Unfortunately, I’m a British male born between 1977 and 1984. This means that like a moth to a naked flame, last Saturday afflicted me with the irresistible compulsion to try and buy tickets for the Oasis reunion. Me, and 20 million other equally ridiculous people all simultaneously trying to purchase 80 million tickets for a series of concerts with only 1.2 million tickets available. To make matters worse, my movements meant that only one show offered up the dates that could work for me. However, as if childhood buddies with Noel himself, I joined the queue instantly at number 280, and within one minute had purchased four wonka-style golden tickets. “It is better to be born lucky than rich“, as my father-in-law often comments when trying to find a park. The tickets I actually bought were the cheap seats which were previously advertised at £75 each. Although £300 may seem expensive, for an event so oversubscribed, it really isn’t. But of course, by the time I got to check out, do you think each ticket had remained at £75? Of course not. Thanks to the modern phenomenon of “dynamic pricing” the advertised price was now a factor of what I actually paid.
“Dynamic pricing” is a concept as old as commerce itself. However, what has brought about its recent prevalence is our increasing ability to understand, manage and manipulate large amounts of data in real time. I own a small Airbnb in the city. When people ask me how much it is a night, I have absolutely no idea. Some algorithm monitors demand, the time of year, what concerts are on at Spark, and a heap of other stuff, and sets a price for me. I have as much say in it as Liam Gallagher does. We are also starting to see this cross over into the sporting arena. Valencia have been the first football club to bring dynamic pricing, which amongst many has gone down as well as SEEKs shift to this model:
“Following the global trend in shows, sporting events and entertainment, Valencia will join this practice, which has the support and technology of La Liga. Tickets will therefore go on sale at a base price, which could increase as the days go by. Buying your tickets early will ensure you get the best price” – yep, after the triumph of “dynamic” pricing in the Oasis free-for-all, the first football club to smell an opportunity to make more cash pops its head above the parapet…
…Never underestimate the potential for the most greedy owners in football to try and import terrible ideas from other industries to exploit supporter loyalty. Matchgoers are already mobilising against the recent wave of price rises and attacks on concessions. Any underhand increases will be met with enormous opposition” – the Football Supporters’ Association (FSA)
Of course, this brings us on to SEEK. Now SEEK have been in my sights of late, however, my criticisms have been mostly misunderstood. Unlike every other recruiter I ever speak to, I actually like the idea of dynamically priced ads. Of all the things that should be priced this way, job ads seem to be one of the most appropriate. In markets where candidates are “rarer”, I’m fine with paying more to gain access to them. This, after all, is business. The challenge that SEEK have is one of communication and execution. When SEEK introduced Dynamic Pricing to the market, they leaned heavily of the “supply vs demand” variable. If you read their initial description of the product, they use the example of ads going up and down in price based on how many people are looking for jobs. Unfortunately for SEEK, the market then bombed and we entered a period where everyone expected job ads to be really cheap. This never happened. What SEEK didn’t initially articulate were the number of variables sitting behind the algorithm, and how low the weighting was on “supply versus demand”. This miscommunication came from Australia, and your poor local Account Manager now cowers under the desk whenever you ask them about it. The other challenge with variable priced ads is that they’re variably priced. Once upon a time, junior recruiters, candidate managers, office managers, and receptionists, could whack up ads without checking with a boss. They cost what they cost. Now, we have a commercial decision to make whenever we post an ad. And this creates a whole heap of problems internally.
As a fan (kinda) of dynamic pricing, we have a dream of using ourselves. Some of you will have attended our “Access” event. For those who haven’t, it’s essentially a tech-powered speed interview evening, where we introduce 10 would-be recruiters to 10 clients who want fresh blood, for 10 rounds of 7 minute interviews each. Candidates and clients then “like/dislike” each other via our platform, and we organise more formal interviews for the matches. We have a dream that the percentage our clients pay us for each candidate depends on the number of matches they get. If you want the superstar with 9 matches, you might pay 20%. If you’re the only one to match them, it might be 10%. Wouldn’t that be cool? Wouldn’t that be in keeping with the basic principles of supply and demand? Or are we crazy? Comment below.
I think if the industry embraces dynamic pricing, we could open up some interesting opportunities. The cyclical AoG debacle could be replaced with a dynamic market place. Imagine if the fee was dependant on how many agencies on the panel were briefed? Or just how hard, statistically, it was to fill a role? The possibilities are almost endless. Linking fees to a percentage of salary has always seemed odd to me, and perhaps technology now allows us to approach things a bit differently.
Anyway, back to criticism, hearsay, and rumours next week.
^SW
