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Why the MOOC is redefining online education

The MOOC for the past year or so has been evolving very quickly. It really took off when the Stanford AI class shot past 250,000 students.

Since then the model itself has been refined and several startups have aligned themselves around the methodology. A few months ago if you asked me who the leader would be in this space, I would have said Udacity. I thought they had the organic growth and quality that you need early on when building a brand.

Today, my answer would be Coursera. I think they have a few things that are really creating a competitive advantage over Udacity and even sites like EdX.

First, they have quite a bit of money behind them, $22 million to date. That amount is not that significant, but the people putting it in is. Kleiner Perkins and John Doer put in $16 million alone. John Doer is considered one of the most influential investors in the Valley. He is also a master of PR pushing his start ups to the front page of major news outlets and leveraging his connections for strategic deals.

Coursera announced that top schools like Duke and University of Virginia have signed on to be part of their offering. Not only are they attracting major traditional school brands but they are asking them to adapt their teaching to the MOOC model.

The ability to change their viewpoint on how online education should be delivered is a massive step forward. We are no longer just watching videos of a lecture, there is true interactivity, peer to peer learning and instantly updated materials to learn from.

Coursera is making the right moves, and getting rave reviews from students. If they keep the quality high they will make a massive dent into online education.  Some of the courses even offer a certificate. This is a huge step forward for employers. Now employers can verify completion and potentially create better HR paths based on this info.

Lastly, I think Coursera is engaging an audience who wants more education but doesn’t want a full degree. This a la carte option is attractive since it is low cost, but more importantly low commitment. Just a few weeks and you are done. No need to rework your whole life.  Now you have exposed a lot of new people to online education and I think this will potentially impact the for profit education sector faster than the publicly traded schools realize.

For profit EDU has been growing for the past 10 – 12 years, but has only scratched the surface of potential students. Coursera is exploding given the higher broadband penetration and higher number of connected devices. I can see their growth trajectory being much faster. Keep an eye on them, they could impact your stock portfolio very soon….

 

Lead Gen and Mobile

Lead generation on mobile is still somewhat a mythical form of advertising. Some are buying lots of cheap inventory and driving lots of leads. I consider this the brute force method. People don’t like filling out lengthy forms on their phones but they will if they have to.

The other issue is that form filling on a mobile phone just doesn’t make sense. Why ask someone to fill out a tiny form when they are ready to talk right now and have a phone in their hands? Mobile advertising should really be focused on click to call campaigns to generate inbound leads.

There will always be varying opinions of what is right and wrong within mobile marketing but our perceptions can be refined by knowing exactly what the does on their phone during the course of a day.

In a recent IAB report, which can be found here, it highlights what users actually do online during the course of the day. The report is fascinating and shows many of the hurdles that mobile advertisers have to overcome. It also shows why slow or lengthy forms are not the way to go into the future of lead gen.

Here are the highlights:

1) Mobile use is highly time sensitive

Mobile usage spikes during commuting times and decreases during work hours. This is the opposite of many display buys that lead generators have done in the past. We used to buy during work hours, this gives us another medium to explore after the person has left work.

2) Mobile is often seen as a tool for price comparison, especially in store.

People on mobile search are much further down the decision path and ready to commit especially with physical goods. Finding a better price can take the consumer out of the store to complete the purchase with an online retailer.

3) Mobile is often used during another activity like watching TV.

61% of mobile commerce happens in the living room/TV room. 49% of people are watching TV at the same time they are using their mobile phone. Speed is a huge issue with mobile offers. If you can’t complete your lead gen process within 30 seconds, you risk a TV commercial or some other media actually taking the user’s attention away. Focusing on getting the person deep into the conversion flow or on the phone can help break them away from the other media.

Another issue with mobile commerce is the issue of “push notifications” which can pop up frequently during a flow and interup the conversion process. Once again speed becomes the biggest advantage.

4) Boredom is a major reason why people are on their phones

People are waiting at stop lights, in line, for something to download, for a commercial, etc. When people are waiting or bored of the primary task they often use their mobile phone to fill the gap in productivity.  From an advertiser perspective it is necessary to understand that people fill boredom with impulse buys. Focusing on low cost, compelling offers, and easy purchase flows can create more success in the mobile marketing arena. Large purchases can be more enticing if there is a special limited time offer or if there is an obvious incentive to engage right now.

