Media CPH: Lower is not Always Better

Sean Quigley
January 17 ․ 8 min read

Lower CPH is Not Always BetterAre you driving a “Low Media Cost Per Hire” and, if so, is that always even a good thing? In recruitment marketing, companies may like to look at one overall KPI to see if they’re succeeding or not, such as, what is our “media cost per hire.” Cost per hire (CPH) has the benefit of being a superior metric to cost per application (CPA), but what does it really mean to have a “good” cost-per-hire?

One might be inclined to say CPH should be as low as possible - “Wow, look at that ROI, we’re saving money, we’re really performing great!”.

The Role of Technology

Recruitment technology solutions can absolutely drive lower-and-lower media cost-per-hire statistics. However, it’s important to not fall into the analytics trap, whereby a little understanding of the data is much more dangerous than no understanding at all. Having a goal-oriented strategy is much more important than focusing on one stat, but all too often the temptation is to over-focus on one stat that doesn’t necessarily relate that well to true end goals.

A Flexible, Customizable Solution

Companies have complex candidate needs that can’t be over-simplified. You have to focus on candidate quality, volume, and the distribution of candidates to the right types of job openings in the right locations. The way to game the system and drive a low “CPH” stat is to spend very little money, bid very low amounts for advertising clicks and impressions, and do only the things that drive lots and lots of applicants to easy-to-fill high turnover roles.  In other words, focusing purely on lower CPH, might result in the exact opposite of what a talent acquisition organization is trying to achieve based on true needs and pain points.


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Traditional Marketing vs. Recruitment Marketing

Clear goals matter above all else, much more so than the simple vanity stats. It’s possible to intentionally pay a higher overall average CPA and a higher overall CPH, and to be performing much better because of it, and this counter-intuitive statement may shock even some people that have been in recruitment marketing a long time. It’s problematic that talent acquisition professionals have borrowed these stats from e-commerce without thinking through the extreme and fundamental differences from the consumer space.

“CPA” in the online marketing world means “cost per action” and that generally means the online purchase of some widget. In that world the more sales that happen the better. Drive as many actions as possible, and as long as the CPA is less than the revenue generated, there is no upper limit on the media budget anyway. In e-commerce, the goal isn’t to sell exactly 100 widgets, and no more, it’s to sell as many as you can, because you always want to make more money.

In recruitment marketing, you really may only have a fixed 100 hires to make this month no matter what. If applicants are driven more efficiently, that doesn’t allow you to hire 1,000 people instead. It’s a fixed goal. If making “quality hires” is of importance to your strategy though, what that means typically is you need more “quality applies” - and what more “quality applies” unavoidably means (in the real world), is that for each job you have to drive more applies in general.

Setting The Right Goal Makes All The Difference

Eventually your hiring manager will make a hire no matter what, because you have to operate a business. So if a “low CPH” is your only goal, the incentive there is to drive only enough to make a hire, but not enough to have a real selection process set up between many competitive candidates. It’s just applies from the cheapest media sources possible, but not a true diversity of candidate options, that allows you to make the right hires.

Efficiency is good, but well-defined goals are much more important than any one data point.  It is entirely possible that a $400 CPH is actually far more optimal than a $200 CPH. No one wants a $2,800 media CPH, but the goal with CPH isn’t to drive it further and further down till it approaches $0. That would kill your talent pool and in the long term that would be an early indicator of a company stock an investor would definitely want to short.

Conclusion

Organizations need enough quality applicants to choose from in every role, to make the right hires. Some roles are much harder to fill than others, and getting enough candidate options to those roles is more expensive than the easy to fill roles. Low CPA and Low CPH is never, ever, the true goal of a recruitment marketing organization.  It’s much more complicated to think though, and you do have to think 10 levels deeper if you want to truly succeed. You can find solutions to help you through it every step of the way from planning to analytics to optimization - but you should always start with very well defined true end-goals, rather than one meaningless data point.

 

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