The debate over the value of for-profit colleges and universities has culminated in recent congressional hearings. Criticism of the for-profit education sector has highlighted aggressive marketing tactics and the high marketing expenditures of these schools (10 to 20 percent of budgets on marketing and recruiting compared with 1 to 4 percent at public and private not for-profit schools).
While several groups suggest for-profit marketing costs are excessive, few, if any, have provided evidence to support this view.
The Cicero Group, a premier research and consulting firm headquartered in Salt Lake City, recently completed a robust comparative marketing study of public, private not for-profit and for-profit schools to discover what drives differences in marketing costs.
A significant driver for different marketing spending is the impact of blogs, local and national news, and various publications on student preferences. These sources serve as effectively free “marketing” for public and private not for-profit schools by covering athletics, research, rankings, alumni, faculty, and community outreach along with a variety of other subjects.
Private not for-profit schools receive 45 times more free marketing through these channels than for-profit schools. Public schools receive 16 times more free marketing than for-profit schools. And this free marketing has a significant impact on students. North Carolina State received 40 percent more admissions applications the year after their men’s basketball team won the 1983 NCAA Championship. Cornell reported a 10 percent increase in admissions applications when they jumped from 14th to 6th in school rankings.
Additionally, students attending for-profit schools value convenience, schedule flexibility and online classes over athletics, research and rankings. Therefore, for-profit schools cannot leverage free marketing and must rely on paid media.
Other factors causing marketing spend differences include the size and loyalty of alumni-bases, the history of public and private not for-profit schools in their communities, and the cost of improving the reputation of for-profit schools.
For-profit and traditional schools attract and serve fundamentally different student bodies and in so doing must use distinct marketing models that induce different marketing expenditures. Certainly, exploitive marketing practices by any college or university should be addressed. But suggesting that for-profit schools are inherently bad because of differences in marketing expenditures is not only inaccurate, but could prove destructive to an important source of education for nearly 10 percent of American college students.
The research was funded by DeVry Inc., a for-profit education provider. Researchers were allowed full independence in design, data collection and analysis. Cicero Group stands by the objective nature of the research and its findings.
A PDF version of the report is available for download here.