A frequent dilemma I hear education portals have is not knowing what the best traffic channels are to generate quality leads. They either don’t want to upset their lead buyers with lead fluctuations or they don’t have a team in place that can test new channels well.

Most of the top portals have the budget and lead buyers in place to extensively test each traffic channel but it takes time, the right analytics team and a watchful eye to get it right. After studying the demographic and info preferences of education leads, my team has spent the last several months testing many different traffic channels.

We had meetings with all our big lead buyers prior to testing and basically told then exactly what we would be doing. We told them we’d need them to be patient through the process as some sources may drop while others increase in quality – but we wanted to stay in constant contact with them and get as much analytics back in real time as possible. We told them the exact metrics we would need. They had the ability to return below-benchmark leads right away, and after all was said and done, they would most likely come away with higher enrolling leads.

We wanted this to be a meaningful test knowing that once we were done optimizing, split testing and stress testing, the remaining traffic channels and sources would be of the highest quality.

Surprisingly, every one of our buyers was excited for our test and was willing to be patient with us through the process.

Here’s a highlight summary:

Email Marketing

We had a small amount of email marketing experience but nothing nearly as extensive as we did over the last few months. We went to some of the biggest list managers with great reputations and worked with them in building creatives to run on a CPL basis. We assumed this was going to be the highest quality traffic but it wasn’t.

Using the same creatives across different lists can dramatically change quality. And just because we mailed through some of the most reputable list managers, didn’t seem to matter. At certain times, we were promised lists that “were great quality” but turned out not to be. And lists they were not sure about ended up being great finds.

Once we weeded out the poor lists and their data sources, email marketing proved to be high quality (but not the HIGHEST quality).

The age demographics of our email leads tended to be older (40 years old+). Lists that had origins from grant sites did extremely poor. Geo-distribution was skewed toward the east coast. Enrollment rates were 3.8%.

Social Media Marketing

The best part about social media marketing; mostly Facebook these days, is that you can target your audience via their exact demographic. Any age or interest you want to target, you have it at your fingertips.

Does that mean this type of marketing is effective?

Yes, it can be. But you have to have the budget to do it. Facebook is very expensive to advertise education these days (well over $1 per click) unless you are creating ads like this targeting 16 – 18 year olds (sarcastic)-

Trust me, you don’t want to do this. These leads don’t back out.

You have to target older ages and that is where clicks get very expensive. However portals with well established lead buyers can afford this, and I recommend testing social media marketing with older age groups.

Display Marketing

The king of education display marketing based on visibility is ClassesUSA, mostly due to their long standing Microsoft deal.

For us, display marketing had the biggest amount of controllable variability.

Quality is purely based on the sites you target. For example Yahoo Education is a gold mine (tip), while sites like AddictingGames.com is a waste of time. Most people aren’t going to buy media directly from sites so you have to make sure you go with a reputable display network and negotiate your terms carefully.

This is where having a skilled internal media buyer comes in handy. There are many tricks of the trade that come with media buying that you only learn through experience. My experience as an affiliate marketer years ago taught me the ropes, at a price tag exceeding 100k.

Display marketing surprisingly turned out being our second best traffic source at an enrollment rate of 4.1%.

Search Marketing

Hands down the best converting traffic source during this test. By converting I mean enrollments (and I realize affiliates don’t care about enrollments). But enrollments are most important to colleges, AORs and well established portals.

Sure bids are $8+ in some cases, but if you have a solid lead gen path in place, don’t be scared to try it. Search marketing is the only source that nails “user intent” on the head. Who better to sign up for your college than someone searching “business degree at online colleges”?

Enrollment rates were 7.4% on our search campaigns.

Affiliate Traffic

Yes, we tested affiliate traffic. Remember when I said display channels have the highest amount of controllable variability? Well with affiliate traffic you have the highest amount of NON-controllable variability.

We tested five of the best reputed affiliate networks and results were very mixed.

