We saw two pieces about for-profit k-12 schools and colleges using online advertising this week, which we excerpt below. The theme is not new. But it’s an important one we plan to continue monitoring. For-Profit colleges are built on heavy marketeering rather than quality education and branding. It’s a flaw in their model. The shady marketing to drive growth undercuts reputational excellence . NBC News reports a huge uptick in online ad spending by for-profit colleges in general and, in particular, the University of Phoenix, which has become the biggest spender on Google by spending nearly $400,000 per day on ads according to search firm SpyFu. It is spending more than any financial firm or retailer. Meanwhile, Greg Toppo at USA Today shows that the heavy advertising model is quickly moving into the K-12 space as well.
Greg Toppo at USA Today writes:
An analysis by USA TODAY finds that online charter schools have spent millions in taxpayer dollars on advertising over the past five years, a trend that shows few signs of abating. The primary and high schools — operated online by for-profit companies but with local taxpayer support — are buying TV, radio, newspaper and Internet ads to attract students, even as brick-and-mortar public schools in the districts they serve face budget crunches.
Virtual schools have become lightning rods for critics who say their operators are profiting from students’ dissatisfaction with neighborhood schools, but don’t produce better results. Supporters say the schools, operating in more than 30 states, are giving kids and families second chances. Nationwide, about 275,000 K-12 students attend school online full-time, according to the Evergreen Education Group, a Colorado consulting firm. Many virtual students are former home-schoolers taking advantage of the schools’ public funding — virtual schools typically get most of the per-pupil allowance that a local school does.
The USA TODAY analysis finds that 10 of the largest for-profit operators have spent an estimated $94.4 million on ads since 2007. The largest, Virginia-based K12 Inc., has spent about $21.5 million in just the first eight months of 2012.
The analysis is based on ad buys and rates compiled by Kantar Media, a New York-based provider of “media and marketing intelligence,” but the figures are only estimates. In an interview, K12 spokesman Jeff Kwitowski wouldn’t say whether the estimates are accurate or provide actual K12 figures. But he said the company’s agreements with local school districts and charter school authorizers require K12 to publicize its programs, often over large geographic areas….
A look at where K12 is placing the ads suggests that the company is also working to appeal to kids: Among the hundreds of outlets tapped this year, K12 has spent an estimated $631,600 to advertise on Nickelodeon, $601,600 on The Cartoon Network and $671,400 on MeetMe.com, a social networking site popular with teens. It also dropped $3,000 on VampireFreaks.com, which calls itself “the Web’s largest community for dark alternative culture.”
Via USA Today
A. Ananthalakshmi at NBC News writes:
Operators of other for-profit colleges, whose ranks include the Washington Post Co’s Kaplan business, DeVry Inc and ITT Educational Services Inc, are also boosting their spending on marketing and are among the 25 biggest advertisers on Google.
But no one is spending like the University of Phoenix, which doubled its spending on Google ads to about $380,000 per day on average between Oct. 12 and Nov. 12, compared with $170,000 a day in the previous month, according to SpyFu data – which Apollo describes as “gross speculation.”
“I have witnessed several versions of this cycle but none as extreme as this,” said Trace Urdan, an analyst with Wells Fargo Securities, who has been covering the U.S. for-profit education industry for about 15 years. “We are going to see more pointed efforts at marketing and more price competition in an effort to try to capture more market share both from each other as well as from traditional schools,” Urdan said.
Increased marketing alone will not be enough to fatten fast-shrinking profit margins and increase enrollments, however. Lower tuition fees and increased specialization of the type of programs offered, along with further streamlining of operations, will also be necessary, analysts say.
Via NBC News