The inspiration for this piece came from the following email, which said, “I am setting up an online media campaign on a cost-per-lead basis for an online University. I am working on a final budget and would like to come up with an average CPA for this campaign… Please contact me to workout specifics.” Unfortunately, the specifics did not include a client name, but it will require an RFP. Not coming from the agency world, the thought of an RFP to run an online education campaign seems incongruous. It might have made sense in 2000, when much online education lead generation took place via banner ads and not vendor hosted landing pages, in today’s market, this approach just seems anachronistic. I just can’t imagine a school trying to enter this market without the industry experience. Part of me is waiting to hear that it’s actually someone trying to promote University of Phoenix.
The point, however, was not to criticize the approach but to help answer the question of the average CPA and volume factors. In general (with respect to online education):
- The average CPA depends on many factors. One of them deals with the school itself, and that is whether the offer is online only, ground only, or both. If it’s both, one factor is how many campuses they have. Online programs tend to pay slightly lower than campus ones, and programs with greater geographic restrictions will also cost more.
- Course selection plays a role not in necessarily in price but in volume. Schools that offer a larger variety of courses will convert users better than ones with a narrow selection. Ones with only a handful of courses, and especially if niche, will be asked to pay more.
- Form fields play a role too. Forms that require only the bare minimum convert better and can justify a market competitive price. Those that ask more personal and less common questions will have a lower conversion rate, lower lead volume and cost more per lead.
- Who hosts the form is yet another factor. Some schools do not let the vendors design and host landing pages. This in my opinion is a mistake. In the beginning, firms could do this and still get volume. Specialization is the name of the game now. Companies specialize in obtaining traffic. The specialize in landing page design, in optimization of pages, in optimization of which pages go with which traffic sources, and so on. One page fits all will have a hard time competing in a one-landing page will not fit all world.
- Taking the above into consideration, most vendors can quote an average CPA, but the smart ones now focus less on CPA and more on enrollment cost. Many vendors – those with affiliates for instance, more generally those who have various sources of traffic, see different performance across each. One price fits all means vendors must overpay for some and underpay for another. Again, this is because not all traffic performs the same. It’s the vary reason Google has their Smart Pricing, charging advertisers different CPC’s for the same keyword based on the source of the traffic.
- A factor that this planner should take into consideration is whether the offer is a school that is already being marketed; if so, it will be difficult to get placement unless this person’s company is taking over all placements, ala Advertising.com and Apollo. Generally, only a new school that hasn’t been online will get consideration with the stated restrictions – one price, potentially one landing page, RFP.
- A point to this planner is to have them prepped for the fact that most vendors will ask to host the form and transfer data to the school; it’s driven not just because of specialization but that many vendors will want to integrate the school into their existing education portals
- As for potential volume, the largest of the online schools process more than 200,000 leads per month. Schools that have low budgets and lead caps will have a hard time getting an audience. This school will want to be able to accept at least 500 leads. The fewer leads they accept the more it will cost per lead.
- So, what does all of this mean if pressed for an average CPA? Typical schools pay out - $12 to $20 for a shared lead (similar to mortgage model); $30 to $40 for average exclusive leads, and $45 to $55 for higher quality leads (better student to enrollment rate). But, I strongly suggest and encourage being able to track not just leads but enrollments and as granularly as possible.
Most fascinating to me about the email request for information is that it hints at a process that runs counter to today’s right pricing trend. We’ve started to hit a point where even the “shadier” vendors understand that quality impacts price, so it’s easy to take for granted that others might not understand the dynamics of a given vertical. I have assumed the above was equivalent to CPM, known by all. In case it isn’t, may the above help.
What do you know about the cost per lead today for online education? Is it still in the $45-55 range for high-quality leads?
Posted by: John Phillips | September 27, 2007 at 12:21 PM