(Photo: Christina Rutz)
You have probably wondered how a no-name private b-school caught hold of your mobile number each time you received a telemarketing call or an SMS from such a school asking whether you would like to consider appearing for its admission process. More often than not, the telecaller knows the roll number of the last management entrance test you appeared for, leading you to suspect whether testing agencies are selling your contact data in the open market without your permission.
Until the late nineties, advertisement of education in India was limited to black and white admission notifications in the inside pages of newspapers. One couldn’t really call it ‘advertising’, because the notifications only prescribed the procedural details of applying to that college while assuming that the reader’s interest/desire for joining that college was a given.
But in the last one decade, the education sector has become one of the biggest advertisers across all mediums, thanks to the boom period that started in the late nineties and continues until the present day and has germinated nearly 3,000 b-schools and private universities offering MBA and PGDM degrees across the country, reacting to a supposedly rising demand for management talent (a belief that has been jolted after the economic recession of 200
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While a select few cash-rich b-schools have heavily advertised in the print medium, for most new private b-schools advertising in well-circulated newspapers is beyond budgetary reach.
One thing is common to all print advertisements of business schools — they all seek to position their offerings as high quality products available to an exclusive set of people (whether or not that is true). The advertisements while singing paeans about the faculty, global linkages and campus infrastructure, also emphasize that there is an admission process that one must clear. Whether or not the admission process is actually rigorous, it is important for an educational product to sell an image of exclusivity and quality, the value of which is supposed to last a lifetime (Paypal Founder Peter Thiel has argued that good education being exclusive reflects a flawed society. But for the sake of the argument I am going to make in this article, we shall string along with the accepted notion that education needs to be exclusive in order to be considered ‘good’). Whereas ‘training institutes’, which serve a short-term need of acquiring commoditized skills or knowledge, need not be seen as exclusive.
Quality education therefore, has to continuously carry the perception tag of a product that is desired more by its customers than it desires its customers.
But the vast majority of new b-schools that started during the post-globalization boom did not have deep enough pockets to afford skyrocketing newspaper or television advertisement costs and therefore had to find cheaper ways to blow their trumpet. The Internet — then the new kid in town and offering measurable return on investment as a value proposition became the natural choice.
It is in this context, that the idea of b-schools using telemarketers to fill up their seats piques my interest. B-schools have been using the performance-based ‘Pay Per Lead’ model of advertising popularized by the Internet since about five years now.
Briefly, this is how it works behind the scenes. Various education websites on the Internet (including those funded by venture capitalists of the high order of Sequoia Capital and Kleiner Perkins) or so-called educational consultants collect contact data of prospective MBA applicants through a multitude of means that includes running Google search-based advertisements which lure applicants to share their phone numbers and email addresses with the websites without providing the explicit choice of opting-out of email, SMS and telecalling promotions; or buying the personal data of test-takers allegedly of popular MBA entrance exams such as the Common Admissions Test (CAT), Management Aptitude Test (MAT) or FMS Delhi University, available through underground channels. This data is then sold to business schools or educational brokers (who like to call themselves ‘education consultants’) as ‘leads’, which is used by the schools for telecalling, SMS or email marketing with an aim to convert the lead into an application or an actual student (depending on how flexible the admissions process is). Adhering to regulatory frameworks such as the National Do-Not-Call Registry, the government’s anti-spam solution, is usually not a priority.
Those who claim to sell the data of CAT or MAT test-takers to these websites or directly to business schools refuse to reveal the source of the leak (the owners of these exams — the India Institutes of Management and the All India Management Association — deny that the data is up for sale either officially or unofficially). But industry insiders roughly trace the leak to flexible and entrepreneurial junior staff in organizations directly or indirectly involved with the execution of these tests.
When freshly available, alleged CAT or MAT data is sold in the market for a price of roughly between Rs 35-Rs 50 per item. With each new customer, the data begins to progressively grow less exclusive and therefore ‘stale’. The price eventually plummets to the range of 10 paisa per item after the contact data set becomes all too pervasive and old.
Ingenious operators however have discovered ways of pimping up the price of this old and low-value data. Some websites, educational consultants and Internet marketing agencies, for example, buy exam data at 10 paisa per applicant and sell it to b-schools at Rs 50 to Rs 100 per applicant after making a brief call to the applicant and verifying whether he or she is still looking for admission to a b-school. Some operators may also make tele-calls on the behalf of a particular school and if the student expresses interest to know more about that particular b-school, sell his contact information to the school at high premium prices in the range of Rs 200 per item. That is perhaps the easiest way of converting 10 paise to Rs 200 that the world has ever known.
