|Graphic credit: stopsmilingonline|
As you can see from my response, I got my first job out of college starting with an on-campus interview. "XYZ Corporation will be visiting on March 1 to interview potential candidates. Interested students can drop off their resumes with the department secretary, etc., etc." I hesitate to say that I aced the interview, just that I didn't throw up on my shoes. One on-site interview later, I had my first chemistry job out of college. It was pretty great, I thought.
It must be terribly difficult for companies to come up with an initial screening process to find candidates for on-site interviews. On-campus interviews rely on the thought that surely, there must be a student here that 1) meets our criteria and 2) has free time to come and visit us. Presumably, phone interviews are somewhat less picky; the thought process is 1) here are people who have expressed the desire to work for us and 2) most people are available by phone.
I think there's something about face-to-face interviewing that people really like, because it's so time consuming and expensive relative to phone interviews. The average on-campus interview lasts 20 or 30 minutes and the interviewer has already spent quite a bit of money to get to the campus itself (plane ticket + hotel room?) Phone interviews might take as long, but the cost can be quite a bit lower. I suspect that the wealth of non-verbal information that you can derive from face-to-face interviewing is worth the extra cost.*
*Of course, the way to test this is to see if on-campus interviewing is more successful at bringing in on-site interview candidates and future employees than phone interviews.