I haven’t heard from anyone at SEEK for months.”

“What do you expect from a monopoly who simply ignores, minimises or tramples over legitimate customer concerns about candidate data ownership? Given their history of doing whatever they like it’s simply par for the course for SEEK to do this.”

From everything I have heard, read and assessed here’s my best guesses and predictions for what’s ahead:

  • For agencies operating in the largest capital cities who pre-dominantly recruit high-skill and high-demand roles in the top-earning bracket (eg accounting, law, engineering, IT, sales, marketing, construction, property, medical etc) the range of the price increase for 2020 contracts, on a like-for-like basis, will be somewhere in the region of 50 to 100 per cent.
  • You can be sure that SEEK’s commercial analysts will have modelled the impact of these decisions to within an inch of their life. I’m guessing their models show that even with the inevitable agency backlash the overall revenue impact will be positive; substantially so, I suspect
  • SEEK will hold the line on the inevitable backlash.
  • Rather than spend more in 2020 with SEEK, most agencies will spend the same, or less and simply post fewer ads.
  • Alternatives to SEEK (LinkedIn, Indeed etc) now have a golden window of opportunity to demonstrate value-for-money to an audience very receptive to ‘anybody but SEEK’
  • Ad volumes on SEEK will drop but the actual number of unique jobs listed on SEEK will drop by far less as agencies prioritise their ad spend on exclusive and high probability jobs and focus their consultants on database sourcing for multi-listed and other low probability jobs.
  • As the proportion of unique jobs on SEEK increases the job seeker experience will improve as search results produce ‘cleaner’ job listings.
  • The better the job seeker experience the greater the likelihood that job seeker  will return to SEEK more frequently, stay there for longer periods of time and generate more applications.

The local recruitment industry and SEEK have been co-existing in an unhappy marriage for a long time now; awkwardly living under the same roof and ostensibly committed to the same things in the name of family harmony.

SEEK have now taken the difficult next step and filed for divorce. They really want it to be amicable and hope to stay friends but they have reconciled themselves to a tricky and emotional few months (or maybe years) ahead.

Like everyone going through divorces SEEK will be counting on the old adage that time heals all wounds and that a different, but workable, relationship will eventuate.

Meanwhile the spurned recruitment industry will be looking to move on quickly, prove that life is better off without their former partner and, in time shake their head in wonder as why they stayed in a relationship with a disinterested partner, that had long passed its use-by date.

 

Related blogs

Out-of-touch Bassat botches Narev announcement

SEEK price rises: you ain’t seen nothing yet

Frontline’s CEO speaks out about his fight with SEEK over candidate data

The long game: is it Seek v Google (with agencies collateral damage)?

2 Comments

  1. Belinda Kerr on 30/10/2019 at 3:23 pm

    Interesting times. As one of your quotes from the industry highlights Ross, it is astounding how often job board advertising is a first port of call over databases. Easier? Maybe in the short term, but anybody not treating their own data like gold is sadly throwing money away – I think with everything else agency owners (particularly smaller ones) have on their plate all too often getting more from existing data falls into the too hard basket at the expense of more placements.

  2. Julie Parsons on 31/10/2019 at 10:35 am

    well summarised Ross, interesting times ahead, SEEK need good competition, and we need to support this

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