The tele-calls or SMSs you may receive regularly would have been the end result of one or more of the above business practices at work. You are, for the lack of a better word, but a ‘lead’ to the aforementioned category of business schools, consultants and websites.
To be fair, not all applicants are averse to being sold education via telemarketing calls. In a February 2011 online poll on PaGaLGuY asking “What is your reaction when a b-school calls you or SMSes you about admissions?”, 11% of a total respondent size of 1,286 said that they were cool with receiving telemarketing calls from business schools (while a whopping majority of 78% said that they deplored it and another 11% said they were okay with it sometimes). Proponents of education marketed through telecalling say that there is a category of applicants who have no clue about the options that may be available to them and a well-executed tele-call from a business school might indeed serve as a much-needed free counseling session. They however also admit that by largely recruiting badly trained tele-marketing talent who treated selling education over the phone not too differently from selling 3-night holiday packages to Bangkok, b-schools have failed to make efficient use of the leads they buy.
The ‘lead generation’ business in the education sector was on its way to reach its peak between 2009 and 2010. Websites such as minglebox.com, (originally a social network founded with a funding of $7 million from Sequoia Capital), studyplaces.com (originally co-funded by VC Kleiner Perkins and Infoedge, the owners of Naukri.com; now acquired by Educomp Solutions) bharatstudent.com, etc achieved considerable success in convincing India’s educational institutions to fill their seats up by buying leads. Insiders reveal that at least a dozen b-schools have managed to fill up as much as 25-30% of their seats via purchased leads alone in the last four years.
And then began the downfall. Without as much of an extended thought to the long term viability and sustainability of the lead-generation business model, a motley collection of outfits ranging from Internet marketing agencies, franchisees of coaching institutes in small towns to individuals looking to make a fast buck in the perceived ‘education boom’ entered the business of generating and selling leads to business schools. The space has now become overcrowded and b-schools are finding that leads purportedly sold to them as ‘freshly generated’ and exclusive aren’t really that exclusive, because every other operator in the business has access to the same leads. The end result is an inescapable menace of 15-20 tele-marketing calls per day from business schools to MBA aspirants during the admission season that is driving them nuts. Your contact data is out there in the market whether you like it or not, because of factors within your control (registering on websites without reading their privacy agreements) or not (data allegedly leaked from entrance exam databases).
But at the same time, leads are now commodities whose price, whether of new, old, verified or unverified have started falling, making it less profitable for the businessmen selling them. Verified leads that were selling for about Rs 150 a year ago are worth about Rs 90-Rs 100 today. Some have started calling it quits, while others want to continue until they can milk it for that little extra litre. Do not, however, expect the private b-school tele-calling menace to end soon, because many business schools with deep pockets are still able to make tele-calling work for them by supporting the effort with branding via huge print and TV advertising budgets. The idea being that aspirants are more open to taking calls from b-schools whose advertisements they have seen in the mainstream media. Your annoyance with the calls doesn’t matter to them because according to the aforementioned poll on PaGaLGuY, for every 78-odd annoyed people like you, there are 11 who are okay with it and might actually end up in ‘converted leads’ for the business school.
During the business education boom between 1995 and 2010, the number of b-schools in India increased from a couple of hundreds to approximately 3,000. Of the approximately 2,700-odd new business schools, only a handful dozen have been able to emerge as truly good quality educational institutes which are sustainable not only because of the money they make, but also because of the academic talent they have been able to recruit, industry recognition they have been able to garner and the impact their graduates have been able to make. What about the rest? It’s not a pretty picture. According to a Business Standard story of the last month, the second and third rung b-schools of the country are facing a crisis of vacant seats which they have been unable to fill since 2009 and are now involved in last-ditch survival efforts before they close shop. We are arguably witnessing the end of the biggest higher education bubble the country has ever experienced.
I have three observations to make specifically on the subject of how the way business schools have marketed themselves has affected the sector at large.
1. Education is not a commodity product, but has been treated like one.
As I argued in the beginning of this article, it is incumbent on education to be positioned as exclusive, high quality and long-term, failing which it ends up being perceived in the category of professional training, which is a commodity product available to anyone who can pay. The moment a business school makes a telemarketing call to a prospective applicant or admits students through brokers by paying them commission, it loses the exclusivity factor. No matter how sweet-talking the tele-caller, the school subconsciously announces, “There aren’t enough people out there who want to join our institute, hence we are having to chase people like you to consider us.” I doubt if really good quality applicants fall for it. The school ends up filling its seats with low-quality talent which good faculty do not find challenging enough to teach and companies don’t find exciting enough to recruit for good jobs. And there goes the chance to enter that virtuous cycle which builds a long term reputation and sustainability for the b-school.
