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Good afternoon everyone and thank you for joining Gray’s monthly webcast on the most recent student and employer demand trends in higher education. Our monthly webcast is derived from our program evaluation system that supports ongoing academic reviews and all types of institutions across the country.
Before I pass the baton over to our CEO, Bob Atkins, a couple of quick housekeeping items. Please feel free to share any questions with us in the chat window on the left-hand side of the page. We will be sure to answer any and all questions at the end of today’s webcast. A copy of the presentation as well as a recording will be delivered to all registrants via e-mail. Without further ado, Bob?
Bob: Thank you Mark, and welcome everyone. This is Bob Atkins, I’m CEO of Gray Associates, and I’m very pleased to have a colleague on the phone with me today who we’ve worked with in higher ed, Jennifer Good, she is CEO of Involvement Builders, and she’ll be sharing some information with us today on how she uses data to geo target marketing campaigns. Let me give Jenn a second to introduce herself no.
Jenn: Thank you Bob. My name is Jennifer, and I work with an agency that does digital marketing campaigns for higher education. We have been looking to the Gray platform for geographic data this year and have some exciting information to share through a case study we’ve been running over the past year. Thanks for having me.
Who Is Gray?
Bob: Let’s get started. For those of you who aren’t familiar with Gray, we’re a strategy consulting firm, we’re focused entirely on higher education, and we do a number of different kinds of work, from program analysis to general projects and business strategy. That work is built off a set of databases that covers student demands, and there we have three data sets actually. One from IPED, one from inquiries that many people buy on the Internet from aggregators and agencies that produce those, and finally Google search volumes. On the employment side, we keep data from BLF and from Burningglass job postings. The competitive data primarily from IPEDS and wage data from BLS, the American Community Survey and other sources. On the demographic side we keep all the likely suspects there in terms of populations and other demographic criteria. We have placement rates, and finally we’ve got a new data set on employer requirements that provides information on skills required by employers for recent grads, so we can help you understand what you might need to teach in your programs, as well as which programs you may want to teach in the first place.
All of that is put together with a cross-walk that we spent quite a bit of time on, we’ll update soon, that allows you to explore by program and see all the jobs related to that program and make that difficult linkage between programs and occupations, so that’s, if you will, built-in.
Out of that data, we pull what you are going to see today, which is information on student demand and employer trends, and one specific program that we’ve chosen to highlight; computer programming. First up, national inquiries. For those of you that have been on this call with us before, inquiries have been following practically forever. These charts show data from 2016, 2017 and 2018. The 2016 data is in light blue, 2017 is in darker blue, and 2018 is in green. If you glance at the chart, you can see that the light blue bars have been above the dark blue bars for some time throughout 2017. The 2017 data never reached 2016 heights. There’s been a decline, that decline is about 10% year over year, in 2017 but appears to be stopping. January volume actually rose last month, 3% year over year, and February came in at a tie with last year, so there is a chance here that the long decline in inquiry volumes is coming to an end, which would be very good news for the industry as an indicator that student demand is becoming healthier.
Unfortunately, there’s a counter veiling trend, which is conversion rates. Now we pause here for a moment and just explain what a conversion is. We count conversions in the month in which the inquiry was received. So, if someone inquires in January, and converts in March, they’re counted as a January conversion. What we find is, most of those conversions take place within about three months, so we consider a period complete three month after the inquiry is received. There are still other conversions that trickle in at a reasonable pace for about another six months, so we’ll call it complete, but really there’s going to be a little bit of incremental growth after that in conversion rates.
What we’ve seen is that this rate is actually falling off a bit. It had been growing quite steadily for a quarter, and in Q3 ended up 51%, but in Q4 it fell for the first time in a long time, and quite sharply. We’re actually looking into that now, so I would consider this a preliminary result, which may or not be confirmed as we have a chance to dig into the data a little bit more.
It’s been a good trend, something happened, we’re not quite sure what yet in conversions. Please join us next month as we dig into that a little bit and explain what’s going on, we’ve got such a sharp decline in conversion bottoms.
