Sensible economic actors' script says spend, spend, spend on marketing

Income from higher tuition fees will flow into universities' expanding marketing departments and budget surpluses rather than efforts to improve the student experience, a round-table discussion on the future of the sector has heard.

September 6, 2012

The prospect of UK universities spending more than 20 per cent of their revenues on marketing - as some US for-profit colleges do - while competing for students in a more marketised system was debated at a session in London organised by Times Higher Education and The Parthenon Group, which advises universities on private investment.

Asked whether this level of expenditure on marketing would be good for the academy, Matt Robb, senior principal at Parthenon, said: "It depends whether you take a system perspective or an institutional perspective."

He acknowledged that "if you take a system perspective, you might say that's too much money being spent on marketing".

But from the point of view of individual institutions, he argued, "if they cut their marketing spend the number of people they attract falls".

A report released in July by the US Senate Committee on Health, Education, Labor, and Pensions chaired by Tom Harkin, junior senator from Iowa, found that for-profits in the country spent an average of 22.7 per cent of their revenue on marketing and recruitment, 5 percentage points more than their investment in teaching.

Tim McIntyre-Bhatty, deputy vice-chancellor of Bournemouth University, said that UK universities would rapidly move towards an equivalent figure.

"The question is how quickly - and the answer is 12 months," he said.

Mr Robb said that tuition fees had escalated and the same thing would happen to marketing spend.

"There's no doubt that universities will spend more on marketing in the next five to 10 years than they have done to date," he added.

He stressed that marketing did not just mean advertising. For example, much of the expenditure in the US goes on employing recruiters who advise prospective students online, he said.

David Farrow, director of marketing strategy and communications at Aston University, said he thought the average marketing budget for UK universities was currently around 4-5 per cent of revenue, but "over the past year it has grown dramatically, as you'd expect".

He said that traditional university advertising spots, such as The Student Room website, had become "cluttered", particularly during this year's crucial round of clearing.

"We can all spend more but it doesn't necessarily mean we are more successful," he said.

Universities will also have to amass bigger budget surpluses if they want to continue to invest in buildings, given cuts in capital funding, said Rama Thirunamachandran, deputy vice-chancellor of Keele University and former director for research, innovation and skills at the Higher Education Funding Council for England.

The assumption that universities should run a surplus of around 3 per cent was "out of date", he argued, adding that the "minimum" was now 5 per cent.

"We think we need to invest more than ever," he said.

Responding to the suggestion that higher tuition fees would be diverted into building up surpluses and marketing, Mark Overton, deputy vice-chancellor for external affairs at the University of Exeter, said that this was "a consequence of the regime that introduced student fees".

"It's not our fault that we are behaving as sensible economic actors," he added.

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