In the last five years, I have come across numerous b-schools that started out with good intentions and hired good faculty from the Indian Institutes of Management (IIMs) or similar reputed b-schools to lead them. Often, the trophy Dean quit the school within an year, unable to come to terms with the promoter’s pressure of focusing on quantity at the cost of quality.
2. Pay-Per-Lead admissions was the opium whose addiction distracted b-schools from the more important task of building an actual high-quality institution.
(This may sound like a self-serving argument in favour of the company I work for, considering that we have opposed adopting the lead-generation business model which some of the websites mentioned earlier in the article (who may consider us as their competition) have made money using. At the same time, it may offend some of our clients too. But I would like to humbly submit that the following is an independent opinion I hold outside the ambit of the business context I work in.)
There are broadly two types of advertising methods a b-school like entity can employ. It can either spend on branding (through mass media advertisements talking about the good things its b-school offers, or public relations) or it can indulge in direct marketing (Pay-Per-Lead followed by tele-calling, SMS marketing, education fairs, or any other way in which the school tries to directly contact a prospective applicant).
When the admissions director (often a euphemism for ‘marketing manager’) of a new private b-school has to show results to an anxious Dean or Promoter for the money spent on marketing, it is easier for him to show more measurable returns on investment by establishing that he spent Rs 5 lakhs to buy the contact information (leads) of 10,000 MBA aspirants at Rs 50 per lead who they can personally contact, as opposed to the less convincing case that he spent Rs 5 lakhs on branding banner or print advertisements whose number of viewers are difficult to establish and response is not guaranteed (people may view the advertisement, but the b-school cannot control how people respond to it).
At some point of time, several originally well-intentioned b-schools have wrongly concluded that if an advertising method’s performance is easier to measure, it must be the right method for them. They fell into the trap of believing that if admissions could be completed by convincing a few desperate students via tele-calling at the right time and with lower costs, there was no need to waste money on branding. And if you do not have to think about branding, why invest in developing the important organs of a b-school (faculty, intellectual capital, industry linkages, infrastructure) when an opportunity to talk about them as USPs is never going to arise? Instead of developing and flourishing as centers of knowledge and learning, b-schools underwent internal decay. Good people started quitting, promoters went into a cost-cutting spree. We all know how it ends.
3. Pay-Per-Lead marketing of education has all the signs of an ‘underhanded’ business.
Consider this. If an automobile company such as Mercedes Benz invests in an advertising campaign, it would find no shame in revealing the name of the agency it employed, the creative people involved in the effort, and would proudly shout from the rooftops if its advertising campaign won awards at advertising festivals. In advertising as we know it, every part of the process — whether creative or analytical — is celebrated with aplomb.
However, b-schools that have been filling up their seats using the Pay-Per-Lead model are loath to admitting to having used this method. While b-schools may discuss and dissect their marketing methods freely within the closed circle of media sales executives who are considered insiders, a b-school’s Director will never admit in public or to a journalist that it has been tele-calling to conduct admissions. Countless Deans and Directors of private b-schools have lied through their teeth to me by denying having spent money on leads.
Which makes me wonder — what does it say about an advertising/marketing model when clients want to publicly distance themselves from it? What made some of the world’s most well-regarded venture capitalists believe that business models which its customers do not want to be known as having used will actually IPO? (As an aside, one observes that the crop of ‘Social Media Marketing’ agencies suffer from the same conundrum. While a client company may admit spending on search engine optimizing campaigns via an Internet marketing agency, they will invariably want to give the impression that their Twitter and Facebook accounts are being run by real people who work in the company, and not by junior client-servicing executives in a social media agency working with a script. What does it say about the respectability of a business when its client is embarrassed to admit to using it?).
In conclusion, I sense that too many b-schools have wasted precious years of real educational asset-building thanks to the above explained distraction and now find themselves at the crossroads of survival in a post-recession era where applicants do not buy a b-school’s glossy story as gullibly as they did. However, the umpteen number of entrepreneurs who entered the education lead-selling business sure did make a decent stash for themselves while it lasted. Some are still at it. Did your mobile phone just get a call from an unknown number?
(Disclosure: this website also derives revenue through advertisements by business schools. However, we strictly do NOT sell user data to advertising clients; if clients want to reach out to our users, they have to send emails through a mailing list that we operate with explicit opt-in and opt-out recourses. While the author acknowledges that there might be a conflict of interest in publishing this article on PaGaLGuY, he would like to emphasize that the objective is not to discredit the work of our competitors but to put forward an argument he finds compelling enough to be shared.)