My sincerest thanks to those who commented and/or wrote me regarding this blog's return. One comment in particular struck me. "Seosnafu" wrote, "Can you post any ideas for upcoming posts? Taking requests? :)
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While it's fun to think of things to share, I enjoy most answering something that I know at least one person wants to read. I encourage anyone who thinks I might have something to add on a topic about which they'd like to read to send it my way. In other words, requests are more than welcome.
Over the past nine months or so that I have not publicly posted, I have written some pieces. I plan on updating the blog with some of them. Below is one discussing a deal announced earlier this month between Apollo Group and Aptimus, a deal that doesn't seem to solve any of Apollo's problems or cover for areas in which Advertising.com (the current exclusive distributor) lacked.
In February of 2006, University of Phoenix shook up the lead generation space by forming an exclusive partnership with Advertising.com. This meant that any company that produced leads or wanted to produce leads for University of Phoenix had to go through Advertising.com. Most of us first learned of the deal a few days after its closure when parent company Apollo Group's President Brian Mueller announced it as part of a turn around strategy to lower their cost per enrollment. Phoenix wasn't the first for-profit education company to outsource its online marketing. Whole companies exist to offer this service, including Datamark, CUNet, along with agencies such as Avenue A / Razorfish who has for years managed all of Capella's lead buying. Few might have expected University of Phoenix to follow that route given their comfort and early leadership role in the space. Similarly, few would have predicted them to choose Advertising.com or that Advertising.com would even consider such a deal as it required them to stop doing business with all other education companies.
Those inside the lead generation space, namely those generating the leads for institutions such as University of Phoenix, found the deal even more surprising, if not alarming. Some of the larger ones had an idea that Phoenix wanted a unique partnership, but those making the best candidates didn't want to lose 60% to 80% of their existing revenue as Phoenix sought exclusivity; those that could drop everything for Phoenix generally didn't have the technology and expertise to add the value the number one education player wanted. As education wasn't core to Advertising.com's business, they were in a position to make that bet and align themselves with University of Phoenix even at the risk of disappointing their other major spenders such as Career Education Corporations' AIU Online. This explains the logic but not the alarming piece. The deal unsettled those providing the leads because unlike Datamark or the better example, Avenue A / Razorfish, Advertising looked more like a competitor than a vendor management firm.
Unlike Avenue A / Razorfish Advertsing.com had access to inventory, lots of it, along with a skilled media buying team and contacts at every major inventory source. In addition, it had search technology and handled some large clients campaigns, ones that required Advertising.com to maintain certain CPA objectives. If UOP wanted to lower their enrollment costs what better way than to funnel all activity through Advertising.com then allow Advertising.com to purchase media smarter based on the activity of the other lead providers. Fortunately, despite these concerns the past 18 months have hummed along smoothly with no major incidents or breach in trust. From the beginning of the University of Phoenix / Advertising.com deal, though, Advertising.com seemed poised to benefit the most. With last months earnings results, you might (finally) call it equally beneficial and worth continuing, But in an even more surprising turn of events than the original March 2006 exclusive partnership comes the announcement this week that Apollo has struck a deal, this time purchasing an internet advertising firm, namely the publicly traded and not profitable Aptiumus for roughly $48 million.
In the press release announcing the deal, Apollo President Brian Muller said, in a statement not all that different from the Advertising.com announcement, "This acquisition is another step to strategically position the company to best monitor, manage and control our marketing investments and brand," and that "Integrating Aptimus' technology and very experienced team into our current marketing initiatives and service center model will take us to the next level in managing student inquiries and achieving further process and cost efficiencies in new-student enrollments." Later he adds, "While the exclusive management contract with Advertising.com expires over the next several months, Apollo believes that the significant investments it has made in personnel and technology, as well as the acquisition of Aptimus, will enable the Company to efficiently and effectively manage Internet marketing internally, without any disruption." Translation, no more Advertising.com after February 2008.
I've re-read Muller's statements a few times, but I'm still a little confused by the purchase. Last year, we hinted that it might make sense for an institution like Apollo to not just partner but to acquire. From that perspective, it makes sense. But, Aptimus? According to their CEO Rob Wrubel, "This is a significant opportunity to deliver our business vision to one of the most important education companies in the market, improving their ability to reach new students." I guess he speaks of new students via-coregistration as that is Aptimus' business to date. And, if I were to buy a company, I might buy one that actually made money. Aptimus lost money last year, and they earned all of last year what Azoogle earns per month. Not only did they lose money, but they saw no top line growth year over year, most likely attributed to their exiting the incentive space. Perhaps in the end, Apollo will pay close to $50 million for people and tracking. They have eighteen months of information and process expertise from Advertising that they can port over to the Aptimus team. We'll see if this move turns out to be penny wise and pound foolish as it looks like a way to avoid paying commission to Advertising.com, which surely equals about $50 million per year.
