National Press Foundation SeminarNov 1, 2006 New York

Michael P. LambertExecutive DirectorDistance Education Training Council

Mike@detc.org

The Business of Higher Education:

Student enrollments grew from 483,000 in 2002 to

1.5 million in 2006

In 2004 alone, student growth was 34%

Average annual growth will be over 20% for each

year of this decade

The Distance Learning

(the above data does not include DETC data)

Total online school revenues grew 36% in 2005, to

over $7 Billion U.S.

By contrast, the online music market was only $1

billion in 2005

In 2001, online students were just 2% of the total

U.S. college students. Today, they are over 7%

cont.

cont.

Due to aggressive internet marketing, and the

availability of Title IV student aid since July 1,

2006, for-profit online schools will exceed over

50% growth rate in 2006.

Availability of Federal Student Loans and

Grants to online schools will likely result in

millions of new student enrollments in the

coming years

Growth at non-profit online

colleges is strong as well: 25%

growth in 2004 and 23% in 2005

2 out of 3 Universities now offer

online programs

As growth in classroom

colleges flattens, growth in online

learning will soar

cont

Total Institutions 100 in 7 countries

Total New Enrollments, 2005 850,000

Total Active Students, 2005 2,250,000

Avg. No. of Programs Offered 20 for Career; 12 for Degree

Avg. No. of Employees 37 Career; 70 Degree

Profile of Students in DETC

Career Courses Degree Programs

Av. Age 34 37

Employed: 81% 94%

High School Diploma 85% 99%

Male 47% 55%

Fees Paid by Employer 40% 38%

Top Academic Degree Programs in DETC

1. Bachelors in Business

2. Masters in Business

3. Bachelors in Criminal Justice

4. Masters in Information Systems

5. Health Care Administration

Top Career (non-degree)Programs in DETC1. Medical Transcription

2. High School Diploma

3. Child Care

4. Paralegal

5. Medical Billing and Coding

6. Bookkeeping

7. Personal Computer

8. Nutrition

Technological Features Used in DETC Schools

Offer Online Programs 70%

“Free” Phone for Students 96%

Enroll Online 95%

Uses Email for Services 98%

Use Phone to Contact Students 96%

Customer Satisfaction in DETC

RESPONDED “YES”

1. Did you achieve the goals you had? 95%

2. Would you recommend the school to a friend? 96%

3. Were you satisfied with your studies 96%

Responses from random surveys of students from EVERY DETC institution

Course and Program Completion Rates

Av. Degree Graduation Rate 56%

Av. Career Course Completion 60%

• Moving content and courses online

• Moving tests/exams online

• Making content more interactive and engaging

–Streaming video and audio, simulations, interactive assessments

• Implementing communication tools

–Messaging and online meetings

• “Staying the course” with print/correspondence models

In Curricula Area, DETC Institutions Plan On--

Do you currently use or plan to purchase a commercial course/learning management system to deliver online courses to students?

Yes, 44%

No, 56%

DETC School Survey

•Positioning and differentiation

–From a niche market to a mass-market

•Marketing expenditures escalating

–20-30% annual increases among for-profit institutions

–+1-2 percentage points over revenue

•Supply and demand and competition from “traditional” institutions is driving up costs

•Media mix is shifting toward the Internet

•New channels and strategies are emerging

Marketing Shifts

Of the following marketing channels, which do you expect to focus more (i.e., budget, time) on in the next 2 years?

14%

16%

24%

25%

37%

37%

45%

51%

67%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Broadcast

Internet: Banner advertisements

Internet: Directory placement/listings

Internet: Direct e-mail marketing

Direct mail

Events

Employers, military, government

Print media

Internet: Search engines

DETC School Survey

Select 3 of the following elements of your institution's offering that you most emphasize in marketing to potential students

6%

12%

17%

33%

33%

37%

52%

54%

79%

0% 20% 40% 60% 80% 100%

Other

Technological innovation

Time to completion

Price/cost

Quality of learning outcomes

Customer/student service

Quality of faculty

Quality of content

Convenience and f lexibility over on-campus

DETC School Survey

•“Real school. Real degree.”

•Penn State Online (PSU World Campus)

•“E-learning with a tradition of excellence”

•Virginia Tech

•“Get your degree at warp speed – from a name you trust.”

•Kaplan University

•“Looking for a top-ranked degree that is also convenient? Earn your master’s online from one of America’s Best Colleges.”

