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
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For more information please contact Bob Atkins.
Email: bob.atkins@grayassociates.com
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

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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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Who Is Gray?
GrayData
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IPEDS
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Industry Inquiries
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Job Postings
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Students Programs StrategyLocations
 Demographic
priorities
 Geo-priorities
 Market share
 City selection
 Location selection
 Relocation analysis
 Consolidation
 Program ideation and
selection
 Feasibility studies
 R&D
 Market reports
 Business strategy and
implementation
 Acquisition analysis
 Pricing
 Outcome improvement
Advanced Analytics
Predictive Models
Geo-Analytics
Clients: Education Institutions and Investors
Mission
Help clients do well by doing good

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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

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Agenda
1. Introduction
7. Summary

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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

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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%

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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

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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
2014 2013
Note: Inquiry price is the average price for pay-per-lead inquiries.

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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

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Agenda
1. Introduction
7. Summary

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-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
Inquiries
Inquiries for On-Line Programs
2013
2014
Inquiries for On-Line Programs
Education Industry Inquiries: YOY Percent ChangeInquiries 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

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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
2013 2014
Immature Months1

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Agenda
1. Introduction
7. Summary

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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
2013 2014
-25%
YoY

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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
2013 2014
Immature Months1

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Agenda
1. Introduction
7. Summary

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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

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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

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Agenda
1. Introduction
7. Summary

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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

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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.

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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
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.

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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
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.

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Agenda
1. Introduction
7. Summary

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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.

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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

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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

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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

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Questions and Contacts
Please feel free to contact:
Bob Atkins
CEO
Gray Associates, Inc.
Bob.Atkins@GrayAssociates.com
617-401-7662
Today’s Presenter: Steve Probst, Partner at Gray Associates

2014 October GrayReports - Student Demand Trends

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2014 October GrayReports - Student Demand Trends