After two decades of brushing aside concern for how digital would disrupt higher education, college presidents recognize that the wolf may be arriving in the form of large, gold-plated public universities investing hundreds of millions to capture a winner’s share of the adult/online and military market.

Penn State Global, Arizona State University, and Purdue Global will soon be joined by the University of Maryland Global Campus, which plans to increase its marketing budget by $500M to grow online students from 90,000 to 120,000. The University of Massachusetts system vowed to become a leader in online education by investing heavily in marketing, as has the University of Missouri system looking to invest enough marketing dollars to grow their online enrollment from 75,000 to 120,000 by 2023.

They’re pursuing a digitally savvy market of over 8 million non-traditional students — working professionals, active-duty military personnel and veterans — either starting or re-starting progress toward a degree.

Welcome to the marketing arms race

Online education stands as the fastest growing sector in higher education. Public universities, facing state budget cuts, are eying it as a cure-all and as a path to financial independence.

Southern New Hampshire University spent $132M on advertising in 2017 and enrolled over 63,000 students from 48 states. Western Governors spent close to $100M on marketing in 2018 and now enrolls over 115,000 students from all 50 states. Similarly, for-profit universities like University of Phoenix and Grand Canyon University each invest over $100M annually to enroll their 100,000+ students.

Such gaudy numbers finally have caught the attention of some public universities looking to add online revenue to dwindling in-state, on-campus tuition dollars. Even if a few of them realize their ambition, the higher education landscape will change dramatically in the next decade.

Impact on marketing

Looking at the situation using the 5 P’s framework of marketing, here is what might ensue.

Promotion
The marketing arms race drives increases in Google, Facebook, YouTube and LinkedIn paid advertising costs. In the last decade, for-profit colleges have doubled the Google PPC bid prices (from $5-$8 to $15-$20 per click) and Facebook PPC bid prices (from $1-$3 to $5-$7 per click) for degree and program related keywords. Public universities – loaded with marketing war chests – will further increase bid prices.

Product
Just as Amazon and Walmart have gradually forced small businesses to become more specialized, public universities will force small, regional colleges to limit their offerings to areas where they have a true competitive advantage – forcing them to shut down non-distinctive programs.

People & Place
Adult students, accustomed to national for-profit and non-profit institutions, will welcome well-known educational brands from across the country.

Price
Increased competition will lower the overall price of online education, lowering the margins for online education providers.

Winners and losers

In this emerging landscape, winning colleges will either be immune to market forces or be adept at simultaneously balancing excellence, access and impact.

Public universities: The few who succeed in overcoming political, structural and faculty barriers to spawn massive online divisions will be the clear winners. They will succeed at the expense of for-profit colleges at first, and then, in the long run, community colleges and non-profit colleges.

For-profit colleges: Once the pioneers in online education, they’ll be the biggest losers primarily because their reputation has already been tarnished by scandals resulting from low-graduation rates, loan-defaults, closings, and their profit motive.

Community colleges: Despite their price advantage, they will abdicate some of their revenue to the stronger brand-named public universities. Their low-end certificates will be most vulnerable to competitive forces.

Private non-profit colleges: In this emerging landscape, a handful of elite four-year private colleges with strong brands and deep endowments will likely remain immune to market forces.

Life continues to get harder for underdog private non-profit colleges with high tuition dependency, small endowments and small marketing budgets. In the last two decades, their once safe existence has been threatened by for-profit colleges, upstart community colleges, demographic declines and, more recently, the promise of free college education. As the Google PPC market and paid social media platforms become cost prohibitive, and public universities threaten to peel off their cushion of online revenue, they must act now, decisively, to balance the forces of excellence, access and impact.

Nine steps private four-year underdogs should take to mitigate risk

They must:

• sharpen their unique selling proposition – providing multiple “hooks” that foster brand preference
• offer a more distinct portfolio of programs – resisting the temptation to start new me-too programs
• create programs that require experiential learning – building immunity from online learning
• narrow focus on fewer programs – where they have indisputable competitive advantage
• reimagine their publishing potential – creating, monetizing and weaponizing valuable content from their natural wellspring of ideas, innovation, and intellectual capital
• abandon ineffective and expensive student search models – embracing new ones based on machine learning, big-data algorithms, affiliates and feeders
• leverage intrinsic differentials – such as geographic advantage, institutional legacy, and large capital investments
• adopt new business models – creating collaborative bridges between themselves and their corporate, government and civic partners
• invest in brand – lifting the college from obscurity to national prominence

When for-profit colleges arrived on the scene in the late nineties, they shook up the higher education landscape with their new innovate approaches to education. As public universities catch up, another tectonic shift is underway. To survive and thrive in this future, underdog colleges must reimagine themselves — leveraging their inherent creativity by outsmarting without outspending their competitors.

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