Anonymous letter

From time to time we receive anonymous letters from people who have something to say, but don’t want to be outed/exposed, here is a recent one:

I have heard most if not all of the arguments & viewpoints against the way for-profit schools market.  I have heard all of the name calling, the comparison to the subprime lenders, the predatory marketing tactics, the hundreds of millions being spent by schools and the deceptive/ misleading advertising practices.  For an uneducated or ill-informed individual,  it’s easy to see how some jump on the bandwagon.  However, let us not forget that whenever one listens to only one side of a story or argument it’s easy to fall into alignment.  What bothers me, in addition to the one-sided arguments being made, is the complete lack of thinking things thru.  The fact that some elected officials are too quick to make changes, many simply for change sake, is just news-bite governing.    When did we all of a sudden decide to switch to a fast break style government?  When did ready fire aim become the best practices promoted by some leaders within the department of education.  Is it really reform if the changes that result backfire on the ultimate goal?    Why don’t people think things thru anymore?  What about the ripple effects caused by these aggressive proposed changes?  I thought one of our top goals as a country was to increase the percentage of Americans with a college degree?  Shouldn’t government work to improve the advancement opportunities for those who need it most.  I am all for closing any firm or firms who are systematically practicing & promoting non-compliance, fraud or deception, I am not however in favor or thoughtless knee jerk decision making that effects an entire industry.

 I was a Political Science Major and a logic minor in college.  Talk about an internal conflict within one’s own education…  It’s sad that in today’s screwed up political climate it seems like an either/ or equation, do I want to be in politics or do I want to be a logical person!

How is it that schools spending large sums of money on advertising are determined to be doing something bad?  What about the reinforcement value of the “go to college”  messaging, the education awareness they generate, and the outreach into areas not targeted by tradition schools?

 Why is it bad for lead providers to provide prospective education seekers with non-incentivized compliance approved forms for individuals to request information directly from schools who want to talk to them about potentially becoming a student.  Isn’t that a value?  

 It’s Interesting that you never hear about the positive aspects resulting from the unprecedented awareness created from the influx of educational advertising over the last decade. 

Here is one:

Recent Pew research center study:

 The most detailed study to date of the 18- to 29-year-old Millennial generation finds this group probably will be the most educated in American history. But the 50 million Millennials also have the highest share who are unemployed or out of the workforce in almost four decades, according to the study, released today by the Pew Research Center.

Pew’s analysis includes its own data, such as a new survey of 2,020 adults, including 830 Millennials, conducted by landline and cell phone last month. It also analyzes data from other sources, such as the Census, which shows 40% of those 18-24 were in college in 2008, a higher percentage than any previous generation at those ages.

**

So if you are a misguided politician you read the above excerpt and say: 

See those for profit schools are suckering more people to go to college than ever before, and if those people weren’t suckered into getting a degree they would not have any student loans…  Also, what good is a degree, look at their graduates, they are unemployed…

I would argue that obtaining a college degree is not ever a bad idea!  I would also argue that they are unemployed because of the current economic debacle we are currently facing. 

A logical person however may read the same excerpt and say:  

Wow, I am glad to see the increase in college educated people within the most recent generation, hey maybe it’s because of all the increased awareness resulting from the influx of advertising to those people over the last decade or maybe from the outreach from the proactive colleges.  It’s unfortunate to see so many of them unemployed, but then again over 10% of our country is unemployed, the economy sucks.    

Anonymous

During long winded negotiated rulemaking for Higher Education, the US DOE proposed defining gainful employment by establishing a 8% debt to income threshold (debt to income is also commonly used for mortgage limits) based on median student debt for recent college graduates with income based either on Bureau of Labor Statistics 25th percentile wage data or actual college graduate earnings. Loan payments would be based on the standard repayment plan (10 years) for the unsubsidized Stafford loan program. For programs that failed to satisfy this standard, the US Department of Education proposed an alternative that requires a loan repayment rate for recent college graduates of 90%. The loan repayment rate measures the percentage of borrowers actively repaying their loans/ and not defaulting. It is a dual to the default rate, but also includes borrowers who are delinquent, in an economic hardship deferment or in forbearance along with borrowers who are in default.

Mark Kantrowitz has written a piece that’s worthwhile reading.  Click the link below to view Marks piece:

http://www.finaid.org/educators/20100301gainfulemployment.pdf

Jay has done it again.  This years Leadscon 2010 was packed.  Lots of great panels, networking, experts and meeting opportunities.  Many people had mentioned that the format in their opinion should be extended to at least 2 full days if not 3.  So much to see, so many to talk to, hard to get it all in.  I will say it was great to see so many leaders from various sectors within lead generation together.  It was even better to see that they were all honest, open and sharing advice and opinions with those just starting out.  The conference proved to be a must be at event for customers, industry leaders, publishers/affiliates & technology providers. 

