Two-Sided Marketplace Business Model: The Case of Job Boards

In this blog post, we will explore the dynamics of two-sided marketplace business models, the specific challenges they present for job boards, and actionable tips for job board owners to build and scale their platforms successfully.

What is a two-sided marketplace and how does it relate to job boards?

A two-sided marketplace is a platform that connects two interdependent groups of users who provide each other with network benefits. Examples of such marketplaces include Uber, Airbnb, Etsy and, of course, job boards. The fundamental idea is that the value of the platform increases for one group as more of the other group participate. For job boards, this manifests in the platform becoming more valuable to job seekers as more employers post jobs, and vice versa.

The inherent challenge in starting a two-sided marketplace is often referred to as the "chicken and egg problem": job seekers will only come to your board if there are relevant roles, and employers will only pay to post jobs if there's an audience to fill those positions. Thus, job boards need to balance the acquisition of job seekers and employers simultaneously. So how do you best overcome this initial hurdle?

1. Building one audience first: Depending on your starting point and business model, this could mean investing resources in building connections with employers or job seekers first. Which in turn will make your platform more appealing to the other audience. We’ll get into each of these two strategies below.
2. Simultaneous growth: This strategy focuses on growing both sides concurrently through marketing and outreach efforts. This approach will be more resource-intensive but can grow your job board faster.

Is a two-sided marketplace really that complicated?

Building a successful job board requires an initial investment of both time and money—just like any business would. It's crucial to have a realistic timeline and budget, as it typically takes a few months to start generating revenue.

As mentioned previously, the primary challenge in this model is the “chicken and egg problem”. For a successful job board you need:

• Job seeker traffic (which will only come to your board if you have relevant roles), and
• employers to post jobs on your board (which will only pay if you have an audience that actually wants to fill those jobs).

Two-sided marketplaces aren't necessarily complicated; they just don't follow a linear growth pattern. The most difficult part will be the very beginning, but once you have a small audience, the value of your platform will grow exponentially with increasing number of users. On average, our customers achieve profitability within 1.5 months.

Another important consideration is whether there are existing users or if demand needs to be created from scratch. For instance, platforms like Uber and Airbnb had to create new types of sellers—people offering rides or short-term rentals—which didn't exist previously. However, job boards are in a much better position as there are already employers looking to post on niche job boards and job seekers using them.

4 Tips for growing a two-sided marketplace job board

Rule of thumb: volume brings success

The success of a two-sided marketplace hinges on building volume. The more people are using your platform, the more valuable it becomes to both sides, similar to a social media platform.

This concept is known as the network effect, where increased participation increases the value for all users. In the case of job boards, the more jobs are on there, the more valuable it will be to your job seekers, and vice versa.

Initially, this might seem overwhelming, especially if you're starting from scratch. But a good first goal is building volume on one side of your marketplace.
Which side of your customers you decide to invest in first depends on your niche, the current hiring market, and your job board business model (i.e. are you monetizing employers or job seekers?).

Here are two different strategies to kickstart your job board:

Strategy #1: focus on the more difficult user group first

Generally, it is more challenging to attract companies to pay to post jobs on a new job board compared to driving job seekers to browse your board. That’s why many job boards prioritize acquiring employers and their job listings first. Once you can showcase exclusive and suitable job opportunities, job seekers will flow to your board almost automatically.

Here are some strategies to build connections with employers:

• Cold outreach: use platforms like LinkedIn to identify and engage with companies actively recruiting in your niche. Tailor your pitch to highlight the benefits of posting on your board, such as access to a targeted pool of candidates in the employers’ industry.
  Tool tip: Use GetProspect to help find email addresses once you have a contact's name or company.
• Collaborations and partnerships: partner with local industry associations (think: association of cybersecurity professionals), chambers of commerce, and educational institutions to offer free job postings initially. Once they see the value, they'll be more inclined to pay for your services.
  Another good place to build connections are in-person industry events such as conferences, trade shows, expos, and startup events in your niche.
• Incentives for first employers: an effective strategy can be delaying your own revenue to get the ball rolling. Offer discounts, free trial periods, or additional services like candidate shortlisting to encourage employers to post jobs on your board.
• Provide resources: create valuable content for employers, such as recruitment guides, articles on writing effective job descriptions, and tips for filtering candidates. This not only attracts employers but also establishes your board as a trusted authority in the niche.

Strategy #2: build a solid job seeker audience first

Another approach is focusing on building a robust job seeker base, which is usually easier. In the meantime you can find roles via a scraper, XML import or manually screening job aggregators.

With a significant number of quality job seekers visiting your board, employers in your niche will naturally be drawn to post their listings or pay for access to your pool of candidates.

If you want to pursue this strategy, here are our top tips for increasing traffic from job seekers:

• Engage with existing communities: participate in forums and social media groups relevant to your niche. Establish yourself as an authority and pitch to run a job channel (with backlinks to your job board) in these communities.
  The Hive Index can be helpful in finding specific communities.
• Social media presence: develop a strong presence on one social media platform by sharing job listings and valuable content like job-seeking tips and industry insights (think: how to land a job in [niche], optimize LI profile for [niche]).
  If you're looking for inspiration, Remote Work Junkie does a fantastic job of this on LinkedIn.
• Newsletter and blog: Create a job board newsletter to keep job seekers engaged and informed, especially passive ones. Additionally, maintain a blog with content that targets keywords job seekers are searching for, driving organic traffic to your board.
• SEO optimization: Focus on search engine optimization to ensure your job board ranks high for relevant search queries, attracting job seekers actively looking for opportunities in your niche.

Continue growth: build trust on both sides

Trust is essential for any marketplace. Once your job board has a decent size, you should consider vetting both job seekers and employers to ensure quality for all users. That way, employers will continue coming to your job board to receive high-quality applications and job seekers won’t waste their time applying to sub-par roles.

• Vetting employers: make sure that the companies posting on your board are legitimate and reputable. This can be done manually through a simple Google search and checking reviews from employees on Glassdoor. You should also encourage companies to create rich profiles on your job board to make themselves more attractive to job seekers.
• Vetting job seekers: this might be a bit more difficult to do but it's helpful to build trust with employers. A step you can implement right now is requiring certain profile fields, such as a last name and a link to their LinkedIn profile, when registering as a job seeker on your platform. This might already prevent the majority of bots and spammy applicants from getting into your job seeker database.

Operating a job board, a two-sided marketplace, does present unique challenges, but it also provides you with an opportunity to grow exponentially. Focus first on building volume, prioritizing one user group, and providing valuable resources to overcome the first hurdle of a two-sided marketplace. And you’ll be off to the races soon.