•Drexel University

•“The nation’s leading online university”

•University of Phoenix Online

•“Accredited degrees – online, with the flexibility to fit your busy lifestyle”

•The University Alliance (Regis, St. Leo, Tulane, etc.)

Marketing Taglines

• Online or on campus, nationwide and around the world”

• Blended models and national/international network

• “The country’s only AAPT-accredited online program”

• Programmatic accreditation and niche uniqueness

• “Online education from your local university”

• Brand/locality

• “A quality online degree at a fraction of the cost”

• Price competition

• “The online degree rated #1 by manufacturing employers”

• Prospect of quality ratings and labor market outcomes

Potential, Future Marketing Taglines

Percentage of Students Supported/Reimbursed by Employers (in whole or in part)

22%

14%

12%

52%

0% 10% 20% 30% 40% 50% 60%

51%-100%

26%-50%

11%-25%

<10%

Extrapolated Mean = 20-25%

DETC School Survey

Future Programs in DETC (3-5 Years)

Advanced degrees and continuing education

Health sciences

Professional Doctorates, e.g., Doctor of Business Administration

Homeland security

Graduate degrees in education administration

Para-professional degrees, e.g., Physicians Assistant

Trends in the U.S. Market

More discriminating and selective consumers

Continued private investment

Blurring of traditional “boundaries” and segments:

– For-profit/non-profit

– Online/on-campus

Growing importance of employer relationships

Evolving and increasingly favorable regulatory environment

Productivity and service enhancements through technology

Content is becoming more flexible, dynamic, and interactive

Beginnings of stronger international push among U.S. institutions

Future Challenges

Competition and differentiation– Escalating competition in a growing market– Traditional institutions waking up to the opportunity– Increasing marketing costs, positioning in a noisy market

Staying technologically current Finding and retaining quality faculty Transfer of academic credits Regulatory compliance and quality assurance Diploma mills

DETC Internet Use

In which ways do students use the Internet to interact with your institution?

68%

74%

78%

86%

96%

0% 20% 40% 60% 80% 100%

Interacting with other students

Taking tests/exams

Accessing course materials

Accessing student services (e.g.,library, tuition payment, etc.)

Interacting with faculty

Note: “Check all that apply” – totals do not add to 100%

MEGA Trends for USA Distance Providers

More Competitors for the Same Student

Everything will be Online and Instant

Homogenous Learning Products and Services

More International Partnerships

Price is the Key Marketing Edge for DETC

Productivity and service enhancements through technology

Content is becoming more flexible, dynamic, and interactive

Beginnings of stronger international push among U.S. institutions

What Works In……MANAGEMENTand ADMINISTRATION

Annual Strategic Planning

Performance-Based Staff Accountability

Competitive Environment Awareness

Virtual Staff and Faculty Meetings

Comprehensive Outcomes Assessment System

What Works In……PROGRAMDEVELOPMENT

Custom (Docutech) Publishing

Ad Hoc Program Development Teams

Third Party Text Storage and Shipping

Partnerships With Reputable Online Institutions

Customizing LMS Templates

What Works In……Curriculum Strategies

Spin-Off Programs/Multiple Options for Majors

Combination Degree Programs: Health Care and Law

Degree Completion Programs (2+2 BS programs)

Pre-Matriculation Assessment for Aptitude for Distance Learning

Small (Virtual) Group Projects

What Works In……MARKETING

Bidding for Top Position on Internet Search Engines

Branding to “Stand Apart” from the crowd

Telephone Call after Literature is Received

Referrals from Current Students

Easy to Navigate Websites with Easy to Enroll Feature

What Works In……TURNING PROSPECTS INTO STUDENTS

Convenience of the Method

Accreditation and Acceptance by Institutions

Acceptance of the Degree by Employers

Price versus PERCEIVED Value of the Degree

Program Matches Career and Life Aspirations

What DOES NOT Work Today

Print-based Advertising

Mailed-In Enrollments

Voluminous, Printed Catalogs

Scripted, Motivational Email Messages

Slow Evaluation of Student Assignments

Lack of 24x7 Student Services Via Email

DETC RESOURCES AND MEETINGS

81st DETC Annual Conference, April 15-17 2007, Tucson, AZ

DETC Course Development Handbook, 2004 edition

DETC Accreditation Handbook, 2006 edition (online)

Website: www.detc.org