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August 16, 2012

Marketing Meets Higher Ed

The Wall Street Journal reports that a number of universities, wary of the public perception that the degrees they offer may not be worth the student loan burden, have taken to hiring highly-paid “CMOs” (Chief Marketing Officers) to build their brands and coordinate their admissions offices’ sales pitch. Although many in academia disdain corporate marketing methods, the practice is becoming increasingly common:

Some say the arrival of the CMO is the biggest shift in higher-education administration in the past decade—but even more so as schools blur the lines between academia and the corporate world by tapping marketing pros from Fortune 500 firms or hospital systems. . . .

Teri Lucie Thompson joined Purdue University after years as a marketing executive at State Farm Insurance and Safeco Insurance. . . . She runs her department like a traditional marketing shop, with a team of seven directly reporting to her, many of whom have corporate backgrounds. One previously worked at Limited Brands and spearheaded the redesign of Ann Taylor’s Loft brand. “She came with a very different perspective so she asked questions that people embedded in higher education might not actually ask,” Ms. Thompson says. Interacting with students on a regular basis, she gathers consumer insights as a packaged-goods company might, and then models solutions.

This may be a smart move for colleges in the short term, but it would be better to see schools reduce tuition costs rather than add more highly paid experts to their ever-expanding administrations. As Peter Thiel points out, “If you need large marketing budgets, it suggests that something has gone wrong with the substance of the product.”

Indeed, if these CMOs are successful in their mission (and if federal subsidies continue), the student loan bubble is likely to get worse. In many ways, this development is an example of what’s wrong with higher ed today.

Posted in Blue Social Model, Education, Quick Takes
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  • cacrucil

    Well said Professor! As far as I’m concerned, you can’t mention this problem enough. This is a big issue.

    In the early 80s, one could get a law degree at the University of Colorado for about $1,000. No, that isn’t a typo. Adjusted for inflation, that would be a little less than $3,000. Needless to say, the actual tuition today is much higher. The educational establishment sees the kids today as easy marks to exploited, not as assets that will guide America in the future. What angers me the most is that the boomers who constantly rip on today’s twentysometings got degrees that were so cheap that they were practically free.

    Professor, just out of curiosity, how much was Yale’s tuition when you were a student there. I’m sure the number is so low that most via meadia readers – especially the younger ones – will be shocked.

  • Eurydice

    I had a similar reaction when I first read this story but then I started thinking about the other ways that people with a marketing background would be useful. They’d be able to find out what the students and prospective employers need from the institution and they might be better able to help students market themselves to the outside world.

  • http://senatorjohnblutarsky.blogspot.com/ Senator Blutarsky

    It is perhaps a telling detail that Purdue has hired a marketing executive out of the insurance industry; financial products, particularly retail products such as auto insurance, are highly commoditized, with little to differentiate the offerings of a State farm from a GEICO.

    In this context, it perhaps represents an acknowledgement that the incremental value offered by a large traditional university is not commensurate with the incremental costs relative to other existing (and emerging) alternatives.

  • Mike

    Having professional marketing aboard might actually help the Universities. They do market research, figure out problems, and feed it back into the organization for future action. Sure, in the short term they will try to minimize the weaknesses, but in the long term, most will offer creative solutions to become more competitive. Good marketing is about listening to customers.

  • Richard F. Miller

    One aspect of the crisis facing American universities is something shared across the board with other institutions, and might be summarized in a question: For whom does the college (municipality/federal agency/church, etc.) exist?

    The dynamic of late twentieth century institutionalization is that these entities serve internal constituencies and not the “customer.” Based on their current configurations, higher ed, (which today serves tenured faculty, grant getters, and an administrative hierarchy unrelated to either knowledge production or dissemination) has no choice but to opt for gimmicks, which is precisely what CMOs represent.

    In the stock brokerage business, it’s called putting lipstick on the pig. It’s still a pig, and lipstick cannot defeat market forces. The ultimate end of this nonsense will be the discounting of “college” education to near zero, as employers will continue the trend of hiring smarts over degrees, and smarts will seek their educations on a piecemeal, ad hoc basis–a few courses here, an online program there, actual hands-on experience somewhere else.

