Hunting for leads
For-profit schools find students like Jaqueta through a process called “lead generation.” Using relatively unknown marketing firms, they tap data culled from the digital footprints left behind by the use of smartphones and web browsers. Lead generators use algorithms that can sift through hundreds of data points to identify prospects. Search engine queries, browser histories, email metadata, Facebook posts and GPS records of your movements all contribute to powerful algorithms. Having collected a consumer’s online history, they match up demographic records, credit scores and other details that can be purchased from third-party sources to estimate both the likelihood that a person will apply and as his or her lifetime customer value. Their algorithms can incorporate as many as 70 different user characteristics. They can analyze a person’s viability as an applicant in seconds and sell it to the highest bidder instantaneously.
Since each new enrollment can bring tens of thousands of dollars in revenue, schools are aggressive in their use of lead generation services. With the decline of subprime mortgage lending, private for-profit schools are now the largest source of revenue for the lead generation industry.
“The whole process, once the consumer clicks on the button to submit their application,” says Mitchelson, “will be decisioned anywhere from immediately to five minutes depending upon how efficiently it is designed.”
Mitchelson ceased to sell “edu” leads several years ago, when it became too expensive to fight off people intent on hijacking the system in order to commit fraud. But he said that for a time, he could sell his leads for between $10 and $40 each to as many as four or five schools at a time.
Everest’s corporate parent, Corinthian Colleges, Inc., spent almost $400 million on marketing and admissions in 2013 — about $3,700 per new admit. Education Management, the parent of the Art Institutes, spent $641 million on marketing and admissions during fiscal year 2012, or about $5,620 per new student.