In a time of towering tuition costs, it’s easy to criticize colleges for trying to differentiate themselves by building climbing walls, luxury dorms or lazy rivers. But as more colleges move to offer online programs, there’s another new cost that has nothing to do with delivering education: buying ads on Google and other online platforms to hook new students.
Colleges with significant online programs can spend millions each year trying to get their name out online. It’s a practice that was pioneered by for-profit colleges as they built their brands, but some college leaders worry that traditional colleges have now entered an arms race of marketing and advertising.
“It’s become outrageous,” says Bernard Bull, chief innovation officer at Concordia University Wisconsin. The biggest problem, he argued in a post on his personal blog last week, is that all that advertising does nothing to help students. “It doesn’t help them find the best-fit school. It doesn’t provide them better information to consider their options. It doesn’t promote a more thoughtful deliberation process,” he wrote. And it takes money away from what could be spent on the student experience, he added.
To get a sense of how much such costs are rising, consider Southern New Hampshire University, which has been rapidly expanding its online offerings in the past few years. According to the 990 tax form filed in 2012, the institution paid more than $3 million that year to a vendor named Platform Advertising for online ads and marketing, and another $17 million to Mediassociates (which apparently focuses more on television and radio adverising). By 2015, that spending rose to $5.3 million to Platform Advertising and $32 million to Mediassociates.
And Google ads in particular are clearly a key expense at many nonprofit colleges with online programs. Western Governors University, for instance, spent more than $10.5 million in one year on Google ads, according to its 2015 tax forms.
Officials involved with such spending, however, note that it has become a necessary part of running an online program. “If we want to reach students on the West coast, how do you suggest we do that?” asks Paul LeBlanc, president of Southern New Hampshire. “I don’t control what advertising costs.” He argues that working with outside vendors to do the institution’s outreach campaigns helps make sure the advertising money is used effectively, and he says that the amounts have to be considered in the context of a large online effort. (The university has more than 80,000 online students.) “We haven’t raised our tuition in several years, and we offer a really affordable degree for most people,” says LeBlanc.
“There’s a very traditional romantic notion that universities and higher education should just do a good job and their name will get out there,” adds LeBlanc. “But you have to market, and marketing is an increasingly expensive and complicated proposition.” And he says that traditional colleges often spend millions on athletics programs and other activities that are effectively marketing, even though they’re not seen that way. “[The University] of Michigan’s athletics program doesn’t improve Michigan’s academic program one whit,” he says. “It provides brand-building.”
Jeff Burton, public relations manager for Western Governors University, says that these days, both nonprofit and for-profit colleges are spending “more aggressively” on advertising. But he says the university puts an equal amount energy into search engine optimization (SEO), trying to convince the Google search algorithm to favor its programs so students find them even without a paid ad. He suspects they spend less than their competitors on such ads. "We are self-sustaining on our tuition and have kept tuition flat since 2008," he says. "Because of this and being nonprofit we are focused on creative ways to reach students."
A Search Giant's Power
If Google’s search algorithm sees your site as high-quality in its internal ranking, that can greatly reduce the need to pay for Google ads to bring in students. That means that for online programs, Google plays a similar role to that the U.S. News and World Report college rankings do for in-person programs, argues Matthew Rascoff, associate vice provost for innovation and education at Duke University. “Every website has what’s called ‘domain authority’ with Google,” he says. “And that’s a huge factor.” For-profit colleges like University of Phoenix have less authority than places like Duke, meaning places like Phoenix must pay to get on the first page of search results, while Duke’s page might just come up as a natural search. At one point, the University of Phoenix was the single biggest spender on Google ads (at one point reportedly spending $400,000 a day on ads).
The underlying problem with online college programs is that people don’t yet know how to tell what a good one looks like, argues Richard Garrett, chief research officer of Eduventures, who watches the edtech sector closely. “Online brands are still very nascent, so schools still trade on their reputations” from traditional programs.
“Online in theory means you can go to any school, anywhere, anytime,” he adds. “But you’ve got now thousands of schools making that pitch, which is noisy.” In some cases, winning the online enrollment game comes down to who spends the most to get in front of the students who are actively looking.
But Bull, of Concordia University Wisconsin, argues that it doesn’t have to be this way. He’s calling for colleges and startups to come together to create a better matching system so online students can find the best programs for them. He points to services like Admitted.ly, designed to help high school students find traditional colleges, as a potential model. “I truly believe we can remove that expense from our budgets through some innovative work,” he says.
Building a trusted third-party broker of data to help students choose colleges was the idea behind the U.S. Department of Education’s College Scorecard, and it shows the challenge of pulling it off. Developed under former President Obama, that project was scaled back from its original ambitions, has faced criticisms over the limitations of its data, and has not caught on widely.
For many traditional colleges starting online programs these days, the solution has been to outsource as much of the business operations as possible (including marketing and advertising), by using companies like 2U. In the SEC filing that 2U submitted when it went public in 2014, the company noted that its sales and marketing costs had increased from from $32.1 million in 2011 to $45.4 million in 2012, and that part of that was spent on search-engine ads. The statement also noted, however, that as a percentage of revenue, its marketing costs were going down. But that’s down from a high bar: marketing and sales costs were 108 percent of revenue in 2011, but down to 81.2 percent of revenue in 2012.
Certainly no college is eager to part with scarce resources for advertising. “Everyone would like to lower those costs,” says LeBlanc, of Southern New Hampshire. “If you want institution X to spend less money on marketing and reaching students, they would welcome your suggestions for how to do that.”