Patterns were the most difficult to spot and I felt too many layers removed from having control of the campaign. The best advice I can give if you are going to test affiliate traffic is to start by allowing email, search and display publishers, and limit each new publisher to a 50 lead initial cap. Yes the networks will give you pushback asking for more, but just tell them you will open the cap as soon as you see the first 50 leads come in per publisher. When that happens, be sure to keep your end of the bargain and give immediate feedback to the network and publisher.

Another tip is to take your planned CPA and build in an assumed XX% bad-data scrub. Then lower your CPA by that amount and give it to the affiliate network at the lower rate. If the networks’ percentage of bad leads exceeds your built-in assumed scrub rate, cut that publisher or network. If you find a publisher that is well within your allowable scrub, think about giving them a custom payout. It is hard to find good affiliates, so when you do you’ll want to keep them promoting.

Conclusion

That’s about it for our test. Although it took several months, it was well worth the effort, time and analysis. We now have a four fold increase in overall traffic and leads at a much higher quality level than before.

I’d like to get my team doing another test in about six months. I’m a big believer in constant testing and scaling.

Are there any traffic sources you have experimented with that I didn’t mention? Leave any comments you have below.

We wrote a while back about Kaplan’s money back guarantee option for students, and they recently began an ad campaign for their five week tuition-free program called “The Kaplan Commitment”. The only place we have seen the ads so far are via YouTube’s sponsored ad platform but they might be running the campaign elsewhere.

Here is the video they are running which features Kaplan President, Dr. Wade Dyke.

You can find more information here.

EduDirectResponse is a firm believer in optimizing statistics to increase conversion rates at all levels of the lead generation funnel. In order to do this successfully a company must either conduct a lot of their own research or find third party research and test those findings.

Available Research

We have recently found a handful of interesting research pieces, when combined, could account for increased conversions among leads. We’ll be testing the findings shortly in education but I wanted to list them for you here.

• Leads360 presented findings at LeadsCon Las Vegas earlier this year that outlined the value of persistence. They concluded that six call attempts lead to the highest probability for conversion. Their whitepaper does not break down the optimal wait time between calls but they went over this information in their LeadsCon presentation which I’ll try to dig up and update.
• Combine that with their most recent study on call center conversions by time and day of the week and we’re making headway.
• The last piece of interesting information is LeadCritic’s recent post about the 15 day clean up crew. The title caught my attention and I found a lot of parallels with Mike’s recount of the 2004 – 2007 mortgage boom and the education industry today. Although education probably has less volume demand than mortgage at its peak, it is still a big industry due to today’s high unemployment rates.

Mortgage lead buyers realized the importance of speed to contact, but many also realized what the consumer was experiencing during the first week after filling out a lead form. In most cases all 5 companies, and sometimes more, called the leads quickly and extremely often. Because of this many leads simply stopped answering the phones. They stopped answering the phone until the calls actually started to slow down or stopped altogether. The savvy lead buyers came through the back door, sometime around day 12-15, and began calling the lead again. Many of them were very successful with this tactic and increased their bottom line ROI. -LeadCritic

What Does All This Mean?

This means two important things that are basic in nature but easy to overlook.

1. This research can be applied to any lead generation vertical.
2. This data is extremely valuable if implemented. If you are running a successful lead gen business that relies on converting leads, why not structure or split test an approach that has proven data behind it?

Each of the three separate studies have shown to increase conversions to a varying degree. By combining all three approaches with methods that are already working well for your company, this should result in some type of increase to your bottom line.

Like I said before, we’ll be testing this data with various partners over the next couple of months in education marketing. If we find compelling data we’ll report back. In the mean time, lead conversion is mostly a numbers game so if tweaking and split testing your approach can help everyone’s margins, then what are you waiting for?

In a potentially positive move late last week, the Department of Education has delayed final voting and publishing of their proposed for profit college rule from November 1 to early 2011. The delay is to review the huge influx of 90,000 letters and comments from for-profit colleges, students and those in opposition of the new proposed law.

Arne Duncan, Secretary of the Department of Education, said in an interview on September 23rd that he is going to host several meetings and hearings to further discuss the proposed rules and the letters that came in. However, if the proposed rules end up being enforced, they will still take effect in July 2012.

The fact that the Education Department is open to listening to feedback and engage in discussion with for-profit colleges is promising for the schools themselves.