Real issues were discussed, not promotional jargon, thus the value of attending was clear.  We look forward to the Leadscon east show this summer and hope it will continue to out perform previous events.

Apollo pre-announced results fiscal 2Q10 results, with EPS from continuing operations lower than our and the consensus estimate. 2Q10 EPS from continuing operations is expected to be $0.77-0.82 versus the consensus estimate of $0.94.

The pre-market announcement apparently is due to

 1) higher than expected bad debt expense,

 2) greater than expected investments in BP Holdings, the European education company that Apollo recently acquired.

Expected bad debt expense surged well above estimates as a % of revenue of 6.8-7.1%(a ~280 bps increase YoY) is higher than our estimate of 4.7% (a ~60 bps increase YoY). The lower than expected Q2 EPS also reflects a loss per share from BPP Holdings. Apollo has authorized a $500M incrase in the share repurchase program. The size of the share repurchase authorization program is now close to $800M.

The company will hold its 2Q10 conference call on March 29.

2010 Benchmarking Report provides key statistics and insights for marketers in the education sector

Closter, New Jersey, and Toronto, Canada, February 4, 2010 – Despite continuing challenges to the overall economic environment, marketing budgets in the education sector – specifically for lead generation – are on the rise, according to results from the 2010 Lead Generation Benchmarking survey by ForProfitEDU.com and sponsored by Sparkroom. According to the survey, schools are overwhelmingly keeping their resources focused on lead generation activities for 2010. Virtually all respondents indicated that they are planning to increase or maintain their spending on lead generation next year (69% and 17% respectively). Just 7% plan to decrease spending.

“Marketing, recruitment and admissions departments have faced a number of challenges over the past few years as the market has undergone a series of rapid changes, many as a direct result of online marketing and lead gen technologies,” said Tom Ferrara, CEO of ForProfitEDU.com. “This report offers a quick and concise way for them to gage their performance against other peer schools and to better understand where they should be making changes.”

The survey of 102 professionals directly involved with marketing in the education sector was conducted by iTracks Research on behalf of ForProfitEDU.com between December 1 and December 16, 2009. It aimed to establish some benchmarks and identify current trends and best practices in the highly competitive for-profit education sector.

“There’s more and more pressure on higher education marketers to do more with less as the market becomes increasingly competitive,” said Jamie McDonald, President and CEO of Sparkroom. “This report confirmed what we’ve been seeing – just a small percentage of schools are optimizing their lead management when measured by CPE. The majority need to find ways to improve their enrollment marketing automation in order to compete with the leading marketers in the space.”

Among other findings from the survey:

• There is a strong correlation between 3rd party call center use and short lead response times with, 82% of schools using a third-party call centers reporting lead response time under ten minutes, compared to just 40% using an internal call center, and 45% of those who rely on admissions reps to call.
• The vast majority (90%) of respondents from large schools (those with a total enrolment over 20,000 students) reported that they are using in-house lead management solutions, rather than relying on an agency.
• The effectiveness of social media for lead generation remains unproven, with just 35% of respondents reporting that it is an effective tool for lead gen. By comparison, over 93% of respondents reported that search advertising is very effective.
• When asked about the most significant concerns affecting their organization, the large majority of schools (89%) noted that poor lead quality ranks as a concern, while the majority (58%) also identified the high cost of agency fees as a concern for their organization.

The survey also attracted lead provider respondents who were invited to answer a secondary questionnaire to track trends among lead aggregators, including the number of leads being generated in the education sector, bounceback rates and revenue per lead. These reports have been compiled in a separate report, titled 2010 Lead Generation Benchmarking for Vendors.

For a more detailed interpretation or additional information on either survey, please email info@forprofitedu.com or visit www.ForProfitEDU.com. To request a copy of the 2010 Lead Generation Benchmarking Report, visit www.sparkroom.com/surveyreport.

About ForProfitEDU.com

ForProfitEDU.com is a leading website resource for all those who work within, around or are interested in the For-Profit EDU industry. The site offers research, consulting, networking, news updates and commentary from members of the For-Profit EDU community. Contributors include those from the school side, as well as those that work at related services firms including the investment community (investors, analysts, venture firms & PE firms), marketing & advertising professionals, educators & curriculum development, career services & other related service providers. ForProfitEDU also provides research and consulting services to schools & other service firms within the industry. Areas of expertise include Advertising, Lead generation, Marketing Strategy & Execution, Admissions, M&A, Raising capital, Market research and Partnering to create & grow online schools.

About Sparkroom

Sparkroom delivers innovative solutions to direct marketers, including its comprehensive Lead Performance Management software and services. Sparkroom Lead Deliver, Lead IQ, and Lead Market Analytics deliver a hosted business intelligence platform to give direct response marketers the tools and expertise needed to measure, manage, and optimize their lead acquisition spending across every direct response channel. Sparkroom’s software, which it hosts and delivers to its customers on demand, enables customers to capture, store, and analyze information generated by their lead buying activities and to gain critical business insights into the performance and efficiency of marketing and sales initiatives and other business processes. For more information, visit www.sparkroom.com.