That leads us to what happened at total conversions. Conversions had been pretty healthy coming up to August of last year, if you had dark blue lines, quite a bit higher in August and had been through much of 2017. That began to decline in November. We actually fell short for the first time in a long time and are 8% under in conversions year over year. December also fell, it’s still short, it’s got a little bit more time to mature, but it probably won’t close that gap. If it does, it will only barely reach last year. January is behind last year, but that probably will close. I don’t know if we’ll beat last year’s January, but we should come close.
February is actually off to a pretty decent start. That little bar, it’s a double, which should put us ahead of next year when it’s fully mature, so a little bit remains to be seen here, but the news is not as good as it had been for quite some time.
One thing that’s going on that’s a little surprising, given that the conversion rates are going down, is that the price for inquiry is going up, and normally what we’d been seeing before is the price has been rising, but that’s been offset by an increase in the conversion rates, in a sense, people are willing to pay more to get a better converting lead. This month, we’re seeing the opposite; the conversions are down, but the prices are still up. What this implies for cost per [inaudible – 00:07:22] is that declining conversions and an increase in price, is that cost per start could be going up fairly significantly, so it’s a number we’ll want to watch. It had been very steady for a year at around forty-five, it started to creep up at the end of last year, broke through forty-six, and it’s been above forty-six every since. We even seem to be approaching forty-seven, so this is clearly a number that’s increasing, and this is one number in our presentation where going up is not a good thing, because it raises your cost of marketing.
Now let’s look at what people are spending money on, and business administration and management will almost always I think be the largest single-program, highest spend in a program where the folks who buy inquiries are likely to be present and buying them. So, I wouldn’t interpret these numbers as being the largest marketing budget, these are the programs where the greatest amount of money is spent on acquiring inquiries, and that’s a subset of the total education market, with an emphasis particularly on vocational programs, and it tends to skew a little bit towards fuel profit as well, but as I said, business administration is by far the leader there. Medical clinical assisting is also an enormous program, second largest program in the US and very heavily marketed by the four profits and other trade schools, so we see that coming in at number two. Health care, health care administration you’ll see in a couple of other places in our presentation also are very large and growing the program. Then you get into a variety of other things; psychology, medical insurance coding, webpage, digital media design, all of these are programs that tend to be more vocationally oriented, tend to be core programs and for profits, and therefore a lot of money is spent on both generating and buying those inquiries.
In terms of change, I found this chart pretty interesting when we brought it up. We’ve got very dramatic swings in budgets, and if I were a marketer, this is concerning because it means that the basis of competition is shifting quite quickly, so if you were in the healthcare administration space two months ago, you’re suddenly facing 41% more competition if you will, more spending for those inquiries. Quite concerning, so there’s a big jump up in a number of programs here in spending on inquiry volumes, healthcare, medical insurance coding, psychology, and web page design, so very big jumps followed with a fairly hefty double-digit jump in graphic design and some businesses or programs if you will where people are disinvesting; business administration management is basically flat as is HVAC, but we’ve got a significant drop in medical assistants, medical insurance biller and office specialists, so some of those big health care programs are seeing a bit of a cut back.
Now let’s shift and see what’s going on in the split between online and on-campus demand. Just to be clear here, these are inquiries for online programs. All of these inquiries would come from an online source, and since almost all inquiries these days do. When we say online, that is a student who is inquiring for a program that is offered online, and this has been quite a healthy space for a long time. Up 5% year over year in 2017. Last month it was up 4%, so basically in-line with the trend. Down a little bit from a 13% gain in January, but still quite healthy.
On campus, not quite the same story. Here year over year, 2017 was down 14%, so by comparison, this year is looking good. If you will, a small decline is the equivalent of up for on ground. We’re down 7% in February after a similar drop in January, so the rate of decline is slowing, but we’re still trending down in the on-campus world.
