2014 october grayreports - student demand trends

GRAYREPORTS Demand for Educational Programs

www.GrayAssociates.com

Results through October 2014

617.401.7662 www.GrayAssociates.com 2

GRAYFor more information please contact Bob Atkins.

Email: [email protected]

Agenda

1. Introduction

2. National Inquiry Trends

3. Inquiries for On-Line Programs

4. Inquiries for On-Ground Programs

5. Internal and External Inquiries

6. Biggest and Fastest-Growing Programs and Markets

7. Summary

Today’s Presenter: Steve Probst, Partner at Gray Associates




Key Demand Trends and Observations

1. Overall inquiries down 32% in October

2. Conversion rates also down in October, to lowest levels in 2 years

3. Broad declines

Both on-line and on-ground programs

Both internal and external inquiries

4. Considerable variation in these trends by institutional segment




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Clients: Education Institutions and Investors

Mission Help clients do well by doing good




What is GrayReports?

Your access to information on demand and marketing trends in higher education

Overall industry trends, which we will review today

Customized monthly reports for your specific programs and markets

On-Line access to detailed data for specific programs and markets

Over 33 million qualified inquiries

January 2012 to the present

Over 700,000 new inquiries in October 2014

Over 185 programs with over 10,000 inquiries

Over 300 cities with over 10,000 inquiries




Agenda

1. Introduction






7. Summary




Overall Student Inquiries

Total industry inquiries continued to fall further behind year-ago levels in October.

Total inquiries in October were down 32%, significantly worse than the 22% decline the month before.

We believe that this reflects three very different institutional segments:

─ Struggling: Some schools are struggling and are receiving fewer inquiries.

─ Shifting: Some schools have changed their marketing to reduce dependence on pay-per-lead inquiries.

─ Sustaining: Many schools are not changing and have relatively steady inquiry volumes.

-32% YOY

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

National Inquiries All Programs and Award Levels 2012 2013 2014




1. Applications are counted in the month in which the inquiry was received (i.e., an inquiry that is received in January and converts in March will be counted as a January inquiry).

Typically, the application rate will rise for at least three months after the month in which the inquiries were received.

3.0

%

2.7

% 3.1

%

2.9

%

3.0

% 3.4

%

3.1

%

3.0

%

2.7

%

2.8

%

2.8

%

2.9

%

3.2

%

3.0

% 3.4

%

3.2

%

3.3

%

3.1

%

3.3

%

2.8

%

2.6

%

2.2

%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%


Education Industry Inquiry Conversion Rates 2013 2014

Inquiry to Application: Conversion Rates

Inquiries are also converting to applications at lower rates than a year ago.

In the first half of the year, conversion rates were much higher than in 2013, but now are falling short.

October was a particularly bad month.

─ We forecast that only 2.2% of October inquiries will convert.

─ September is likely to convert at only 2.6%.

Immature Months1

2.6%

2.3%

1.5%




Student Inquiry Conversions

Fewer inquiries and lower conversion rates will drive down the number of October conversions by 45%.



Immature Months1

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000


Education Industry Inquiry Conversions All Programs and Award Levels

2013 2014




Average Price for Pay-per-Lead Inquiries

Average inquiry prices rose slightly in October, after a 3% increase in September.

For January through May, prices were stable and slightly above year-ago levels.

Prices jumped about 8% in June and were steady for three months at about 7% above year-ago levels.

It is not clear how much the rising price trend reflects across-the-board increases vs. a change in mix

(with lower-priced inquiries declining much faster than higher-priced inquiries).

$42.13 $42.24 $42.13 $42.87

$41.59

$44.97 $44.67 $44.86 $46.15 $46.58

$30

$32

$34

$36

$38

$40

$42

$44

$46

$48

Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec.

Average Price per Pay-per-Lead Inquiry All Programs and Award Levels

2014 2013

Note: Inquiry price is the average price for pay-per-lead inquiries.




Average Cost Per Converted Inquiry

Cost per converted inquiry jumped in August and is continuing to rise.

Cost per converted inquiry for the first half of 2014 was relatively steady and comparable to 2013 levels.

