At the past three LeadsCon, the for-profit-education segment has dominated the stage as well as the discourse in the exhibit hall. And why shouldn’t it have? The conference tends to reflect the industry at large, and as a percentage of total revenue, the for-profit-education sector has comprised if not the largest sector, the second largest. What percentage of spend it would be moving forward has been the big question mark because of a major overhaul impacting the ways that schools are judged by the federal government. If they fall short of the new rules, they could lose funding. If they lose funding, then they cannot spend on marketing. It’s a delicate dance that has been made only more so due to a cultural shift in how education is viewed, namely that it should not be a business.
Despite the new policy rules, the business of education has remained robust. The “when” not “if” worst case scenario has for some been avoided, but it looks more and more likely that the reprieve is only temporary… not because of anything that the schools have done or even the marketers. It has everything to do with the public’s perception, which up until now has been non-existent. That is what could change things as more and more mainstream press have “uncovered” the “scandal” within education.
Pros Versus the Cons
Just like the buyer / seller dynamic in the online world, when one side attracts too much attention, it can mean bad news for the other. In the online world, we like when buyers appetites are not met. We want demand to outpace supply because that provides the motivation and liquidity for growth and expansion. When supply outstrips demand, it can cause problems. At the very least it can put downward pressure on price, but more problematic, it generally suggests critical condition of a vertical. If not critical condition, what it suggests is a severe imbalance and a need to uncover a new solution. We see it with mortgage and debt. More people want to draw money out of their house or consolidate bills than for whom solutions exist. If a solution doesn’t become available, all it does is hurt the credibility of advertising in the future, which is exactly what we want to avoid.
In the online world, this pro versus con debate means the available information all looking negative. The New York Times has been among the most vocal critics, running a front page story over the weekend, “With Lobbying Blitz, For-Profit Colleges Diluted New Rules.” Instead of the half-full approach about the overhaul, it became the half-empty, namely how “diluted” the new rules are, that they are “much-weakened.” Interestingly, the for-profit-education story is playing itself out not just in post-secondary but also in the K through 12 market. “Profits and Questions at Online Charter Schools,” another story by the Times explores a for-private public company that runs elementary and high schools. The rub once again is private companies making money off tax payer dollars, while appearing to provide a sub-par product.
Time for a Different Lobbying
The problem with lobbying is that it almost always sounds negative. It doesn’t matter if there is a lobby organized to end world hunger or to establish peace in the Middle East. By the very fact that dedicated action is needed, action that requires significant money, it creates a guilty until proven innocent mentality. It’s the same issue with building consumer facing businesses in the tech world. If you have to spend money to acquire users, there is almost something wrong with the business compared to those like Facebook which grew organically, virally, via smoke signals, or some other divine digital intervention.
What the for-profit-education space needs is to hire Republican campaign-meisters to speak to the end user. That’s what the NYTimes is doing with their articles. Whether they have an agenda or not, they are creating a perception in the end public. The public doesn’t care about lobbying. That just screams unfair. It shouts, you have no control over your own government, whereas appealing to them directly has them rooting for the cause to succeed no matter how it gets done. If it is through lobbying, well then that is just fine, because at least the public is getting what they think they want.
For-profit Motive
The desire to make money will cause all sorts of bad behavior. We see it all the time in the world of performance-based marketing which is a much less charged topic than monetizing education. It is just human nature that without the proper incentives and the proper checks and balances, those looking to make money will optimize towards making money at the expense of any secondary objective. It doesn’t mean that making money off education is bad. Look at the vast majority of the education system today. Outside of a few prestigious schools, it’s pretty unremarkable. Money means a motivation for innovation, but money for money’s sake will mean innovating within the profit motive. The key is aligning incentives to have these companies optimizing towards success outside of their own profits. Just look at UPS and FedEx, both of whom exist to make money, but their ability to deliver a better product has lead to no one today complaining that they are taking jobs away from the Post Office. Until we get there with education (showing that for-profit can mean better results), we will still be at risk. We need to get there soon; otherwise public opinion will dictate the future of this industry with actions based on appeasing the public instead of serving them.
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