Now shift over and look at it by city and program, this is actually pretty good news. My view has been that we can’t really expect a turnaround in demand if we’ve got major declines in all the bigger cities in the US, which had been the case for some time and you can see that dark blue bar, 2017 year over year was down almost 20% in all five of the top five cities. Those numbers are much, much better this year, albeit they’re still down. These cities are all down about 4 or 5%, so it’s a significant improvement over last year, but looking forward to a day when those are all above the line if you will in trending positive.
Where is that money going? Where is the fastest change in inquiry volume among large programs? First is healthcare administration, we saw that earlier, a very significant jump in inquiry volumes in that space, that’s part of what drove the increase you saw in the budgets for that. We’ve got three of the other large programs, basically flat, registered nursing, business administration and criminal justice. And then medical kind of goes drifting down 13%. That’s again about the second largest program, still facing a pretty significant decline.
Now let’s turn to the fastest growing programs, how we’ve got leading the pack here electrical engineering, almost a double, management science almost a double and we’ve got many people are looking at that as big data and data science programs, a very popular topic right now. Computer programing came in number 3 at 134%, and we’ll spend some more time looking at that program in more depth in just a minute. Then of course we have cyber security and game and media design, and the only two that are repeats here are actually computer programming and cyber security, so there’s a little consistency in that growth trend month over month for those two programs.
As I mentioned, we’re going to turn here to computer programming, and talk about that in a little more depth in terms of trends both from an employer standpoint and student demand. The first this is these folks are in demand, the easiest way and most reliable way to tell that is looking at salaries. If you look back at job postings, we’ve got over 50,000 job postings right now for computer programmers in the US. Most of those are paying over $75,000, so it’s a very well-paid profession, as I think one would expect. I’ve got another [inaudible – 00:4:00] at 50-$75,000 and that accounts for more than three quarters of all jobs, so it’s a very well-paid profession.
What education do you need? I find this very interesting; you would expect to see, actually I would have expected to see a fair amount of demand for people with masters and doctoral degrees in a field that’s this technically sophisticated, that’s really not the case. You’ve got 72% of the demand at the bachelor’s level, a little bit at associates, and some at the high school or vocational training level for lower skilled variations on coding. What’s really surprising to me though is that there isn’t a lot of demand for those graduate degree programs and what I believe is happening here is that employers would prefer to get somebody fresh out of school and then have them learn on the job than to hire somebody with a higher-level degree. When we look at wages with master’s degrees, there really is no wage premium for someone with a master’s degree. The other thing that happens is there aren’t many students who would want to go on and get that degree, because they perceive correctly they can get a job without it, and they can get paid as well as they would if they had a masters, so there’s really not a lot of logic here in getting that degree. There’s a huge exception, and that is foreign students. When we looked at it, most of your students in computer science at the graduate level are actually from overseas, and my hypothesis is that’s because they actually can’t get the job, especially in the US without a graduate degree that demonstrates their skills in a type of degree that the average American employer can understand.
What do they need to know? And HR, we have a number of other data sets on skills now that tell you what folks need to learn, and these are no surprise; you’ve got to know how to design a system. Interesting now that number 2 is design and data security system. I think that all the breaches that have been experienced over the last years are really creating a lot of demand for that data security knowledge. Optimize software performance, write computer programs, and not a lot is surprising here. What’s fun is we looked at what tools you need to know, you’ve got essentially every software tool, but even here are some basic skills in office software turn out to be important, that would be fundamental stuff like Excel, Word and PowerPoint are just expected job-related skills that you’d need here. You also by the way need them in almost every other academic program. Something to keep in mind if you’re designing courses for other fields is that core office tool kit is a requirement and needs to be developed while folks are still in school.
Program score card, I’m not going to walk you through every detail here, but I did want to share it with you to show you the kind of data that are available to help you make program decisions. What we’ve done is broken this into four large areas. First, at the upper left, you see our student demand data. Below that with the gray shading is competitive data. Up in the upper right, we have job information and then we look at the degree fit for what degrees people have in the work force and what degrees they’re graduating with. We color code these so that you can quickly look at them and understand what’s going on, what’s good and what’s bad. Dark green is good, pink is bad, and you can then look up here something like inquiries at 25,000, 26,000, that’s actually finishing up in the top 5% of all programs, it’s 1400 programs that we’re comparing it to. So, you’ve got a sense that that means that’s large. Otherwise, these individual numbers are very hard to interpret, so we percentile them and compare them one program to another to give you a sense of which programs are bigger than others.
