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How For-Profit Colleges Major In Marketing & Fail Education

By on December 31, 2012
Domestic, Education Quality, Ethics, For-Profit, Friend, Fraud, or Fishy, Graduation Rates, Minorities, Recruitment, Required, Retention Rates, Universities & Colleges

Swings above the boardwalk - again!

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Kevin Chen writes a smart post on The Motley Fool about how for-profit colleges ace marketing but flunk education. He reminds readers that University of Phoenix owner, Apollo Group, is the biggest advertiser on Google, spending $400,000 a day. But all that advertising cannot save the U of Phoenix and its for-profit peers from declining student enrollments, huge drop-out rates and competition from traditional universities with better reputations.

Chen writes:

After losing enough students to fill three Ohio States, followed by another 14% drop this past quarter, the University of Phoenix seems to believe that it can advertise its way out of declining enrollment. With 75% of its enrollment consisting of online-only students — higher than the average 59% for for-profit colleges — the university spent investors’ dollars to buy students with Google ads. From Oct. 12 to Nov. 12, the university doubled its online advertising spend from $170,000 to $380,000. That’s more than Amazon.com (No. 6), the world’s largest online retailer!

Unsurprisingly, daily ad spending seems to be an industrywide trend.

Company Advertising Rank Daily Ad Spend Current Enrollment Past Year’s Change in Enrollment Year-to-Date Stock Gain
University of Phoenix 1 $380,000 356,900 (14.7%) (63.7%)
DeVry 7 $98,100 60,044 (14.7%) (31.1%)
Kaplan 14 $69,500 96,701 (7.9%) (5.4%)
ITT Technical Institute 17 $64,500 73,255 (13.5%) 15.1%

Source: Spyfu.com, Most recent 10-K.

After hemorrhaging students this past year, for-profit universities seemed to follow the University of Phoenix’s lead. DeVry (NYSE: DV  ) , Washington Post‘s Kaplan, and ITT Tech (NYSE: ESI  ) are among the 17 biggest advertisers online — outspending companies from Progressive to J.C. Penney. (Although the Apollo Group describes this data as “gross speculation,” The Washington Post cited SpyFu, the site that provided these numbers, as a credible source regarding online advertising during the 2008 presidential election.)

Marketing can’t change reality
Although marketing may increase enrollments, it will do so only in the short term. In this sluggish economy, graduates from traditional four-year colleges are struggling to find jobs. Prospective students have begun to realize that education isn’t always a great investment, and they are now scrutinizing their options even more intently.

anImage

Source: 10-Ks.

Read more….

Via Motley Fool



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