It looks like August and September inquiries will end up close to $1,700 or $1,800 per converted inquiry,

about 33% higher than earlier in the year.

October inquiries are on track to cost about $2,100 per converted inquiry, once those inquiries have had

enough time to convert, or about 50% higher than year-ago levels.

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2013 $1,378 $1,531 $1,335 $1,397 $1,387 $1,151 $1,287 $1,347 $1,484 $1,436 $1,418 $1,419

2014 $1,301 $1,428 $1,228 $1,322 $1,271 $1,435 $1,365 $1,709 $2,053 $3,100

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500 Cost Per Converted Inquiry All Programs and Award Levels




Agenda

1. Introduction






7. Summary




-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000


Inquiries

Inquiries for On-Line Programs All Programs and Award Levels

2013

2014

Inquiries for On-Line Programs

Education Industry Inquiries: YOY Percent Change Inquiries for on-line programs fell 44% below year-ago levels in October.

That continues the worsening trend evident since July.

Inquiries for on-line programs have been below year-ago levels since January, and they are trending

worse than overall inquiries.

-44% YOY




Student Inquiry Conversions for On-Line Programs

Inquiry conversions for on-line programs are declining drastically, with October likely to be 66% below last-

year’s level.

Inquiry conversions for on-line programs have generally been below 2013 levels this year, with the

exceptions of May and July.

Conversions of August and September 2014 inquiries for on-line programs are likely to finish at least

40% below last-year levels.

2012

-

2,000

4,000

6,000

8,000

10,000

12,000


Inquiry Conversions for On-Line Programs All Programs and Award Levels

2013 2014



Immature Months1




Agenda

1. Introduction






7. Summary




Inquiries for On-Ground Programs

Inquiries for on-ground programs were down 25% in October, continuing a downward trend that started in

August.

Inquiries for on-ground programs exceeded last-year levels for the first half of 2014.

Since July, the gap relative to year-ago volumes has worsened each month.

2012

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000


Inquiries

Inquiries for On-Ground Programs All Programs and Award Levels

2013 2014

-25% YoY




Student Inquiry Conversions for On-Ground Programs

Conversions of inquiries for on-ground programs have been falling at an increasing rate.

Conversions of October inquiries for on-ground programs are likely to be 35% to 40% under year-ago

levels.

Conversions of July and September inquiries for on-ground programs have been about 25% under 2013

levels, while conversions of August inquiries were only 6% under last year.

2012

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000


Inquiry Conversions for On-Ground Programs All Programs and Award Levels

2013 2014



Immature Months1




Agenda

1. Introduction






7. Summary




Conversions of External Inquiries

Conversions of external inquiries fell sharply starting with August inquiries.

The sudden drop in conversions, starting with August inquiries, reflects a 10% drop in conversion rates

relative to 2013 levels for August and September, and a 38% drop in the conversion rate for October

inquiries.

External inquiries have been falling steadily since January.

In contrast, conversion rates for external inquiries were roughly 20% above year-ago levels through July.

-37% YOY

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000


Conversions of External Inquiries All Programs and Award Levels 2012 2013 2014




Conversions of Internal Inquiries

Conversions of internal inquiries have been dropping sharply, with conversions of October internal inquiries

likely to be about half of year-ago levels.

For October inquiries, the causes for that drop are about equally due to a drop in internal inquiries and a

drop in conversion rates for those inquiries.

In contrast, for September inquiries, the drop below year-ago levels was due almost entirely to a drop in

conversion rates.

-51% YOY

0

5,000

10,000

15,000

20,000

25,000


Conversions of Internal Inquiries All Programs and Award Levels 2012 2013 2014




Agenda

1. Introduction






7. Summary




Largest Programs: October Growth

While total inquiries were down 32%, the biggest programs varied widely around that average.

Business Administration and Medical Assisting – the two biggest programs – both dropped roughly in

proportion to the average.

Criminal Justice/Police Science and Accounting both dropped considerably more than average.

Health Care Administration/Management fell 15%, about half of the average decline.

