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The cost of recruiting a university or college student 💸
The top spenders, how much do they spend, OPMs, and PPC advertising.
Universities and colleges spend millions of dollars every year on marketing and advertising initiatives. Let’s take a look at the numbers behind student recruitment, where they allocate the budget and the cost per enrollment.
📖 What you’ll learn
Where do they spend it
Who are the top spenders
How much they spend
Private sector partnerships for enrollment
Does the cost of enrollment make sense
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💎 Where do they spend it
Advertising: This can include expenses related to advertising on social media, search engines, or other online platforms, as well as print and broadcast advertising.
Events: This can include expenses related to hosting open houses, college fairs, and other recruitment events, such as venue rental, promotional materials, and staffing costs.
Lead generation: This can include expenses related to lead generation campaigns, such as paid search ads or sponsored content, as well as the cost of purchasing leads from third-party providers.
Staffing costs: This can include salaries and benefits for marketing and recruitment staff, as well as any outside consulting or agency fees.
🏁 Who spends more
According to a 2019 Hechinger Report article, this is the marketing spend for some of the leading 🇺🇸 US universities.
💡 The figures are from 2018 or 2019, whichever was the most recent tax year for which the institutions have provided documents.
Western Governors University: $127m
University of Maryland Global Campus: $500m over 6yrs (2019-2024) = $83m/yr
Johns Hopkins: $29.6m
New York University: $28.5m
University of Pennsylvania: $25.7m
University of Miami: $23.2m
Boston University: $12.7m
University marketing spend data outside the US are very limited but according to a Guardian article here are the “big” spenders in the 🇬🇧 UK:
University of Central Lancashire: £3.4m for 2017-18
University of Middlesex: £2.6m
University of East London: £1.3m (excl. open days & publications costs)
Anglia Ruskin University: £1.19m
University of Bedfordshire: £1.08m (£432 per enrolled undergraduate)
🏫 In the world of OPMs
💡 Online Program Management (OPM) companies manage online courses by designing digital materials, offering technical support, and providing student services for enrollment, advising, and technical assistance.
Academic public-private partnerships have grown widely over the years, especially with the evolution of the global education model. Universities and colleges partner with OPMs, Bootcamps, and International Pathway Providers to outsource student recruitment, digital delivery, and service capabilities.
HolonIQ research is cited indicating that 770 universities are now working with 200 edtech companies on online program delivery. So it means a big market.
OPM key players are Coursera and edX which started as MOOCs turned into student recruitment organizations for universities and colleges. The marketing and sales expenses of one of the leading OPM, 2U, are ~22% of the total tuition generated across partner programs.
In short, $1 in $5 spent on tuition goes to customer acquisition.
2U financial report over a 5-year period indicated the marketing and sales expenditures are over half of its revenue ($1.2 billion).
💸 Where does most of the budget go
In a 2019 report, The Century Foundation discovered that among all the ads they analyzed that ran between mid-April and mid-July for degree programs, nearly half (44%; 885 out of 2,000) were for health care programs. From April to May, 8 of the 10 largest college advertisers in their study started running for the first time, or more frequently, ads for health care programs.
Columbia University, the third-largest higher education display advertiser in May of that year, spent $75,300 on one ad alone about switching careers to health care.
Since April, Northeastern University has been promoting becoming “a leader in public health—on your schedule.”
Post-COVID ad competition for people looking for online degrees still remained high. According to the same report, here are some keyword examples with their CPC in March 2020:
💡 PPC (Pay-Per-Click) advertising is where advertisers pay for each click on their ads, targeting specific demographics and keywords, and using platforms such as Google Ads, Facebook Ads, and Microsoft Advertising. CPC (Cost-Per-Click) is the cost of those ads.
Term: “business degree online” → CPC: $68.79
Term: “criminal justice online degrees” → CPC: $54.17
Term: “online social work degree” → CPC: $47.22
Between Feb 2020 and April 2023, here are two examples based on Google Ads:
Term: “online bachelor’s degree” → CPC: $50.44
Search volume: 14,800 per month
Term: “online degree in business management” → CPC: $90 😱
🤔 Does the cost of enrollment make sense
Let’s take a look at this benchmark report from RuffaloNL that compares the cost of enrolling students for private and public universities in 2018 and 2020. It seems that:
Private universities spent 4x more than public universities to recruit undergraduates in 2020.
Recruiting local undergrads is 3.6x more expensive than recruiting international students.
📊 Key numbers
The average cost per lead for search advertising in Education & Instruction category is $50.91; while the average conversion rate is 6.61%.
Benchmark: The average CPC in the United States is $0.71, and the average CPM is $30.09. COVID-19 increased spending on digital advertising and other online recruitment tactics. The average cost per enrolled student for higher education marketing campaigns in the United States was approximately $2,185 in 2020.
A Noodle study found that only 6% of visitors to lead generation sites know colleges are paying to be listed on these sites.
☠️ Risks for universities and colleges
The revenue sharing model between universities and OPMs probably needs to evolve in order to ensure that program recommendations are always aligned with the university’s mission.
In a hyper-competitive market such as international student recruitment, there is a risk of an increase in recruitment costs without high revenue returns.
This week I'd like to highlight a great resource for edtech news in Asia 👉by !
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