In fact, in all this criteria green is good, so you can glance down and understand which attributes a program is doing well on. You can see here we’ve got an interesting phenomenon I would have not have guessed for computer programming, that inquiries are actually down, and Google search for this particular program are down, so that’s a bit surprising. It’s still very large, I would not have expected to actually see it decline in something that’s got so much buzz in the industry. Completions are still steady, but a bit of a trailing indicator because people would have picked their major some time ago, and then we get into some competitive intensity metrics, and I’ll just draw your eye to a couple. One is market saturation, you can see it 0.09, that compares this particular program to a hundred other cities in the United States, this is the national average at 0.9, and average level of competitiveness, and you’ll see this when you go and look at this by geography, that number can vary quite a lot from one city to another depending on heavily saturated that market is with graduates, and we can also see some other competitive metrics here in terms of cost per click and cost per inquiry.
Job market, the total is still good. We’ve got 44,000 job postings right now, but again, a troubling downward trend here that I want to confirm, but I’m a bit surprised to see something like computer programing showing a downward trend not just in student demand, but actually on the employer side as well. Still confirms that it’s a very well-paid profession with the average person under 30 making 45,000 a year.
Now, the question is; if you’re an online marketer, if you’re thinking of opening a new campus or adding us to a campus, where would you want to do that? So, what we’ve done is taken all this criteria you just saw, and stack rank markets in the United States on those data elements using a scoring system that if we work together we would customize with you. Here you can see that the number one market in the US in terms of attractiveness for this program is San Francisco, and they drop off fairly sharply even within the top 20, from a score of 25 to the score of just 9, and we can look at one of those with you, and San Francisco I mentioned here we’ve got good student demand, good Google search volume, and importantly as I move down the page a little bit to look at the number of institutions, relatively few institutions, one is left, and very attractive cost per inquiry, and very attractive Google cost per search at $9, it’s in the best 2% of all programs in this market for that, or of all these markets, so that’s an indicator that this might be a pretty attractive place to be marketing this particular program.
We can run those for every city in the US, and then once you have that, you can pop up a map and begin to identify places where you might want to geo target your marketing efforts. Once you get to that sort of marketing implementation, Gray is out of it’s depth, so we turn to our partners like [inaudible – 00:21:21] who use our data in order to increase the ROI for their client’s marketing spend. Let me turn it over now to Jenn and she’ll explain how she used the data to improve the productivity of marketing spend.
Jenn: Absolutely. So, one of the things that we’re going to start to apply from what Bob just walked through is really how can you start to use a lot of the data that’s available to universities to come up with a marketing strategy that allows you to regionally target prospects, but also nationally find pockets of opportunity that will work to help scale your programs at the program level.
So, there’s really two different ways we look at this. One is, regional targeting, which we call an owned market. This is the area immediately around the University where the broadest part of the programs will be best known. There are lost of different types of data you can do internally within the University to build a geo targeting strategy that’s regionally close to you. Google ad words, Google analytics, search console and really looking at the students and where their zip codes are, you can match all of those different types of things when you go to do your marketing strategy within 100 miles of the University. But, ultimately, we know that many institutions are looking to get outside of that regional area where competition is the strongest for them, to find pockets of opportunity across the US that makes sense for their programs and for these types of markets we call it an earned market, versus an owned market.
The different types of data that we leverage from various sources, even the Gray platform, pulled all of these things into a score card that we just walked through, but all of this data is available, third-party data, and we look at employment gaps, student demand and all of these different types of things and the score card will allow us to pull all of that into a relative picture.
It’s really a three-step process. The first thing that we’re doing is we will use the data to really find benchmarking data that really outlines for a specific program and for all of our programs, what is the benchmark look like nationally and regionally for all of these metrics that are important to us. This is what kind of gives us a data set to compare to itself to find which programs and which markets nationally make the most sense to target.