The relative performance of these five programs is similar to what happened in September.

-5%

4%

-19%

-9% -11%

-37%

-27%

-74%

-15%

-55%

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

Business Admin and Management

Medical Assisting Criminal Justice/ Police Science

Health Care Admin/Management

Accounting

Year-over-year Change in October Inquiries Five Largest Programs

2013 YoY % Change 2014 YoY % Change




Top 5 Fastest-Growing Programs in October

Welding and Electrical Tech continued their run as the fastest-growing programs.

Health Information/Medical Records Administration had the highest combined two-year growth.

-21%

39%

569%

87%

11%

451%

268%

80% 38% 28%

-100%

0%

100%

200%

300%

400%

500%

600%

700%

Welding Tech Electrical, Electronic, and Comm. Tech

Health Information/Medical

Records Admin

Web Page, Digital/ Multimedia Design

Network and System Admin

Year-over-Year Change in October Inquiries Five Fastest-Growing Programs


1. Includes only programs within the top 75 for total inquiries since January 2012.




Largest Cities for Inquiries

While all five top cities are down, all also beat the average inquiry trend of down 32%.

14%

-9%

-4% -7%

8%

-12% -16%

-19% -23% -24%

-40%

-30%

-20%

-10%

0%

10%

20%

New York Los Angeles Atlanta Chicago Philadelphia

Year-over-Year Change in October Inquiries Top Five Cities for Inquiries


Note: The market for each city is defined as a 15-mile radius around the population center of its CBSA.




Fastest-Growing Cities for All Inquiries

Three of the top 75 markets had positive year-over-year inquiry growth in October.

Three of the top five growth markets are in California: San Diego, Fresno, and Riverside.

51%

-11%

0%

-7%

-16%

12% 9%

4%

-1%

-7%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

San Diego, CA Fresno, CA San Antonio, TX Phoenix, AZ Riverside, CA

Year-over-Year Change in October Inquiries Top 5 Fastest-Growing Cities for All Inquiries


1. Includes only the top 75 cities by inquiry volume since January 2012. Data includes a 15-mile radius from the center of the CBSA.




Agenda

1. Introduction






7. Summary




Key Findings

Declines in inquiry volumes and conversions accelerated in October.

Inquiry volumes were down 32%, much more than in prior months.

Conversion rates dropped to the lowest levels since November 2012.

The declines hit both on-line and on-ground programs, with on-line hit harder.

The declines hit both internal and external inquiries.

We believe that different institutions experienced a range of trends:

Strugglers: Some struggling institutions received sharply fewer inquiries and converted fewer of

the ones they did receive.

Shifters: Some institutions shifted their marketing spend away from paid leads.

Sustainers: Some institutions largely escaped these broad market declines.




Some New Things We’re Hearing

Market share: a lot more institutions talking about this

Expansion instead of consolidation: re-opening campuses, exploring new markets—taking

advantage of “white space” left by Strugglers and Shifters

Metrics: what to measure, what benchmarks to use

Strategy: business models, student and customer segments, value capture

Medical Assisting re-launches:

─ The largest program at many schools

─ Facing challenges on placement and gainful employment

─ Best practices can allow schools to fix and grow this program

─ Comprehensive change required: Curriculum, instruction, simulation, externships, and certification

─ Much higher ROI than a new program launch—and often more opportunity




Upcoming Gray Associates Webinars

APSCU: The Opportunity in Medical Assisting Education

─ Wednesday, December 10, 2:00 Eastern time

GrayReports: Student Inquiry Trends through November

─ Friday, December 19, 1:00 p.m. Eastern time




How Do I Get Information for My Locations and Programs?

Gray Reports is offered as an annual subscription.

Customized for your locations

Customized for your programs

Monthly PDF overview of inquiry, application, and pricing tends in your markets

On-line access to your market data by program, campus, veteran’s status, years since

high school and other factors




Questions and Contacts

Please feel free to contact:

Bob Atkins

CEO

Gray Associates, Inc.

[email protected]

617-401-7662

Today’s Presenter: Steve Probst, Partner at Gray Associates