5) Mobile is local

The term “SoLoMo” has become a buzz word since it reflects how many people use their phone throughout the day. It is seen as a tool to help them explore their local community, find restaurants, find a tow truck, find movie times, etc. Small local tasks seem to be a major use model for mobile. The social aspect does not seem to be a major factor in motivating a user yet, but this is partially because the number of social local mobile services is fairly small at the moment. I expect that to change in the coming 6-12 months.

6) Re-targeting may be the key to mobile.

Now here is the golden nugget. If users go to an offer on their notebook or desktop, massive value can be derived if the user is “followed” to their mobile device. For instance the user visits a car insurance website on their computer, and doesn’t fill out anything. They get a retargetting pixel which follows them on to their phones through browser synchronization.  When the user is browsing or searching on their mobile phone they will see ads from that same car insurance company, perhaps with a personalized message of sorts.  This model may even work in the TV realm, imagine watching a Geico commercial, your phone is “aware” or “listening” and then starts showing you more Geico ads.

That will be the holy grail of mobile advertising.

Lots of interesting things to come out of mobile advertising in the near future. Understanding more of what people do on their phones will be key to creating successful marketing campaigns in this market.

 

 

 

Yahoo Axis and SEO

Yahoo! Axis is the new browser plugin by Yahoo! which allows people to once again “browse” the web in a visual interface.

My initial thoughts on the interface:

  • It is fast! It is also much more intuitive to use than Bing’s Social Search or So.Cl products.
  • It is a glorified toolbar in some respects. It is attached to the browser which is a great distribution strategy since it works with the major browsers. Any decent toolbar developer with a Yahoo feed could potentially replicate this quite quickly.
  • Ads are either not present or they are very well hidden. I can’t help but think this will not drive more revenue for Yahoo.
  • The flip side of the ads argument is that this tool allows you to stay on your favorite site and search at the same time. So essentially the display ads on the main site still maintain a lot of value since the impressions are much longer now.
  • This is a huge boost for sites like Facebook. Bing should have really done something like this instead of trying to get people to Bing.com. Given that people spend hours and hours on Facebook a day, allowing them to really get true search results while never leaving their “ecosystem” is huge.
  • The touch interface works well with a Mac and iPad but PCs without multi-touch support may not get all the benefits of the simpler UI.
  • Images are an interesting way to browse the web, but when it is not fashion or recipe related, the value of an image is greatly reduced. Just seeing a snapshot of a webpage doesn’t help me know if I should be going to that page.
  • There is not much in the way of social integration.
  • I couldn’t get any video results or image results to appear when searching for things like “lamborghini aventador video” or “lamborghini wallpaper” This seems to be ignoring a large portion of the web.
  • Location at the bottom of the screen is “thumb friendly” for tablet devices.

How does Yahoo Axis affect SEO?

From a technical standpoint, it doesn’t change anything in SEO since the search results are largely served by Bing.

However, from a consumer standpoint, the ranking is not hierarchical anymore. It is horizontal indicating a slightly more egalitarian structure. Subliminally if things are placed horizontally most humans will think they are of equal importance. This is very counter intuitive to Google’s vertical ranking which indicates the one at the top is the most relevant.

Another major point from a laymen consumer is that now your site is largely being chosen based on an image block. Most informational websites are designed around text and navigational elements. For example, if you run a company that provides mortuary services, would you put an amazing photo of a dead person or a fancy casket on your home page? Would this image establish the site as an authority and sway the browswer’s opinion in any way? In other words, would this image get me a click?

This is an extreme example but the reality is that many things can not be conveyed in images. Company logos are a great way of creating trust through branding but Yahoo’s interface focuses on a webpage rather than a logo. Most people don’t associate any brand notions with your webpage especially if they have never heard of you nor interacted with you.