The second step is really going to be putting all of the different programs against [inaudible – 00:24:14] data set to pull out the ones where we think there are gaps established, so potentially a gap between market demand and student demand, and really finding areas where we think that our programs will succeed in our marketing strategy. Different pockets of markets across the US. The Gray platform allows you to do this at the program level across the US, and so some of the data we have to show to [inaudible – 00:24:40] is really when you complete this process, how will those two different types of marketing strategies compare with each other? The one that is in your regional market, and the one that only contains markets that the data suggests are your best opportunities nationally.
So, the final step is really launching and it’s a continuous process, we call that the build-measure-learn process here, where we are taking the national campaign strategy live and a regional strategy [inaudible – 00:25:12] find a way to incrementally grow these programs.
We wanted to break apart the score card a little bit. Just to give you a sense for what are the types of things we’re really pulling out when we find a market and really decide to target it. We have two of the score cards which are just the national data for computer science, and then the two slides after that will be of regional [inaudible – 00:25:38] of San Francisco and why we felt that San Francisco was an ideal target in this case for marketing campaigns for computer programming.
So, there’s a couple of things in each score card that we want to pay a little more attention to. One is that if we’re working with a bachelor’s program for computer programming, we want to make sure that there are enough job postings that are requiring that level of a degree, so the first arrow here is pointing to 70% of the job postings at Burningglass are suggesting that they require a bachelor’s degree. These jobs set of arrows are pointing to the fact that 18% of the completions are coming from a bachelor’s program across the US and 81% of them are coming through with an associate’s program with an associate’s degree, so we’re really trying to establish this gap because the national work force only has a 47%, only 47% of the national work force actually has a bachelor’s degree, so we’re establishing nationally that there’s a gap between the job market and the student demand.
Then the left-hand side really pulls in the Google search data, which helps to establish that there is a high demand for the program by monitoring Google search per term. The Google platform pulls 20 common search keywords of the top search keywords in all of those to see how those are performing nationally for this particular program, and then also the Google cost per click, this one is $8 and competitive index is a number that tells you, it goes all the way up to 1% so the .5, 1% is in the middle of the mix here where if something was in a .9 it would mean that there are a lot of competitors bidding on these keywords, so the data here nationally is telling us that it’s an affordable cost per click, and that comparatively the competitiveness is moderate, so this would suggest that this program could be an affordable one to target online.
We’re going to dial all that back just to a particular market. So, we have the benchmark nationally, now we’re looking at all the markets across the OL in the platform and have decided to focus just on San Francisco here. The same data, you want to make sure that comparatively it’s looking better or similar to the national market that made you decide to focus on this program. We’re seeing 67% of job postings in this market are requiring a bachelor’s degree, but only 4% of the completions in this market are bachelors, there’s a high percentage of certificates and associates, so that is following the gap that we’re looking for, so this would suggest this market should be included in our national target.
Then the next slide is really focused on the Google piece again and just validating that the Google hashtag is going to also reflect that, so there’s moderate to high Google search queries happening for the computer programing keywords and then then the Google search CPC, so the cost per click in Google ad words is $9, so a dollar higher than the national average, but still really low and the competitive index is .53, so that also tells us that this is a great market for us to try.