When the department opened themselves up to feedback, one of the higher publicity letters came from Kaplan CEO Andrew S. Rosen, who is considering further innovation in the industry with possible “money back guarantees” offered to students.

Innovating new ways to raise the quality of education for students at for-profit colleges will be at the core to resolving this issue.

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What do you guys think of the new proposed rules? Good or bad for our education system? Leave a comment below.

Forums and blogs are some of the best places to get information when you run any type of internet related business. With things changing as quickly as they do online, forums and blogs are nimble enough to get you the information quickly. With that being said one of the best lead generation forums is the Lead Buyer Network.

Originally launched in 2007 and operated by Lead Critic (great industry blog by the way), Lead Buyer Network was run on the Ning platform which is basically an off the shelf social network. The advantages to LBN on Ning were that users could create Facebook-like profiles and communicate easily but keeping track of lead buying and selling threads was not as clean and organized. And at the end of the day, even though you have your own domain, Ning still owns all your content.

A few weeks ago Lead Buyer Network was moved to a traditional vbulletin forum platform which will make communicating in relevant threads, searching and archiving content much easier. If you are looking to talk all things lead generation, head over to Lead Buyer Network.

In a move toward creative innovation that I referenced yesterday regarding the Obama administration’s proposed rules, Kaplan CEO Andrew S. Rosen wrote and released a letter on  September 8th proposing a “money-back guarantee” option for students.

Rosen suggested that having an introductory portion to Kaplan’s higher education classes with a refundable tuition option if a student is not fully satisfied with the program.

This would certainly incentive for-profit colleges to increase the quality and value-add of their programs if they know students can quit the program and get their tuition back risk-free.

Kaplan spokesperson, Mark Harrad added, “there’s no guarantee Kaplan would be permitted to make a risk-free guarantee to its students. The Education Department and state regulators would have to approve, as well as Kaplan’s accreditors (…) It’s a great idea and one we’re going to push for, but it’s not an operational reality yet.”

This is the type of innovation needed in the for-profit sector to move from looking for ways to deprive low-income students of federal funding to look toward ways to increase the education quality they receive.

We have been asked a number of times in the last few months what the Education Department‘s proposed new rules really mean for the for-profit college industry.  With all the bad press in recent months I thought I’d explain the two rules that can potentially have the biggest impact.

The main issue is that the government wants to cut back on federal funding given to schools that are most at risk of having their students default on their loans. The government’s argument is that for-profit schools are not being 100% honest and transparent about the debt amounts students are getting themselves into. Colleges also over-promise the ability for students to gain employment after graduation according to the Education Department.

This leads us into the most important proposed rule:

• “Gainful Employment” - This rule would require colleges to measure the ratio of salary to loan among their graduates and if it passes above a certain threshold the school will lose a percentage of aid they are eligible for.

The “gainful employment” proposed rule breaks schools into three categories where they classify fully eligible, restricted and ineligible colleges. In order to remain fully eligible to receive full federal funding a school must stay below 8% in graduate salary to loan ratio AND over 45% of graduates must be making payments toward the principal of their loan.

Certainly some schools are within this range but I could not find data on which are and which are not. (Find full list of for-profit schools here.)

The second important proposed rule addresses student recruiting tactics.

• Student recruiting tactics – This rule would prohibit colleges from compensating recruiters on a commission basis for how many students they bring in.

This is actually not a new law; it has been around since 1992 but due to various loop holes and lack of clarity it has not been enforced. The current law from 1992 does not specify what percentage of a recruiter’s compensation can and cannot be commission based and therefore has never really been enforced. This proposed rule would strictly outline what can and cannot be done when compensating recruiters.

Current Default Rates

Current statistics show that student loan default rates are at 11 percent at for-profit colleges compared to 7 percent for the higher education industry as a whole. Proponents for the for-profit industry however, state that students who enroll in online colleges tend to be lower income and self supporting students, therefore are generally at “higher risk” to default.

What Does All This Really Mean?