Yahoo! is trying to push the web back to 1999 when we were largely “browsing” or “surfing” versus searching in the mid 2000’s. Visual search is being driven by sites like Pinterest but the content it caters to is inherently a subset of the entire internet. Without support of multi-media searches, the Axis tool seems somewhat of a mobiel accessible toolbar and that is not a huge value generator for the consumer. This tool is really focused on publishers keep their users in one place for the majority of the day.

I think Axis has the bones to become a great tool, but this version is not something I will use.

 

Facebook vs Adsense

Facebook is due to IPO within the next two days and the analysts on the street are wondering how Facebook can keep its current multiple long term.

Is Facebook the next Groupon?

In my opinion, I think Facebook has some interesting plays which could boost revenue in the coming years. Groupon is an accounting mess you don’t want to touch with a 10ft pole.

http://seaprof.com/courses/calendar/action~oneday/page_offset~1/time_limit~1385740800/request_format~html/cat_ids~5/ What will Facebook do to grow revenue?

The key here is that Facebook will have major trouble growing its user base past the 1 billion mark. There are just not enough people online in the world to make that grow. Without a dominance in China, they might plateau around that 1 billion user mark.

Also once they become public you will see a marginal decline in users since they may be forced to disclose how many of the actual users are just advertising accounts or duplicate accounts.

Facebook drives most of its revenue via ads. No surprise here. I think this will remain the core for years to come. Here are the pros and cons of their potential revenue models.

cheapest place to buy finasteride online Mobile

A large portion of Facebook users primarily access the site via their mobile devices. Currently the issue is that the majority of interactions are notifications or action items. You tend to browse more on the desktop version of Facebook. The argument here is that the majority of their display ads are for a browsing type audience. Building new ad units for the mobile user and fitting everything within the 4 inch screen will be tough. The only real spot for an add within a native app is in the feed itself.  Or perhaps Facebook allows advertisers to send messages/emails to the users with relevant ads? Either way, the model is subpar at best.

If Facebook were to release a click to call network, that might be something to watch. Perhaps they acquire a company like Marchex to get that technology.

click here TV

People often forget that TV is still a monster of ad revenue. Facebook users are often on Facebook while watching TV. There is a play to be made here. And advertisers know the breadth of Facebook. Will TV shows start broadcasting on Facebook and will there be regular 15 to 30 second commercials on Facebook? Taking this route directly takes a stab at YouTube which we all know has a massive amount of ad inventory which monetizes fairly well.

AdNetwork outside of Facebook.com

One analyst mentioned that he thinks Facebook will start to attack the AdSense model and go after publishers outside of Facebook.com. This is one of the most valid ideas since it can be executed relatively quickly. Publishers have no loyalty to any ad network so there is little switching cost. Facebook already has a strong ad platform, but it doesn’t have much variability in terms of the ad unit sizes. This could be an issue for pubs. The other issue is that Facebook is largely CPC focused, but for publishers the CPM model might prove more effective. Google is clearly more advanced in this sector but they don’t have the social data to increase overall click through rates for pubs.

As the web moves towards being more mobile, this could also present another roadblock for Facebook. Will they be able to make display ads work on mobile partner sites? Does Facebook have a big enough sales team to go after the publishers that work with Google already?

Will having a transparent network be good for advertisers? Will having a transparent network be good for users?

My guess is that people will start to feel weird about Facebook following them outside of Facebook.com. I bet the privacy lawyers at Facebook will hold back revenue growth in some ways.

Facebook.com

Facebook.com still has more inventory than ads, which means the ads show at a very high frequency compared to some other ad networks. This results in a lower conversion rate for advertisers and lower monetization for Facebook.com. They really need to get more advertisers in the mix so users are always seeing something fresh. The burnout rate for ads is just too fast for most advertisers to keep up with.

CPC rates have risen very quickly for the big advertisers but they are fighting for certain demographic groups which convert. Making the long tail of impressions and users will be important to long term monetization for Facebook.

Apps 

Ah, Apps within Facebook. For the app world it makes sense to compare Apple’s app eco-system to Facebook. Apple makes a ton of money by being fairly agnostic of the user interface, they provide a solid hardware platform and simple monetization engine. They also provide fairly consistent growth in their devices which keeps the market growing.

