A recent article revealed that the University of Phoenix was the top spender on Google AdWords over the last quarter, spending nearly $200,000 a day. With five billion daily ad impressions on Google worldwide, it’s no surprise that the university and other top players are investing large sums of money to advertise on this growing network. Advertising through Google AdWords allows businesses to reach a targeted audience at the time they are seeking information, to generate quality inquiries at an effective ROI.
Almost a year ago, we published some of our paid search predictions for 2012, which included the prediction that schools would be increasing their paid search budgets in 2012 due to concerns surrounding compliance with affiliate inquiry generation and the need for more transparency. We have definitely seen that happen over the past few months across multiple paid search clients, and expect that trend to continue into 2013.
Our recent Benchmarking Report further supports this trend of increased investments in digital marketing, with paid search being one of those core channels. We found that just 44% of our clients’ inquiries were generated by third party affiliates, which was down 33% from last year. The recent concerns over inquiry quality, regulatory compliance, and increasing costs per enrollment, have led more and more clients to cut spending on third-party inquiry sources and instead shift that budget to channels like pay-per-click (PPC).
Transparency, compliance, and quality issues aside, it seems that there is one powerful reason why schools are spending more money in PPC advertising: it works!
We have seen the investment in PPC pay off firsthand for some of our own clients. Earlier this year, we examined how one particular client was gradually increasing PPC spend, and grew their inquiry volume as a result. Months later, those inquiries are continuing to convert to starts, at comparable start rates, which keeps their total cost-per-start within goal. This client plans to continue to increase spend throughout the fourth quarter and into next year.
Similarly, another core client has also been gradually shifting more budget to PPC throughout recent months in efforts to improve the quality of their inquiry flow, which should in turn improve their cost-per-start. PPC spending for this client in Q3 2012 has grown 12% from Q3 2011. During 2013 budget planning meetings, this client conveyed that they would like to continue to shift more budget to PPC wherever possible. They understand that shifting this budget out of affiliate networks will cut down on the quantity of inquiries generated, but are hopeful that the improvement in quality will ensure their enrollment goals are still met, at more efficient costs.
With players like University of Phoenix dominating the market, schools will be forced to continue to increase keyword bids and spending if they want to attempt to compete in this game. Those who do invest in PPC should continue to see the payoff in quality inquiry volume that converts very well to enrollments and starts.