Fortunately the Education Department is taking their time in reviewing and trying to gain consensus on the proposed rules. A final set of rules is expected to be voted on in November but this has been a hotly debated issue all year and will only heat up.

When you look at the proposed rules in early 2010 compared to today they have become slightly more realistic, although my guess is they will need more adjustment in order to pass in November. There are not enough statistics right now to justify some of the propositions so they will have to become more lax or will have a difficult time passing.

A Different Point of View

Sitting back and analyzing the for-profit college situation I see a third view that could be a viable solution in an ideal world.

The real issue at hand is the need to better educate people in the United States, not necessarily depriving students of federal funding they need for an education. According to the New York Times, we currently rank 12th out of 36 developed nations in education. If instead of focusing on taking away federal funding, we focus on improving the quality of education at for-profit colleges, it would be a win win win for everyone (students, colleges, government).

The for-profit industry is great at innovating and providing easy access to millions of students who otherwise would not get an education. If that strength is channeled toward creating innovative ways to create educational programs that put students in positions to get high paying jobs and better learn their craft, there would be no need to argue over student loan defaults.

The goal for everyone is to improve education and it seems like that has gotten lost in the shuffle with the new proposed rules.

Upon completing a 4 month study about the demographics and informational preferences of education leads (people who signed up to receive more information from online for-profit colleges), we have analyzed and released our statistics via a full report.  You can download the pdf here – Qualified Lead Demographics & Online Information Preferences of For-Profit College Leads.

Our goal was to provide a detailed and comprehensive study on the demo and mentality of prospective online college students that converted into a lead and ideally an enrollment for a college. All the traffic was paid and lead registration occurred at Classes2Careers. After gathering data and surveying leads, we hope the report can help colleges and lead aggregators optimize their recruitment efforts.

Some highlights from the study which you can find on page 8 of the report are:

1. More females than males are interested in online classes.

2. Over 60% of prospective online college students have a High School degree or have at one time in the past attended college.

3. Business and Health Care are the two most popular majors for prospective online college students.

4. 90% of prospective students want additional financial aid information after agreeing to receive information from a college.

5. Over 80% of prospective students want to receive a college related newsletter.

6. Prospective students do not mind entering their email address and other personal information but feel that their phone number is the most intrusive piece of data they give.

If you have any feedback or questions on the study, don’t hesitate to contact us.

In an interesting article by Motley Fool written a few days ago they mention QuinStreet as being a good potential buy-out target for Yahoo!. It has become industry chatter that Yahoo! is looking for large content sites to purchase in order to spread their ad placement reach. The rumored Huffington Post buyout looks to have been shot down recently but they did acquire Associated Content two months ago in an approximate $100 million deal.

Yahoo!, having $4.2 billion in cash and securities on their balance sheet, has announced that they plan to buy back $3 billion of their own stock over the next 3 years. Motley Fool says this is a bad idea as there is not much about their current business that justifies significant future stock growth.

Yahoo!'s stock buy-back approved at a 7% higher price than today

However Motley Fool suggests Yahoo! uses that money to look at five potentially good acquisition matches with that money -

1. AOL (NYSE: AOL)
2. QuinStreet (Nasdaq: QNST)
3. Travelzoo (Nasdaq: TZOO)
4. Health Grades (Nasdaq: HGRD)
5. WebMD (Nasdaq: WBMD)

Quinstreet caught my attention as an interesting mention because (1) they are trading well below their $15 IPO price 5 months ago and even further below their initially desired $25 price last year which makes them a well priced candidate; and (2) they has healthy profit margins.

QuinStreet's stock price since IPO

However QuinStreet’s business model is too different from Yahoo!’s to be a good acquisition partner. QuinStreet’s model and web properties are based on lead generation and direct marketing in education, home, financial services, B2B, health, advertising, career, insurance and travel. It’s a great model for QuinStreet but does not compliment Yahoo!’s desire for more eyeballs to their ad network.

Another interesting point about QuinStreet’s growth is that it is all acquisition based rather than organic based. For more information on this, you can read a good analysis here.