Facebook on the other hand, provides various speed bumps or walls before you can get to your intended content. It also rapidly and frequently changes the user interface which is key to how app developers gather new users. The concept of “social sharing” is a moving target and can sometimes go away completely with larger changes like the Timeline implementation. Products like social readers blew up in terms of usage and died almost as quickly because of the UI changes Facebook implemented.

Consider how much time it takes to build an app, and the costs behind it. If you can’t deploy within weeks, you may actually miss the entire market opportunity. From an investment standpoint, I think investors will be hesitant to put money behind these ideas since they are unable to drive long term revenue or user growth. The other side of this is that developers will get sick of not being able to drive long term revenue with Facebook. They will focus on iOS where things are stable.

If a company like Zynga were to launch today, it wouldn’t work and it wouldn’t be driving 15% of Facebook’s revenue. Facebook is not allowing new products/companies like Zynga to sprout. This could be a serious issue when considering long term growth.

1 billion member affiliate network

Facebook could be on the brink of releasing the largest affiliate network ever. Imagine if it allows advertisers to pay each individual for getting their friends to buy a product or service? There would be millions of micro payments per day and massive fraud. This particular model could put a serious dent into Facebook’s cool image. But people want money and there will always be a group willing to sell their friends.

Search

Google dominates search, and Bing runs a pretty solid site. Bing.com doesn’t need to exist anymore. It can live within Facebook.com and probably grow much faster. Searching for anything on Facebook is a horrible experience. I would bet that most people still leave Facebook.com to do a Google search, and then come back.

Facebook needs to stop people from leaving the site and truly incorporating Bing into the system will achieve that. It will also create a new ad product within Facebook.com which most advertisers are very familiar with. Search Ads.

There are no real costs associated with this strategy. Bing and Facebook already play nice together and are integrated loosely. But having the full power of Bing within Facebook is the better use case for users. Time for Microsoft to let go of this brand and focus on really attacking Google.

I think this proves to be the biggest threat to Google long term. If they lose their foothold in search, it could spell disaster for their entire product line.

 

Google+ Hangouts on Air and EDU

Google just announced that Google+ Hangouts on Air will be available to everyone worldwide.

What is a Google+ Hangout?

Google+ is a Google’s social network which is more based on friend discovery which is different than Facebook’s model of being a voyeur on your friend’s lives. Google+ hangouts allow you to have an online video chat with multiple people at once. Think of it like a giant video conference call.  Quick promo video is here.

The cool thing is that this is 100% free, and you can join anyone’s public hangout. This means you can really strike up a conversation with people you don’t know and potentially learn new things.

Google+ Hangouts on Air is a way for people to publicly broadcast their hangout and save the video recording on their YouTube channel for a later viewing. Some examples of this are here:

Trey Ratcliffe in a Google+ Hangout.

Here is a quick explanation of how to get your Google+ Hangout started:

Why is this important for Education Marketing?

Marketing in general is about questions and answers. (OBVIOUS STATEMENT). Does your product or service help me do X?

Education marketing is largely form based and a one to one approach. I fill out a form, get on the phone with you, ask a bunch of questions and the school tries to sell me on a course.

Leads are incredibly inefficient in some regards. They ask a person to wait for an answer, sometimes the leads are never called back since they don’t meet certain criteria, and you are in a sales pitch most of the time, not a true consultative approach. Another downside for leads is that they require one call center rep to be talking to one person at a time. Lastly, I would bet that most prospective students don’t have a pen and paper to write down their questions and the respective answers. The majority of the knowledge on the call is lost within seconds of hanging up, resulting in more calls or a lost sale.

Being in a recorded communal chat with video has several advantages.

  • The video is recorded – people can review the video again later if they get interrupted. Being interrupted is almost 100% certain given the volume of communications methods we have these days.
  • The questions come from multiple people. One person may ask a question you never thought of. This benefits everyone in the group.
  • Cost delivery is much lower. One trained person can talk to several people at once.
  • Since it is online, you can continue the conversation after the video. It is easy to take the conversation private or continue via phone.
  • It feels more personal since you can see the other person’s face.  This builds major trust with students that are worried about “fake online schools.”
  • The video itself can be used a marketing material. Real conversations are a great way to show your company has a soul and see that the other prospective students have the same worries as you. Knowing you are not alone is a major psychological element.
  • If a person can successfully communicate via a video chat, they should have no problem learning online. Consider this a quick and free test to assess their technical skill level.
  • You can easily assess their grammar level and communication skills.
  • You don’t have to worry about transparency issues. Everything is recorded.
  • No school is doing this now. The first movers here will establish a major market advantage and potentially drive real sign ups versus useless “likes” on Facebook.

