Recruitment Ad Startup Closes, Lamenting HR’s Status

Snaptalent, a company whose name may be familiar to anyone who attended the fall ERE Expo, has shut down, leaving behind a poignant note about the difficulty of making inroads to the recruitment market generally, but especially in the economic conditions of today.

Snaptalent made its ERE debut as one of four companies to showcase at our Startup Panel. Already struggling then as the recession took hold, Snaptalent’s CEO Sumon Sadhu described the company as an Adsense-like ad network for recruiters that positioned ads on contextually related content pages of its participating publishers.

It was a well-received concept that as an exclusive recruitment ad program had no direct counterparts. However, the job listings aggregators — SimplyHired and Indeed — were already doing something similar for their PPC job postings. Because of their reach, they were able to deliver volume. Plus PPC campaigns are attractive to budget-minded recruiters since you pay only when an interested prospect clicks on the posting.

On the Snaptalent site, the farewell message acknowledges that despite the accolades the business model “ended up being economically unviable as a business. Primarily because the number of candidate leads generated per impression wasn’t able to satisfy employers to keep buying and therefore for publishers to keep getting paid.”

Within a few months, Snaptalent had abandoned the ad network concept in favor of a college recruiting platform. It was introduced in the spring — too late, even in a good year, to interest many corporate recruiters. And 2009 is anything but a good year, as the Snaptalent team admits: “Market timing couldn’t have been worse … most calls to potential customers indicated that they wouldn’t be willing to spend or focus on this area for at least another year.”

The note concludes with a lament about the HR profession as a whole:

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“It’s (recruiting) a large market ($10B/year spend), with rich customers, and poor innovation. It sounds like an entrepreneur’s dream. The truth is that there are barriers to adoption of newer technologies which come down to the position of HR in an organization. Since HR isn’t directly revenue-generative, HR decision makers aren’t as empowered to drive change required by revenue generative functions like marketing or sales.”

“Recruitment spend is bloated, so as the cost of transmitting information to connect companies and candidates comes down, the trend is for companies to use free tools which help amplify that spread. The companies that will win in the recruitment space therefore are all working on solutions which take away from job advertising spending; search engine optimization, social networking, referral hiring, improving social media presence.”

The company’s final message says it is returning the majority of the money investors gave it.

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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10 Comments on “Recruitment Ad Startup Closes, Lamenting HR’s Status

  1. The U.S. Small Business Administration has seen lots of small businesses come and, unfortunately, go. According to the SBA, over 50% of small businesses fail in the first five years. Why? What goes wrong?

    1. Lack of experience
    2. Insufficient capital (money)
    3. Poor location
    4. Poor inventory management
    5. Over-investment in fixed assets
    6. Poor credit arrangements
    7. Personal use of business funds
    8. Unexpected growth
    9. Competition
    10. Low sales

  2. Innovation will have to happen despite HR rather than spurred on by it. At least until power on the other side is aggregated to a point where it can influence the way that things have always been done.

  3. This was probably the roughest environment in recent history to launch a start-up focused on college recruiting. I applaud the team at Snaptalent for realizing that their approach was not working as they had hoped in time to return the money to their investors. That’s a really mature move, and one that in my experience is very rare among entrepreneurs, since we’re often wedded to our big ideas.

    Further, I think it’s big of them to post this analysis of what went wrong in public, where other start-ups can learn from their experiences.

    The last part of the Snaptalent note did rub me the wrong way though. I’m not going to claim that HR is the most empowered or innovative department in most organizations, but I have seen them adopt new technologies as they prove their value and how they can help them be more effective in their roles.

    As an entrepreneur, I know that when when customers do not buy my product, it’s my fault for either not addressing their needs or for not communicating effectively how I can do so – not theirs for “not getting it.”

  4. I thought the same thing as David about the notion that HR is any more or less empowered to spend money on innovation.

    As an 11 year profitable survivor and market participant, I think the most unexpected aspect of our business to outsiders is the huge scope of what “recruiting” encompasses; from a young HR clerk somewhere to white shoe clubs and offices in NY, LA, DC, Atlanta, Dallas and Chicago…..

    Unless your solutions are very horizontal, you are not going to gain a lot of share because the market is so wide. Gaining big share for solutions related to basic economic functions almost automatically requires a scaled business and a major investment.

    David, I’m not sure I agree with “when when customers do not buy my product, it’s my fault”

    They are not customers until they buy, and I think about prospects quite differently than I do about customers- but that’s just usage.

    When a prospect does not buy, it may be nobody’s fault as there may not be any fault involved- it really depends on the fit and timing, neither being especially controllable on demand. The skilled marketer learns about both at the minimum cost to themselves and their prospects.

  5. I think while SnapTalent’s premise was viable, this market requires much more interpersonal activity than most technolog startups are willing to give. As stated in this article, there is truly no shortage of fee of free technology to help increase impressions on the web. The key to working with HR, in my opinion, is to provide personal service to help them utilize the tools available, rather than try to simply sell the the next new thing. HR people are, by definition, people people. They want to have face to face conversations, they want to share a cup of tea, they want to feel like they’re getting the attention and focus of their vendors. These are very difficult orders to fill through technology alone.

  6. Regardless of the viability of SnapTalent’s premise neither the economic meltdown nor the perceived capabilities of HR have as much to do with their success IMHO. Yes, timing is key and bad timing coupled with not having deep pockets is a problem but that is a basic business choice. Failures in our space are legion even in good times and I attribute the majority of them to two challenges:

    1. “Due Diligence”. Recruiting is not a simple, centralized marketplace. Not globally. Not in the US. HR is not at its center despite all the hype and bluster. No one is. The fragments that make up recruiting are many and they operate as independent silos. Convergence is an illusion. There is a reason why you can go to dozens of conferences and, with few exceptions, never see people with similar jobs. The folks who get sourcing, the folks who sell SEO/SEM and the folks who do College Recruiting live on separate planets- just one example of many. The people who can even breathe the air of all these different planets are few- but you can find them. Most entrepreneurs coming in to this space with no prior staffing background and a great ideas take several years to figure this out- lots of ways to short cut this and SnapTalent was certainly trying by getting involved in activities with ERE that gave them feedback. Making sense of the info is another matter.

    2. Noise Ratio. The number of people with great new ideas trying to get face/phone/internet time with a decision maker in a company is extraordinary. Could be 10-20 different folks every day. Day in. Day out. Week in Week out. Their messages are so similar- “we offer an integrated, global, end-to-end solution bolted to your existing enterprise-wide HR/ATS/CRM to channel passive/quality prospects into a candidate pipeline at lower cost/higher quality etc.”

    That being said, Staffing will continue to evolve rapidly in the next few years and there is extraordinary money to be made (much more than the 10B figure mentioned). All the current ways that employers spend money on staffing are up for grabs….for anyone a) with the ability to collect good data from the right stakeholders and make sense of it and b) with the marketing and branding savvy to cut through the noise.

  7. I think the subtle issue is most recruiting tools solve the same problem in slightly different ways with very little difference in results. So if you spend 30 minutes to locate a qualified profile and a new tool purports to do it with 80-120% result efficiency for a 20% savings, most HR people won’t bother.

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