As a former assistant dean of admissions at the Kline School of Law, Drexel University, my world revolved around calculating NTR (net tuition revenue), FTE (full time enrollment) and discount rates for over 20 years. Daily, I interfaced with acronyms to manage my business portfolio and my students.
In my current role as a senior consultant at Converge, my paradigm has shifted to deciphering the true meaning of ROI, CPCs and CTRs in digital campaigns. Still a lot of acronyms, and much like my admissions days, I’m helping our client partners use data to measure the effectiveness of their digital marketing and enrollment efforts.
As a part of my on-boarding process, I’ve spent a lot of quality time with our team learning the ins and outs of digital advertising. Along the way, I’ve asked tons of questions, and taken lots of notes, in order to help colleges and universities tie all of this together. Here are FAQs addressed by one of our digital account managers, John Staak, that I know other enrollment and admissions folks will find extremely helpful.
Q1. What do the terms impressions, CPCs, CPLs and conversions mean in layman’s terms?
- Impression – Any time an ad appears to an end user
- CPC – Cost per Click (Total Ad Spend / Total Clicks)
- CPL – Cost per Lead (Total Ad Spend / Total Leads)
- Conversion – Typically this is a form submission on a landing page, so the term ‘conversion’ is used interchangeably with ‘lead’ in the context of digital advertising for higher ed.
Q2. How can colleges and universities determine ROI on their digital campaigns?
Before starting any type of ROI calculation, it is important to understand two limitations.
- There will always be a portion of ROI that is impossible to track and attribute to digital advertising. For example, let’s say I see ads for a particular law program on my Facebook feed that captures my interest. I decide to click on an ad to explore a little further – but I do not fill out the RFI (Request for Information) form. Weeks later, I am reminded of the program after seeing a remarketing ad while browsing the web. I figure, it’s now or never, so I decide to get started on my application. Digital advertising without a doubt played an important role in my application, but since I did not fill out the RFI form on the landing page – there is no way for the advertiser to know this.
- The recruitment cycle may take months – even years. Let’s say that we ran digital ad campaigns from January to June 2017 in order to increase applications for the August 2017 start date of a law program. With such little time allowed for lead nurturing (2-7 months), it is important to understand that it will be common for leads received from January-June to matriculate into applications and enrollments for Fall 2018, 2019, and beyond. Keep in mind that there is short-term and long-term ROI metrics, and that you are never really finished calculating ROI – you should be revisiting this metric year-over-year. It is certainly helpful to understand the direct ROI of digital ad campaigns on the August 2017 start date, but it does not tell the full story of ROI – and that cannot be truly calculated for years down the road.
With these limitations in mind, an ROI calculation is fairly simple:
# of enrolled students from digital ads X Avg. revenue per student (tuition and fees for 3 years) = Total Revenue
Digital Ad Spend + Total Campaign Management Costs + Implementation Costs = Total Cost
(Total Revenue – Total Cost) / Total Cost = ROI
Q3. What are the education industry benchmarks for a good CPC, CPL and conversion rate?
Benchmarks for these channels vary greatly as they are influenced by a number of different factors such as the ad channel, region and audience. ROI depends quite a bit on internal admissions tactics and revenue per student from tuition. However, these are some general benchmarks education marketers would expect to see based on data from law programs we have managed:
Q4. How should these benchmarks inform campaign decisions? What does this information tell marketing and admissions teams?
Keep these benchmarks in mind when reviewing data, and look for opportunities to optimize campaigns if metrics are significantly deviating from the shared benchmarks. At the end of the day, ROI is the only metric that truly matters – all of the other metrics involved in digital advertising like cost-per-click, cost-per-lead and conversion rates are microlevel engagement stats. Breakeven cost-per-lead (CPL) should be the main benchmark used to determine whether or not campaigns are paused or budget reallocated. This metric will give you a benchmark to truly measure profitability.
Q5. When we give adspend recommendations to our clients, we break it down by low, medium and high. What does this mean, how can we measure it and does it factor into the ROI calculation?
Low, medium and high ad spend will mean different things in different markets. A $5,000 per month budget will put you in pretty good in shape in Topeka (and might even be too much budget to justify), but that would be an entirely different story in Los Angeles. There is certainly a point of diminishing returns on spend when it comes to lead generation from digital ads, but there is not necessarily a perfectly scientific way to find that point, especially considering the countless variables that affect monthly lead counts (seasonality and recruitment cycles, changes in competitive landscape, audience saturation, optimizations, etc.).
The best way to find the optimal level of spend for your program? Trial and error. Start with a reasonably sized monthly budget given your market, and slowly increase ad spend until you see drastic increases in cost-per-lead. Keep in mind that spend should always be tied to an enrollment objective, and that we recommend starting with a goal for applications and working backwards to determine your budget.
CALCULATING ROI FOR YOUR DIGITAL CAMPAIGNS
A huge shoutout to John and the digital advertising team for these insights into FAQs for digital advertising in higher education. Want more information on determining the ROI of your campaigns? Download our ebook on the real ROI of digital advertising for #highered.
Have more questions about digital advertising? Shoot me a note. I’d be happy to connect and provide more information from our team.