What about B2B marketing?

From a B2C perspective, there are many advantages for using Google+ Hangouts on Air for marketing. However, I think there are also major benefits for using this method for B2B marketing of Education technology.

Imagine being able to host webinars about your technology for a variety of market leaders at once? At first you might think this is a bit odd since your competitors might be on the call.  That may be true in some settings but in other settings you might actually receive valuable insight from the other people in the Hangout.

Instead of traveling to expensive conferences, sometimes it is better to get 5-10 thought leaders into a common place and hash out a guideline, talk about a white paper, or talk about some pertinent news. Or perhaps after a conference, the panel wants to clarify a few points, they can easily hold a hangout to further discuss. The conversations should continue after the convention.

Anyway you look at it, Google+ Hangouts on Air has the potential to really enable a lot of new ways of communicating for the B2B world.

Another potential use for this technology is a shareholder conference. I can easily see quarterly shareholder calls going from boring phone calls to interactive video chats so that shareholders from around the world can question management.

 

 

Edu Lead Gen Long Term

Often I write about how EDU lead gen is being battered by the current administration and the stock market. Today, I wanted to take a slightly different perspective which is more of a long term view.

For the past 10 years for-profit EDU companies have had to fight against some major issues to validate what they were doing was real. They had to fight against people not having broadband at home, no computers at home, and not understanding what studying online was. Why was I supposed to pay $30k for an education where I never got to meet the professor or my other classmates?

Broadband is almost in every home in the US, computers are everywhere and more importantly people are connected via mobile devices.

But people are still unsure about the quality of an education online and if the for-profit schools are “real.”

One of the greatest things to happen this year was a major initiative by the Obama Administration to actually spur more innovation in the Education sector. This has lead to a series of education start ups and new learning models which are introducing online education to gigantic numbers of people much quicker than any online school.

Sites like Udemy, Udacity, Coursera, KhanAcademy, and Skillshare are all introducing online learning to people who were not in the core demographic of for-profit schools.

What is this important?

First, mass acceptance is vital to legitimize any industry.

Second, these sites are attacking the spectrum of online learners from two ends, the young folks and the older folks who went to traditional schools in the past.

The fact that kids are getting more involved in online learning is great. The folks who are over 28-30 years old who are now trying online learning just happen to be the same people who are hiring these days.

The biggest outcome of the boom in online learning is that employers are now starting to see more of this in the workplace, see the quality of education and experience it for themselves.

This is a major boost for the for-profit sector. If more employers are willing to hire graduates of the online schools this will help them reduce their loan default rates and hopefully increase their graduation rates.

What happens now?

In the coming months you will see many of these free and pay for courses platforms continue to explode. This will lead to a short term erosion in the for-profit sector’s target pool of candidates. Long term there are many potential outcomes.

1) The for-profit schools use these platforms as lead gen tools. The people on these sites self identify that they are life long learners. Perfect candidates for long term degrees.

2) The for-profit schools offer lower cost single course offerings and make their degree a-la-carte oriented. This may face some accreditation issues but this maybe more in line with what the students/customers want.

3) The continued increase in technology penetration into the home will invariably increase the target market for the for-profit schools.

Personally I think 2012 will be a flat year for the online schools but going into the next 24 months, I think you are going to see massive growth, acceptance and product offering changes from the for-profit sector.

I think this view point is further bolstered by the comments made by Mr. Andreesen of Andreesen Horowitz which can be found here and here.

 

 

Can the government trademark “GI Bill?”

On Friday, President Obama issued an executive order that will limit or regulate how for-profit schools will be able to market to and recruit military members.

