MARKETING: The Big Questions Answered

MARKETING: The Big Questions Answered

How to increase the effectiveness of your marketing spending
 

THREE QUESTIONS HAVE BEEN MAKING the rounds at the marketing conferences this year, as more and more schools are trying to get a better handle on their marketing expenditures:

1. How much does marketing cost?

2. Is marketing worth the money?

3. How can we increase the effectiveness of our marketing?

Before exploring the last two questions, it helps to poke at some of the issues that lurk behind the first. For example, how much does it cost to market, and how much does it cost to recruit a student?

Of course, there is a related question: How much does it cost to raise a dollar? Unfortunately, there is no current data that might help answer that question, so we need to let that one pass for now.

Right now, this can only be explained in the most general way. Last year, CASE and Lipman Hearne released a study of marketing expenditures at 157 institutions ranging from research institutions to small liberal arts colleges. "Key Insights April 2007: A Report on Marketing Spending at Colleges and Universities" (www.lipmanhearne.com/resources) offers a good first look, but care must be taken not to over-generalize. The small sample does not adequately represent the 3,600 colleges and universities in America either as a whole or by institutional type.

With this caveat in mind, let's examine some of the findings.

Respondents were asked, "What is the total marketing/communications budget for your campus, not including staff salaries and benefits?" Among the 77 public schools responding, just over one-third have a budget of more than $400,000; just over one-half of the 76 private schools responding have a budget that high. Forty-six percent of research doctoral institutions, 41 percent of liberal arts institutions, and 35 percent of master's institutions have budgets of at least that much.

The report reveals that spending within college and university marketing/communication programs increased 50 percent since 2000.

Rae Goldsmith, vice president for communications and marketing at CASE, says, "What this survey points out is that the more an institution invests in strategic marketing and communications, the more it will gain in terms of achieving student recruitment and other goals."

Spending within college and university marketing/communication programs increased by 50 percent since 2000.

To get some insight into how much it costs to recruit a student, we can turn to a study done by Noel-Levitz in 2007, "Cost of Recruiting Report: Summary of Findings for Two-Year and Four-Year Institutions" (http://tinyurl.com/3z94dh). This study, like the study of marketing costs, rests on a relatively small sample of 171 institutions, and the same concerns about over-interpreting this data apply once again. Still, its findings are interesting. The average four-year private institution spent about $1,941 to recruit a student, and the average four-year public institution spent about 20 percent of that amount ($398). Two-year publics only spent about $121 per student.

The 2007 median cost to recruit a student showed a decrease for both four-year public and private institutions and a slight increase for two-year institutions compared with 2005 reported costs.

Two important reminders are in order before we leave our discussion of costs. First, it can be difficult to separate a "marketing" dollar from a "recruiting" dollar. It is likely that some of these expenditures were counted twice, once in the study by CASE and again in the study by Noel-Levitz.

Second, if you are going to compare your costs with the costs presented here, take the time to make sure you are including the same cost variables. In many respects it might be more helpful to develop a set of consistent cost variables for your institution and then to focus on year-over-year costs rather than comparing your costs with those of other institutions.

Now that we know, at least generally, how much it costs to market and how much it costs to recruit a student, let's consider if that spending is worth it. To determine that, we need to broaden the topic of effectiveness.

Say that last year you purchased 50,000 fairly basic marketing pieces at a cost of $0.77 each, for a total cost of $38,500. This year, another vendor has proposed a piece with a great concept that will cost $1.05 each, for a total of $52,500. You are wary of spending the extra $14,000, so you opt to reprint the same piece from last year.

Did you make a good decision? Let's take our scenario another step to find that out.

Last year's 50,000 search pieces generated a response rate of 6 percent. These 3,000 inquiries therefore cost you $12.83 each. However, only 240 of these 3,000 inquiries (8 percent) matriculated. Your cost per matriculant was $160.

Let's go back to the $1.05 search piece. Because the concept tested well with prospective students, it is not surprising that it proved to be more effective. Instead of a 6 percent response, it generated a 9 percent response. This lowered the cost per inquiry to $11.66. Let's assume that this second piece also had an 8 percent inquiry to matriculant conversion rate. However, because the more expensive piece generated more inquiries, you will also have more matriculants. The final tally is 562 matriculants at a cost of $93 each. That's more than twice the number of matriculants as the less expensive piece at almost half the cost per matriculant.

As we have just seen, colleges and universities should place a much greater emphasis on effectiveness and not be so concerned about initial cost. Of course, the big question is "How can I predict effectiveness?" In most cases, you can't. At the same time, there are some marketing best practices that will likely increase the effectiveness of your marketing efforts. Here are several:

Hire the best people possible. While they may be more expensive up front, their experience will save you time and money in the long run.

Focus on a handful of your most important target audiences and conduct the research to understand audience values and lifestyles, motivations, reservations, prior knowledge, competitor set, media habits, and channel preferences.

Reorient all your messages so they are more audience-centric and less sender-centric.

Develop a communication map for all key audiences. Look at message flow, content, and channel synergies.

Don't automatically look at traditional advertising. Instead, use the broadest possible definition of media and try to achieve as much integration and synergy among and between channels as possible.

Differentiate your school and your messages from your most consistent competitors in ways that matter to your target audiences. Remember, relevance drives response.

Develop a marketing/communications plan that combines your brand strategy as well as your recruiting and advancement communication strategies. This will increase efficiencies and squeeze out waste.

Precede all direct marketing strategies with an effective brand strategy that focuses on the value you offer to prospective students, donors, and others.

Segment. Segment. Segment.

Manage the relationship between your print communication and your digital communication. Your website is or will soon become your marketing center of gravity. The purpose of print, e-mail, and other channels is to drive traffic to the web.

Your website is or will soon become your marketing center of gravity.

Position your web presence as a relationship building channel and not simply a distribution channel.

Complete a creative brief for each audience.

Do not let committees approve creative. By the time a committee approves creative, it is likely no longer creative.

Become comfortable with uncomfortable creative. The more edgy your materials, the more likely they will be noticed. While predictable creative is safe, the fact that it almost never gets noticed means that it is also the most expensive.

Use the 70/20/10 rule: Spend 70 percent of your marketing dollars on media with a demonstrated track record. Reserve 20 percent of your marketing dollars for new media that you believe will work. Finally, spend 10 percent of your marketing dollars on emerging media.

Remember the law of replacement. If you add "X" to the mix be prepared to discontinue "Y." Often marketing plans resemble archeological digs. They contain a shard of every activity ever undertaken as new strategies are added to old. Seldom is anything taken away or dropped.

Test everything. We know that hand-addressed envelopes outpull labeled envelopes and that labeled envelopes outpull window envelopes. How do we know? Because we tested.

Become media agnostic. Do not fall in love with any channel or activity. Only fall in love with results.

So what is the big lesson here? While cost matters, effectiveness matters more.

Robert Sevier is a senior VP of Stamats Communications (www.stamats.com). He can be reached at bob.sevier@stamats.com.


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