I’ve had two meetings in the last ten days with Arun Arora and his core team at Edvance Learning. They’re launching three products in the education space – none of them delayed or cancelled thanks to the slowdown.
Every morning, each non-pink newspaper sees a number of ads for educational establishments– colleges, tutorial classes, vocational training institutes.
I wouldn’t be surprised, this year, despite the slowdown, to see the total spend on education go up significantly.
They will go up because:
a) there are more players in the market, encouraged by the acute shortage of capacity at almost any level in almost any stream
b) existing players, if admissions are affected by the slowdown, will spend more than they did last year
The education financial model is most unusual in that the cost for the entire year is predictable almost to the decimal point. All costs are fixed costs. Those who run businesses in this space, therefore, know the minimum revenue that they need in order to break even. It’s also peculiar in that there is little or no scope to increase revenues in the course of an academic year.
Therefore, they advertise till they reach an admission intake (and, consequently, a revenue figure) that they are happy with. The spend on advertising, for most, is a variable. Bills are paid punctually so that they can keep releasing ads – some actually pay early and negotiate a further cash discount.
Sounds good for the advertising business. Tell your business development guys to run and get a decent education account.
Whoa. Hold your horses.
There’s a downside as well. If the intake is lower than the economics demand, the last bills just won’t get paid. Sometimes, they don’t get paid, ever.
Which is why, perhaps, it is a time for some imagination as well.
Find a college or institute or tutorial or whatever that you believe has good potential and pitch for the business.
Forget all existing revenue models, forget your rate card and your retainer.
Link your remuneration to the fees generated by the communication that you have created.
There have been any number of discussions on how little advertising agencies earn for the considerable task of brand-building, for the effective communication that agencies create.
Here’s an opportunity staring you in the face. Go get it.
Education accounts may be of no interest to the creatives, but the accountants will love them. As will the employees you aren’t forced to pink-slip because of the slowdown.