In the order President Obama stated he would like to trademark the term “GI Bill.” The original TradeMark application can be found here. GI Bill Trademark application You can also view it online here. 

There are a few issues with this strategy that schools and lead vendors should be aware of:

  • The Government can own a trademark, unlike a copyright.
  • The GI Bill is technically a law, not a good or service, which Trademarks are usually reserved for.  However, you can trademark words, but the cases are usually weaker.
  • There are many chapters within the original GI Bill – like the Post 9/11 GI Bill Chapter 33. To really make any policing effective, they would have to trademark specific chapters of the original law. Once again, this doesn’t really seem to fit traditional trademark law.
  • The GI Bill has been around since 1944.  I would argue that the majority of people know this is something from the US Govt not a private entity. I think the potential confusion arises when you have sites with official military terms like “military” and end in a .com instead of .gov. Any true military member knows that an official government site should end in .org or .gov.
  • There is also the case of nominative use. If there is no other way to reasonably refer to the trademarked term, anyone can still use the term.  How far will the government go to protect this term? EG will they penalize people for saying that their schools accept “GI Benefits?”
  • In the other DOE crackdown on for-profit edu schools were promising things that weren’t necessarily true. This time around – I personally don’t think the schools are promising anything about the GI Bill. All they are saying is that they accept the benefits and stating how much you may potentially receive.  If a school or website said you were guaranteed the maximum benefit then they might have false advertising claim. They may be misleading a person about how the GI Bill works but it is virtually impossible to say that your school offers the GI Bill itself. Everyone knows that the GI Bill benefit must come from the VA.
  • Once again the DOE nor the WhiteHouse has defined how this law will be enforced or when it may be enforced. The most common way of dealing with Trademark infringement is a simple Cease and Desist letter, not a financial penalty.
  • Trademarks once filed are open for debate. It is possible this process could take a long time if there are many comments from other businesses or the public. To file an opposition you can go here. Please note you can only file an opposition once the application has gone to the official Gazette for public opposition.
  • Many not-for-profit schools use the term GI Bill on their website. The removal of this term or policing of this term may have a negative impact on military members knowing where they can use their benefits.
  • The end consumer here – the military member may have less information on how the GI Bill works. Personally I think the VA website is a mess of red tape and acronyms. Why not let other sites explain it?

In a recent Business Week article they mentioned the govt is worried about schools marketing “bad programs” in conjunction with the GI Bill. The core statement of programs being “bad” is rather subjective. The quality of any school is really determined by the student.  At most of the for-profit schools you will find a mix of students who like the program and some who don’t. This sentiment will be somewhat similar in any school in America.

From a school perspective I think it makes sense to fully understand how Trademark law works before pulling back on marketing to military members. Some recommendations for the short term would be the following:

  • Note on your site – clearly and prominently – that you are not an official government website.
  • Do not promise GI Bill benefits. Edit your language to be less definitive.
  • Focus on your core product – education. Most Trademarks are enforced if they feel that a group of consumers is being misled. If you are honest and open about your offering and how it relates to the GI Bill, I would argue that you are playing within the terms of the law.

 

 

Obama Slams the For-Profit sector over misleading Military members

Friday, April 27, 2012

President Obama will sign an executive order today that will greatly limit the For-Profit EDU sector from marketing towards military members.

The order is a result of Senator Tom Harkin’s efforts to curb the for-profit sector from getting too much money from the federal government in the form of federal student loans.

What are the main changes in this Executive Order?

  • The VA is going to be trademarking the term “GI Bill” – this will greatly limit what you can say on military specific landing pages and potentially opens up some lead generators to trademark infringement.
  • All schools must provide each prospective student information from the Consumer Financial Protection Board about the “know before your owe financial aid form.” This essentially helps students fully understand the financial implications of what they are getting into.
  • Removing recruiters from military installations.
  • Regulating online recruiting websites from potentially misleading veterans and current military members.  It is not 100% clear who will be regulating the sites though. I suspect a branch of the Department of Education will be tasked with this responsibility.  The sheer number of sites related to this topic is quite massive though.
  • Collecting data from each school about how much revenue they get from GI Bill benefits.
  • Creating a centralized complaint system for military members. If you have tried the CFPB complaint system, it is very effective and efficient.

