Like many other sectors, the gig and high-volume hiring industry have had quite a few ups and downs over the pandemic. It almost seems like there have been equal but opposite forces at play, as if guided by Newton’s third law itself – a surge in gig business demand embattled by a slowing labor market. In the spring of 2020, the sector experienced unprecedented growth in demand. Instacart saw a 500% increase in orders from March 2019 to March 2020. Shipt (Target) grocery delivery grew nearly 300% in Q1 2020. At the time, employers were paying several multiples above historical norms on a cost-per-acquisition basis, and the need for gig workers in a tight labor market was ever-increasing.
Fast forward to the last six months. Demand has started to soften for these employers as economic pressures increase. The need to “overpay” to get gig workers in the door (or on the app) has lessened. As the economy starts to tighten and the labor market remains competitive, the focus of balancing the demand for gig workers with reasonable costs is now beginning to play out. A fundamental regression is starting to occur, and 2023 should show where the market will naturally settle.
As hiring professionals look ahead to 2023, new year strategy conversations in many gig and high-volume hiring companies are taking place. Here are three predictions for what the sector will focus on for this year.
There will be a shift from a “volume” strategy to an “efficiency” strategy in 2023. Uber CEO Dara Khosrowshahi has stated over the last year that the focus is profitability, which is true for many publicly traded gig companies.
So what does profitability mean in terms of recruitment efforts for gig companies? It’s looked at in two key areas: how much does it cost someone to apply or register on the platform, and how much does it cost for that person to make their first delivery, completed shift, or engaged in service?
From 2020-2022, gig employers were accustomed to paying anywhere from 3x-5x multiples on gig worker acquisition compared to pre-pandemic costs (Recruitics Data). It’s expected to see a change this year as more conservative budgets are deployed against a tougher economy. Employers are now going to look at all candidate acquisition channels in a vacuum, and focus more budgets on the channels that can provide efficiency gains – while still maintaining the new gig worker volume they need to meet market-level demands.
Search, social, and other media channels will be even more directly compared to job board programmatic performance. The need to have a diversified channel mix will give way to the top acquisition channel performers winning a lion’s share of the budget. These types of employers generally look at hiring within an acquisition model – acquiring a worker to fulfill orders within a given market at a reasonable cost. Whatever channel can “win” within that model will be the channel that sees increased budgets.
From a strategic perspective, fulfilling hiring or acquisition goals as fast as possible is no longer the driving force. Recruiting teams are pivoting to “pace” acquisition for the weekly or monthly advertising period. Fulfilling the labor demand too early? Hiring professionals likely left efficiency gains. Not fulfilling it at all? Budgets will flow to channels that can.
Yes, quite the challenge for a recruitment advertiser.
If efficiency is going to be a focus this year, companies need to have data signals coming in to show what recruitment channels are efficient. The team at Recruitics can see the best performance and advertising executed with companies, and can integrate at a deeper level and share meaningful down-funnel data.
This is especially important for gig employers.
Having this data available is so performant that Recruitics created an offering that’s available for free for any gig employers: End-to-End Analytics. Unlike traditional corporate hiring within the Fortune 500 or SMBs, gig employers focus their ROI point much further down the funnel. The ultimate ROI point in the gig acquisition model is the first delivery or completed serviced act. Gig employers that are more willing to share “first delivery” type data back to the advertiser will have the competitive upper hand in 2023. Advertisers with this data can make intelligent full-funnel decisions when executing advertising strategy. Gig employers at Recruitics who utilize this service have seen “first delivery” acquisition costs decrease up to 50% within the first six months of implementation.
The value of data sharing in an “efficiency” strategy is paramount – not only between employer and advertiser, but also between advertiser and channel/job board. Employers that can’t share or send demand signals to job boards within this model are at a disadvantage, because job boards can’t see the budget allocated to a market or role type. In the programmatic model, they mostly go off of bids within a feed and usually deliver traffic to the job with the highest bid combined with the most traffic. To avoid market overspend, advertisers must share data more meaningfully with these job boards. Several job boards will read a CPA goal or priority field within a feed, and set up measured acquisition channels on their end to accommodate the primary efficiency goal.
New Channel Testing
The reality of a tightening labor market means traffic is down. For employers, this usually means fewer clicks, applies, and deliveries than last year. Traffic levels have varied widely throughout the previous few years. Some job boards, like Indeed, have begun to limit traffic to gig jobs. Indeed created a spin-off site called Indeed Gig, which relocated gig employers off the main Indeed site and decreased traffic levels. Other job boards have been critical of the amount of gig job postings on the site, and in turn, have begun to limit the exposure of those postings to only one main job posting within a market. Whether you agree or disagree with these actions, traffic is down, which means acquisition efforts need to broaden to “replace” this lost traffic.
Emerging platforms for recruitment, like TikTok or Reddit, have proven valuable in early new channel tests. Other companies like NextDoor are broadening their advertising offering to include recruitment. Expanding the existing media channel mix to test for new audiences will be key, as traffic may be limited within the flagship channels.
Tip: Look for a channel that will offer an onsite lead generation experience and find a way to integrate. These channels perform best with the gig worker audience, where a worker can easily sign up in a moment without leaving the platform. These newer, untested channels offer the chance to capitalize on high-converting lead generation efforts. If gig companies want to succeed in 2023, new channel tests are a must for finding undiscovered audiences.