The Edu Conundrum
If we could, we would like to create a performance marketing index, not one that tries to guess at the total revenues of those running cost per action ads, but one that could truly answer the question of what are the best offers. Each network tends to send out emails suggesting what to run, but knowing that their competitors often have accounts on their system and receive the blast emails, these emails don’t always show what’s really under the hood. Given the issues surrounding the continuity space, for example, it’s easy to see why they might not psuedo-privately thump their chests about both having said offers and their performance.
One offer or areas of offers, though, that has done well over the past year and carried little stigma to promote are education offers. From an offer standpoint, the most significant change to take place in edu is the transformation from "Earn Your Degree" to "Find Local Jobs." While the same number of words, the effect is a big one. It took a secondary message – that advancing your career could lead to a better job – and made it the primary one. The transition in messaging made sense given the change in the economy. The issue on people’s mind had less to do with finishing a degree or earning a degree in a different field to make a career change. All people have cared about were finding jobs, which makes this a long winded way of saying that if the goal is clicks, a message about jobs will work much better than a message about a degree. The problem, of course, is that the monetization vehicle remains the same – education offers.
With unemployment holding steady – even steadily bad – the demand for jobs remains high, but the actual, true demand for continuing education does not. The demand for for-profit post-secondary education correlates closely to the change in unemployment. Over the last three years, the change in unemployment rate was quite high, going from 6% to around 10%. In times past when the change in unemployment went the other way, from higher to lower, that correlated with a significant decrease in demand for school. We are somewhere in between today. Unemployment hasn’t quite fallen, but no longer is the rate getting bigger. This suggests that education offers, and more globally, the ability to generate education leads should slow. In reality, the ability to generate leads should have already slowed. No one likes to not grow, though. And, even though the schools themselves have been through this before, i.e., periods of growth and subsequent contraction, no one – be it school or seller – quite wants to accept not growing.
Herein lies the quandary. On the upper bounds of the education space, namely the largest aggregators, growth has slowed – some could very well dip. It sucks, but from a macro-economic perspective, that makes a lot of sense. Harder to understand is any growth in leads. Those who know about going to school, know about going to school. The addressable market has been addressed. How then, are many in the space still able to post such strong lead volume? The short answer looks less and less short, but not surprisingly, it involves the job offers. A handful of firms have grown by taking share from the bigger guys – doing search, email, etc. better. By and large, though, we have too many leads entering the system because they aren’t really leads. They are data. They are as much a lead as a free iPod person is a lead in that, they aren’t a real lead but can be turned into leads. That is what has been happening in education. One executive calls it lead laundering. What he really means is the rise in call verified leads.
Call verified leads have been the quiet growth engine for the past two, if not more years. The process started innocuously enough. A handful of firms knew that sources of media existed from which schools themselves wouldn’t advertise and/or accept full form leads. Put a full form lead in a co-reg path, and you’ll get leads but no conversions. There is an apocryphal story about TheUseful having sent almost $50k in leads to a school that resulted in not one enrollment. Stories like that were part of the reason that co-reg as a form was not accepted. That didn’t mean an aggregator couldn’t put a simple opt-in asking if a person wanted to learn more about education, then calling that person to confirm their interest. It was a gamble, because it meant paying a few dollars and hoping that you could connect and convert enough people into full-form leads.
Right as companies started to figure out the economics of the call verified lead was right at the heart of the negative change in employment. It was, as it turns out, the perfect time to market the education message. With each passing day, a greater percentage of the population had an active interest in what a degree might do. This meant greater conversion rates from opt-in to call to full form, and a direct rise in those collecting data. The question became not if the call-verified model worked but how to get enough data to feed the machine, and because of the overall market, that made bad data look better than it was (and why people could make raw phone book data profitable). The quest to put data through the call verified machine turned into a mini-bubble, and like most bubbles, the actual business operations and performance trails the true market. This gets back to the change in unemployment and addressable lead market. That tipped earlier this year, but were we to use the call verified lead volume, it would look like the market is still growing.
The question now is when will the correction start. We know the performance marketing world well enough, though, to know that no one will voluntary stop trying to find data sources to feed the machine. It’s one of the many reasons for the earlier switch to job offers versus education offers. Unfortunately, this trajectory is not truly sustainable. The percentage of total leads with little to no intent of all leads generated continues to steadily rise. At what point does it become not just unsustainable but absolutely detrimental? The short solution is that we need to find another offer that works with the same infrastructure, another monetization vehicle that can take general traffic and turn it into qualified not just verified leads. Whoever can do that can make a fortune. We couldn’t come up with it, so hopefully you will.