If you go, as we talked from the beginning, the different types of growth, one is going to be the regionally focused campaigns, and that in this case would be just in the San Francisco area, there are Universities there, and then across the US we’re looking for markets where we feel like we can earn our place. So, what we have been testing is, if you split your marketing campaign dollars 50/50, so 50% focused regionally, 50% focused nationally on pockets of opportunity, what will the results look like? We have some data to share on the next slide which will really give you a sense for how you can measure these two different types of campaigns. So, the top data set is all about the earned market, so this is the pockets of opportunity across the US, and the second is just immediately outside the University, so you can see that the media was split pretty close where the cost is, the column for cost. We spent roughly $320,000 over a period of a year, but then 100 miles of the University, and then the other $325,000 outside. The inquiries is the total number of leads that were generated from these efforts, and you can see that the cost per inquiry, $273 nationally and $180 regionally, so on this rounder you’re going to see a lower cost per inquiry. Initially however, it is higher, by using this targeting strategy you’re able to go into the market with more information about where your programs and campaigns will perform well, which allows you to keep your cost per start under control. So, typically in the market we’ll see a cost per start or in moment anywhere between 1 and $5000 per start so these are both great cost per starts, and when you take the blended cost per start with this approach, we came in a little over $2300, so this marketing strategy allows this client and University to grow their programs incrementally in this market and keep a well-controlled cost per start to be able to incrementally grow.
I’m going to go ahead and turn this over back to Bob, I don’t know if we’ll have time for questions at the end, but I will turn it back over to you.
Bob: Thanks Jenn. So, summary here, just for a moment, we may be coming to an end in the decline in inquiries which is very good news for the sector as whole. Conversion rates and conversions are falling however, and we’re seeing the beginning of a price increase for inquiries which is a bit troublesome. The inquiry budgets are really changing a lot. We’ve got some that are rising 30% or more, others that are declining double-digits, so it’s a very dynamic environment as a marketer where your competition may be changing quite significantly in terms of marketing spend by program. The major trend as online programs continue to grow, but online continues to decline, on ground, excuse me, continues to decline. Fortunately, the decline slowed a little bit this month, so January is down 15%, but February is only down 7% so hopefully we’re seeing a bit of a slowing in that that will persist and allow our total inquiry volumes to continue to be flatter out.
A couple of thoughts on the sales pitch here; our systems can help you find the right programs and those trades they can also help you find the right markets for your programs, especially outside of your core markets. For those of you that need a little help improving the productivity or marketing, certainly Enrollment Builders would be glad to help out.
That is all we have for now. We’ll open the floor to questions.
In the meantime, I hope you’ll join us on Thursday April 19th, this is coming up fairly quickly, we’ll actually be able to share the March results in just a few weeks, so please join us on the 19th at 2:00 when we’ll share the results for April.
Mark: All right, and it’s just enough time to let a few questions come in, so we have a couple of questions that did come through and trying to help understand the level of score cards that are available for programs across the country and how markets can be defined, what detail do we have that in terms of the programs in markets?
Bob: So, we take programs all the way down to a six-digit sit level, so that’s about as detailed as you can get in terms of an academic program. On the markets, we are currently tracking about 100 US cities and what we do is we find a population wage at the center of each of those cities and we draw a 30-mile radius around to define a market. If somebody wanted us to, we’d be happy to add markets to that, it’s not a problem. We can take geography all the way down to a census track level, so whatever level of detail is appropriate for you, we’re happy to help out.
Mark: Perfect, there’s a variety of data sets on these score cards, but there’s a question that did come through in terms of how often or frequently the date is updated and what was the trend or the time frame of the current score card that was shared?
Bob: Yeah, so the data sets update as they’re available. The federal data sets, as you might imagine only update once a year, IPED and DLS, so we update those a month or two after the federal government issues them, typically around the middle of the year for IPED and towards the end of the year for DLS. Frankly, all of that is getting much slower with the new administration, so the timing on that is always a bit of a guess. But, once a year for those. For inquiries and job postings we update once a quarter, we get that data once a month, and we aggregate it and update our systems once a quarter. Most of the data you saw today was trailing twelve months, so that’s what the federal data would be for the year ending and once that data was received, but everything else is a trailing 12 months of say, inquiries for job postings.
Mark: Thanks for that Bob. Someone asked the question, what is CAGR?
Bob: Compound Annual Growth Rate. So, think of that as the annual rate of growth for a program. We try to avoid all those acronyms in the presentation, but some slip in.
Mark: I think that’s about all the questions that we have for this afternoon.
Bob: Thank you all very much, please feel free to get in touch if you have any further questions or we can help you out in any way. I hope you’ll join us again on April 19th and we’ll share the results from March.