LeadsCon Las Vegas 2010 takes place February 23rd and February 24, 2010. Join for two full days of unforgettable learning and unparalleled networking.

Register: http://www.leadscon.com/leadscon-las-vegas-2010/register.html

Repost from our linkedin group…much more there join the group by clicking the linkedin button top right of website.

The tradition classroom is changing. People have ever increasing demands on their time. Finding new ways to deliver a traditional education is a growth area for innovation in education.

Textbooks are continuing (and need to continue) to move into electronic formats and to digital device usage by faculty and students–such as Kindle and Sony Reader or Kindle for PC, etc.

It appears as if both of you are in agreement that the mode of delivery is the key place for innovation. I definitely agree that the mode of deliver will be extremely important. However, I believe strongly that access is only the first phase of the education revolution and that a second phase will include a combination of access and quality in terms of the level and types of educational opportunities that are afforded using these new methods.I believe that the area of remediation for the large number of students who are currently not able to obtain a high school diploma holds promise. In addition, there will also be opportunities in regard to those who are seeking a post-secondary education but who do not have the necessary skills to do so. A third area that ties in to both your idea of service delivery and the idea of access to content is the need for providing new methods and also increased access to quality curriculum (at an affordable price) for those who are choosing to home school their children. Delivery methods in the form of on-line programming has already made more diverse resources available to parents. However, there is is need for these parents to receive more and better options for receiving a standardized curriculum that can ensure that they are meeting quality indicators as highlighted by colleges and universities.

All of this being said, I think that access to digital is one way to deliver content while improving quality. Delivery of textbooks using this medium will definitely save schools money, time and resources. However, if we can also deliver varied types of content in more updated and non-traditional ways using digital media then that takes it one step further. With this in mind, I believe that the digitizing of actual teaching in such a way as to tie in immediate feedback in the form of assessments is the next big wave. While I do believe that there is no replacement for a real life human being, the fact of the matter is that schools currently teach to the middle leaving many students fall behind. This lends itself to remediation as being the area where opportunity exists. After that we can begin to look at challenging those that are on the high end although I am noticing that these students are gaining greater access to distance learning courses offered by colleges and universities (and only time will tell if that fills this area of need). Regardless, we will need to think outside the box to provide digital teaching opportunities.

Any thoughts?

To add to my previous post, role playing programs, situational lessons, traditional curriculum and assessment that all respond to the needs of the learner all have possibilities under this umbrella. If there is an interactional component then it will work (think Wii). I also believe that distance education that enables students to solicit responses from a teacher and/or other students that are in another part of the globe (think Cisco commercials that ran repeatedly during the Championship Bowl game) all fit the bill of increasing opportunities for those who have traditionally fallen through the cracks or who are being home schooled. The combination of new and varied delivery methods (as you indicated) along with the ability to deliver increased levels of complex educational content is the key in my humble opinion.

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More & more we hear from admissions people that a continuing trend of students coming in and telling them that the don’t expect to pay for school and that Obama is going to pay for it… This is a sign of a growing problem, much of which is being driven by the marketers. Do you know how your schools is being marketed?

 Take a look at this and let me know what you think (copy and paste if it does not appear as a link):  http://www.aralifestyle.com/article.aspx?UserFeedGuid=245a1190-1c3c-47aa-b51b-48f7b10be5ee&ArticleId=2507&ComboId=8228&title=Obama-will-give-you-2-500-a-year-to-go-to-school

FYI, the link in the email reads:  Click here: Low income? Stimulus will pay you to go to school

It is important that schools continue to fight for transparency in advertising tactics when they use new EDU marketers.  Must have teeth and claw-back provisions when vendors break arrangements!

With 2009 being a perfect storm for EDU lead gen, how will 2010 play out?  

Almost all of the EDU lead vendors we have spoken to feel 2010 will continue to be strong for EDU lead gen, though most don’t expect a repeat of last year’s explosion.  Clearly the data suggests that most of the second half of 2009 showed a steady decline from the first half.  While year over year was still exceptional, the aggregate consistently began to decline in August continuing thru year end.  However November & December did not decline from October as much as previous years.

For those of you who like read, it may be worthwhile to ruffle through quinstreet’s s-1 filing.  Some interesting information on their firm, on their outlook of the industry and a nice peek into this company which has been closely held for many years now.  Interest to see % Devry’s represented of revenue. The company has been one of the leaders in EDU for some time and has made ground in Insurance & finance too.

I am very interested to see how the market will take to it.  Hopefully strong.

Link to s-1: http://www.faqs.org/sec-filings/091222/QUINSTREET-INC_S-1.A/