Accurately Calculating the True Cost of Recruitment Advertising

When assessing the cost-effectiveness of recruitment advertising sources like ZipRecruiter and Indeed, it’s essential to consider not just the immediate advertising expenses but also the comprehensive costs involved in screening and qualifying candidates.

This analysis explores the multi-dimensional nature of recruitment costs, incorporating both advertising and screening expenses to provide a holistic view of recruitment budgeting.

Here’s some interesting data to think about, to be clear this is an analysis of one job type in a specific region. Therefore the results will not hold true for all jobs and locations but the methodolgy used to measure this yourself will be the same and one that I reliably used all the time in Shiftfillers to really understand how we should spend our advertising dollars.

Looking at cost per apply data can be misleading

In this case Ziprecruiter delivered 210 applications over the period for a total cost of $575.40

In the same period Indeed delivered 425 applications for a total cost of $603.50

On the surface looks like Indeed is the better place to spend budget, right?


Calculate Advertising Cost per Application

The first step in understanding the true recruitment cost is to calculate the advertising cost per application from each source.

Advertising Cost per Application = Total Advertising Spend / Total Applications Received

In this example:

Zip Recruiter = $2.74 per application

Indeed = $1.42 per application

However although spending on ZipRecruiter is $2.74 per application and on Indeed it is $1.42 per application these figures only provide the base advertising costs before the quality of the pipeline and the additional screening expenses are considered.

Calculate Cost per Qualified Candidate

To refine these figures, assess the percentage of applications that are from qualified candidates and then calculate the cost per qualified candidate as follows.

Cost per Qualified Candidate = Advertising Cost per Application / Percentage of Qualified Applications

In this example:

40% of ZipRecruiter’s applications and 24% of Indeed’s applications were qualified. The advertising costs per qualified candidate are now $6.85 for ZipRecruiter and $5.91 for Indeed.

Indeed is still ahead, right?


Factor in Screening Costs

The costs associated with screening candidates—whether through a platform like Glyde or using internal resources—significantly influence the total recruitment cost.

Incorporating Glyde’s Fees: Adding Glyde’s fee of $2 per application to the initial costs results in new costs per application of $4.74 for ZipRecruiter and $3.42 for Indeed.

In this example:

The recalculated costs per qualified candidate are now $11.85 for Zip Recruiter and $14.25 for Indeed, reflecting a higher efficiency in ZipRecruiter’s screening process.

In this case the client was using Glyde to provide the application processing and AI screening service so the differential is modest but ZipRecrruiter comes out 16.8% cheaper.

But wait, you are probably not using Glyde so your costs are a little bit higher.

Factor in Internal Recruiter Costs

If using internal recruiters at a cost of $10 per application, the advertising plus screening costs per application would be $12.74 for ZipRecruiter and $11.42 for Indeed. This shifts the costs per qualified candidate to $31.85 for ZipRecruiter and $47.58 for Indeed, a 32% difference in favour of using Zip Recruiter.

This analysis also shows the significant impact of higher internal screening costs on the overall recruitment budget.

Evaluate Cost vs. Quality Trade-off

While cost considerations are crucial, the quality of the candidates sourced from each platform should not be overlooked. As we have seen a source that yields a higher percentage of qualified candidates, albeit at a slightly increased cost, might offer greater long-term value by reducing turnover and enhancing workforce quality.

Dig deeper

By meticulously accounting for both advertising expenses and the costs associated with candidate screening, businesses can make more informed decisions on where to allocate their recruitment budgets. This comprehensive approach ensures that companies do not just focus on the immediate costs but also consider the broader implications of candidate quality and screening efficiency, ultimately leading to a more strategic and successful hiring process.