QuinStreet's traffic growth according to Alexa.com

Some homerun properties in QuinStreet’s portfolio include:

• SureHits.com – One of the biggest CPC insurance advertisers.
• Insurance.com – Purchased for $16 million.
• Insure.com – Purchased last week for an undisclosed price.
• WorldWideLearn.com – Purchased years ago for their organic education traffic.
• Chef2Chef.com

Acquisition Growth

Acquisition Growth can be great for companies as seen by QuinStreet’s 100 acquisitions in the last three years accounting for annual revenue growth from $167.3 million to $260.5 million but similarly to too many “middlemen” getting involved between CPA advertiser and affiliate, the same can be true for when acquisition growth (QuinStreet) meets acquisition growth (Yahoo!).

Of course there are exceptions to everything and both Yahoo! and QuinStreet are well positioned in the near future with great businesses but I can’t see an acquisition being the way to go for Yahoo!. Same for QuinStreet who raised around $160 million from their IPO giving them enough funding for any future desired acquisition.

There has been a large, visible shift recently in the marketing of for-profit colleges that has resulted in several interesting observations. The perfect storm began when (1) the recession started; (2) Obama was elected to office; and (3) a flood of affiliates entered the edu lead gen space.

The Recession

First came the economic downturn in 2008 where unemployment rates significantly increased and as peoples’ job searches didn’t result in new jobs they needed alternatives. One of the more popular alternatives to surface was going back to school.

Online colleges quickly picked up on their opportunity to strike and began marketing to the unemployed, stay-at-home moms and those looking to take part time classes while they held part time jobs.

The pitch was to get an education while no one is hiring so when the economy bounces back they will be better educated and in a position to earn more money.

Obama Gets Elected

Part 2 of the perfect storm was Obama entering office and talk of the elusive “Obama stimulus money“. This allowed for an added spin to the marketing and advertising of online colleges that tied in getting “Obama’s stimulus money”. Example here:

Getting Obama’s stimulus money sounds great in theory but what is it?

In reality Obama’s stimulus money is little more than being eligible to receive Federal Government aid through a grant (if you’re lucky) or a loan (if you’re unlucky).

Affiliates Enter Education Lead Gen

As the above two events were aligning, credit card processors began cracking down on a billing practice called continuity billing. The crack down significantly wiped out the same continuity offers that turned affiliates and affiliate networks into overnight millionaires and left them searching for the next big industry to get in on.

Education lead gen was it.

For-Profit Education Lead Quality

Historically the for-profit college industry was run and marketed by university industry professionals. People who had years of hands-on experience working at campus or online colleges would start auxiliary businesses associated with for-profit schools but they truly understood what drove the schools’ profits and losses.

These are people who know that a good education lead is worth $40+ for a simple lead submission of a person’s name, address, email and education background. These are people who also know that a college must be able to take that valid user data and convert it at a 4% enrollment rate.

An affiliate’s mentality is to get a conversion by any means necessary.

As these worlds collide, an interesting dynamic plays out. Affiliates are now running education offers at $35+ payouts with their “get a lead by any means  necessary” mentality while schools must still convert that data into enrollment rates of around 4%.

At first glance things seem win win for everyone – schools get a flood of leads and affiliates get huge payouts for a fairly simple lead.

Here is the result:

leadconfidential.com

credit: leadconfidential.com

Conclusion

Smart marketers look for new angles to market old products and that is exactly what is happening here. Fortunately for new marketers, they are still able to get high payouts for simple lead gen forms but as we see more and more “$70 Billion grants”, “Become a Cop”, and “Get a $1,000 Scholarship” ads lead quality gets dramatically diluted and payouts will continue to drop.

What started as a $35+ CPA (to affiliates) for a straightforward education lead has dwindled to ~$11 for a niche career landing page (see cop example) and ~$4 for a soft incent scholarship landing page (see above example ad).

Steps are being taken by colleges and AOR’s (agency of record) to combat these types of ads by having their final submit pages strictly emphasize that the user is submitting their information to get contacted by a school. This is most likely the best happy median we have for now.

The more affiliates understand that yes a lead is a lead but at the end of road an education lead must back out to a 4% enrollment rate, the better the long term relation will be between affiliates and for-profit colleges.