Marketing campaign grows University of Phoenix Online enrollment

Internet Strategies for Education Markets: The Heller Report, August, 2001

The University of Phoenix (Phoenix, AZ) success story is remarkably simple. Establish a brand over 25 years, improve product based on feedback, and stick to your mission. With this foundation the University of Phoenix Online, though just slightly more than a third the size of the organization's ground-based student-body, is growing rapidly. In September of 2000, the company raised $75 million for the online division with the introduction of a tracking stock for the University of Phoenix Online. The Apollo Group continues to own all assets.

Some of that funding was used for an aggressive marketing campaign that included a mix of television advertising, direct mail and banner advertising. Students also arrive at the University's virtual doors through corporate referrals and referrals from students and alumni. Determining the ad source triggering an inquiry is difficult, but Tony DiGiovanni, president of the University of Phoenix Online, has a sense that the television advertising -- primarily cable buys on channels such as CNN, MSNBC and Discovery Channel -- was particularly successful.

Something worked at any rate. The University of Phoenix Online experienced 86.5% growth in enrollment in less than a year. More generally, the online division has historically experienced growth of 50% to 60% per year, compared to a growth rate of 12% to 14% for the ground-based courses. The University of Phoenix now has 70,000 students enrolled in the ground-based programs and 25,700 online students. The stock, though not impervious to downturns, has generally climbed.

The University of Phoenix has offered an online program since 1989. The Apollo Group, which owns the University of Phoenix, Inc. as well as Institute for Professional Development, The College for Financial Planning Institutes Corp., Western International University Inc. and Apollo Learning Group Inc., has been providing adult education for 25 years and has been a public company since December of 1994.

With a minimum enrollment age of 23 and an average age of 34, the University of Phoenix serves the adult student wishing to further his or her career. The online offering tends to attract a slightly older student. Tuition rates for the University of Phoenix Online are $400 per undergraduate unit and $495 per graduate unit. Ground-based tuition varies depending on location, but online tuition is higher. That, says DiGiovanni, is a reflection of the high technology infrastructure costs and students' willingness to pay more for convenience. Online courses also tend to be smaller, averaging 12 to 14 students per class compared to 15 to 17 students in the ground-based courses.

Limited Partnerships

The company has typically chosen to build rather than buy as it has developed its infrastructure for the online University, and that remains true as the recent funding has spawned further investment in infrastructure. The exceptions are few. The financial aid system is based on software from PeopleSoft. There are currently partnerships with several publishing houses such as Pearson Education and McGraw Hill to develop electronic textbooks. Assessment is developed in house, though a testing site is hosted externally. There are only occasional REPs.

The University of Phoenix also owns all intellectual property rights to their courses so that they are able to repurpose and redistribute content. Instructors retain the rights to any of their own lecture notes they may add to the course.

Changes in Title IV regulations to financial aid for distance learning programs may well give University of Phoenix Online another boost in enrollment, and the organization has been selected to participate in the U.S. Department of Education's Distance Education Demonstration Program. The University of Phoenix participates in Federal Aid Programs and offers their own P.L.A.T.O. Loans for up to $13,000. These can be applied to tuition, books or computer needs.