    That’s the end of the story.

  • Jim.

    @Mike-

    Why are the marketers talking to the students and not the businesses that might want to hire graduates, then?

    If these market researchers are going to do any good at all, they should probably be kept as far as possible from students.

  • Mrs. Davis

    The student is then purchase decision maker. By talking to students they will soon learn that what students now want is a job at the end of the party. Then they’ll talk to the employers.

  • thibaud

    “If you need large marketing budgets, it suggests that something has gone wrong with the substance of the product.”

    [What the heck]? Does this libbetrarian loon really think Apple doesn’t have a +$1billion marketing budget?

    OTOH, no amount of marketing spend could save this “billionaire barbecue tinder” product idea (read the comments for some good laffs):

    http://wonkette.com/451352/libertarian-billionaire-seeks-to-create-island-nation-for-libertarian-billionaires

  • thibaud

    Paul Ryan would be right at home on Thiel’s Fantasy Island, “a kind of floating petri dish for implementing policies that libertarians, stymied by indifference at the voting booths, have been unable to advance: no welfare, looser building codes, no minimum wage, and few restrictions on weapons.”

  • thibaud

    If any university could benefit from greater marketing expertise, it would be Purdue, whose brand awareness and level of consideration for in-market purchasers both lag far behind the actual quality of the product offering.

    In non-marketing speak, Purdue rocks, but fewer and fewer people outside of the industrial midwest have even heard about Purdue, let alone put it on their shortlist.

    I could see Carnegie Mellon hiring a CMO as well. Ditto for Case Western and the University of Pittsburgh, maybe U Rochester as well – esp for their biology and neuroscience undergraduate programs.

    All of these colleges are as good or better than USC, whose superior marketing has effectively re-positioned the product formerly known as the “University of Spoiled Children” as a desirable and prestigious supposedly elite school. Hey, if Hyundai can do it, why not USC?

  • Sam L.

    Yes, there’s nothing like adding more administration to improve the product!

  • FC

    If Via Meadia is going to be an open forum for anyone who happens by, why not just give “thibaud” a byline?

  • http://www.11changes.com Helveticus

    I was the Director of Marketing at a very highly respected college for 7 years.

    Marketing in such a school is not only about getting more “bums on seats.” (Or, to be more exact, as the number of incoming freshmen was not meant to grow, instead of a greater quantity of students, we were after better-quality students. Can that be a bad thing?)

    So marketing at our college encompassed many things, but primarily burnishing the institution’s image, or “brand,” to make sure the school was attractive to companies who would see it as a source of talent and therefore send recruiters there to hire graduates. This is a big communication/positioning challenge, as it means ensuring that these companies know about the quality of your programs and students, and that they have an idea how good you are compared to other schools they might go to instead. And as alluded to in another comment above, the more successful you are at this, the more successful you will be in attracting students. It’s a virtuous circle.

    Communicating with parents, alumni and the community is also an important aspect of the marketing job. I’m surprised that anyone would find it controversial that a university might want to do this. Marketing is something that every organization – profit or non-profit, big or small – needs, because if you aren’t actively defining yourself in the eyes of your customers and stakeholders, then they will define you themselves. And they may form an incorrect, incomplete, or disadvantageous idea of who you are and what you do. Marketing is about explaining your mission and how you accomplish it to people who may then decide they like what they hear and want to be part of it.

  • thibaud

    Helveticus – bingo. Especially pertinent is this point: “Communicating with parents, alumni and the community is also an important aspect of the marketing job”

    From an ROI standpoint, adding a CMO is brilliant. Elevating the school’s profile with alumni, employers and the press will cause wealthier alumni to divert some of their charitable donation money to their alma mater.

    A greater endowment enables greater investments in research facilities and increased scholarship funds available to top students who, in Purdue’s case, can be tempted to choose Purdue over Michigan or Georgia Tech or other outstanding engineering programs.