How does this impact EDU as a sector?

  • From a sector perspective several schools are military dependent since it offsets the current 90/10 regulations. I suspect this may lead to more strategies to find students who are able to pay a larger portion of the tuition themselves.
  • Some of the for-profit stocks are already being hit today with COCO down 3%. I suspect APOL will also take a short term dip on this news.
  • The reality is that no publicly traded school has been penalized publicly for an infringement on the incentive comp rules so far. Until this happens, a lot of this news is more about suppressing the industry versus destroying it.  I also think that a lot of this news is being timed specifically around the upcoming election.

As a media buyer what do I need to know?

  • As a media buyer you may want to call your vendors who are advertising with military sites or keywords. The trademark around the GI Bill is not in effect yet, but you will need to get an inventory around what you are potentially exposed to.
  • The schools and or agencies will need to come up with an universal set of regulations around how to market to the military. This should augment the education marketing council guidelines.
  • I strongly urge you to check out the “Know before you Owe” form on the CFPB site. This gives you a much stronger idea of what the govt is requiring.

 

 

The top 10 Fastest Growing Industries – #3 For-Profit EDU

IBIS World just published a report about the fastest growing industries even in a somewhat tumultuous economy.

The breakdown which is an interesting mix of industries is as follows:

Generic Pharmaceutical Manf.

Solar Panel Manf.

For-Profit EDU

Pilates and Yoga Studios

Self Tanning Product Manf.

3d Printer Manf.

Social Network Game Development

Hot Sauce Production

Green and Sustainable Building Construction

Online Eyeglass sales

Fastest Growing Industries Full REPORT – IBIS World 2012.

 

From my personal perspective, I think EDU is on there because the traditional education system is no longer sustainable and technology is now enabling us to access education when we want.

If we look at the list from an investor standpoint, my attention flows to the Green materials, Pharma and Education. They have massive needs, strong revenue models and lots of fragmentation. There will massive failures in these sectors and massive wins. The only downside to these three sectors is that they are somewhat susceptible to the 2012 Presidential Elections.

 

 

Trusting EDU Lead Gen Again

In 2010 the EDU market essentially ran out of gas and has been forced to come up with more sustainable fuels to keep the system going.

The EDU lead gen market went from a booming industry to an industry that had two parties, vendors and buyers who didn’t trust each other anymore. Suddenly there were “ad police” in the market sending you screenshots of what was wrong and not kosher according to the new DOE standards.  When the police arrived, a community based group called the Education Marketing Council put forth self imposed regulations and standards.

All of this lead to a massive decline in the publicly traded EDU stocks, a drop in overall lead flow and layoffs at various organizations.

Why did all of this happen?

It happened mainly because very few if any lead buyers knew where their leads were coming from. If they knew where they were coming from, they were not 100% sure if those leads were fresh.  Think of it like if you went into Whole Foods and bought a really expensive steak which looked fresh but you really had no idea how long it had been there, where it had come from, if it was organic, if it was grass fed, etc… You mainly relied on the fact that it was sold by Whole Foods, a historically  reputable company.

The effects of buying bad leads from a high quality provider caused a massive sense of distrust in the industry which spread like wildfire. It seized the lead gen engine that had run so smoothly for the last 10 years.

In a so called performance marketing system on boarding vendors costs on average $20-60k (conservative test buy of 500 leads a month for 3 months at a CPL of $25)  before you know if the leads are viable or not. I am not sure if that is “performance marketing,” anymore.

Leads are Commodities…or are they?

The EDU Lead Gen market is a commodity market. Everyone is just selling information. However, this market is unique in that the leads can be graded by the following factors:

  • Freshness – how long it took to get to the buyer. And how many middlemen it passed through to get to that buyer.
  • Source – What was that lead fed in terms of a marketing message. Was the message filled with false statements etc.
  • Certification – Did the lead go through a system like Targus Info to validate that it is in fact a real phone number and contactable?  Also does that phone number match the name on the lead?
  • Modeled – Based on the buyer’s historical success rate, does this lead look like it has a stronger chance of becoming a paying student?

After 2010, several EDU companies invested heavily into differentiating their leads and spent thousands on travel visiting their clients assuring them that they were going to be transparent moving forward.

But for some reason, this didn’t really resolve the trust issue in the industry. Media buyers still were skeptical of on-boarding unknown vendors. Mainly because if the bigger guys played by the rules, the little guys had a lot of incentives to play in the grey area and test the limits.  The other reason is that the majority of actionable metrics were retro-active. You had to wait until you got enough info to determine if the lead was bad and kill the source. This took time and a lot of money.

Enter LeadID

In 2011 a company called LeadID entered the market. It is headed up by Ross Shanken, an old TargusInfo guy. He set up a simple system which essentially gives a lead a stamp of origination. This stamp essentially stays with the lead no matter where it goes in the market. If a buyer buys a lead with this stamp they can see how many hops it took to get to them. It also shows how long it took to get to them.  All of a sudden the EDU market has a way of showing a buyer that they are actually delivering what they are promising.

Huge.

It is easy to compare this system to something like a CarFax. It is a report of what happened to X car. The main differences are that you can get around a CarFax and not report information and a CarFax is somewhat retroactive. LeadID is in real time and once implemented you can not get around it.

I won’t go into the tech too much but here is a quick video explaining the concept behind LeadID.

http://www.youtube.com/watch?v=jjyXQpc2QKA

 

As a media buyer what does this mean for you?

If you have ever bought a used car you have been trained to “ask for the car fax” through various commercials and friends recommending the system.

As a media buyer imagine how much time you can save by just asking “Show me that you have LeadID implemented.” If not, simply say we are not testing new vendors without this.

This one question has the potential to save you that initial media testing cost and save you tons of time listening to the exact same sales pitch.

This strategy has a lot of potential benefits for media buyers in the EDU industry and the system as a whole.

  • It creates trust and honor in the system. If you stamp your product with a seal, you better be delivering what was promised. The buyer now has real time insight into if you are delivering it and can call you out at any time. This is also a metric that doesn’t require a ton of Excel time to find. It is in a simple actionable dashboard within LeadID.
  • You can finally start to pay more for the good stuff while the media source still exists. A major issue with media buying today is that the inventory itself changes so fast. If you want to replicate a Facebook buy from 3 months ago, that is virtually impossible. There are new users, new ad units, and much higher prices. Being able to reward vendors now versus 3 months from now is big.
  • As a media buyer you can spend more time talking about strategy with your vendor versus interrogating them about their “transparency.” Once again going back to building a solid relationship and partnership.
  • You have one more point to negotiate prices be it positive or negative.
  • You can cut outliers in the data quickly. Cut anytime during the month if they are not delivering what they originally promised.
  • There is no real implementation time on the buyer side. It is a web based interface.

Is this all good?

No, of course there are issues with any new technology. To really make this work, it needs to be a standard and used by the majority of people in the industry.

Since it is technology, it may be possible to break it. The inherent mentality of a vendor is that they will always be testing/hacking to find the highest level of performance.

It also won’t erase the mass mis-trust in the industry right away. It will take some time for both buyers and vendors to realize the true value and get back to the more important conversations.  This may require some re-training in the industry to show that new vendors can be given the benefit of the doubt.

What should be my next steps?

As a media buyer, vendor or C Level exec – the easiest thing to do is evaluate the technology for yourself. You can find Ross and his team at the upcoming Insights Summit in Las Vegas. I believe they will be presenting a case study with a current publicly traded client. You can also email Ross directly at ross@leadid.com.

Before your meeting with the LeadID team, I would encourage you to ask yourself and your organization a few questions:

1) When you hear from new vendors – are you hesitant to reply to their emails knowing that you can’t test them or just don’t want to deal with the boring sales pitch?

2) Are you rewarding higher performing vendors? Are you able to cut bad vendors fast enough?

3) What is the average cost of your test buy? How many enrollments does that usually provide?

4) When is the last time you had a call with a vendor to talk about corporate plans 6 months out and actually have the vendor execute on a plan?

5) If your financial projections for 2012 and 2013 are flat, what are other ways you can save money in your media buy?