There are three customer segments; the first customer segment is the end user, which we have historically been labeling the “mass market,” due to the sheer number of users we aim to acquire. e2 is a free service, so the user base will not be a direct source of revenue; rather, users will fuel revenues from the second customer segment, Advertisements and Higher Education Lead Gen. The third customer segment consists of corporations.
This report gives an in-depth look at the the value proposition, market size estimations, experiments, and results of the “Lead Gen & Advertising” Customer Segment.
Lead Generation and Online Advertising
We spoke to 3 lead gen vendors and researched lead gen in the higher education space to obtain the information that follows.
Higher Ed buyers of prospective student leads (lead gen) are demanding higher quality. Lead buyers are concerned about freshness of lead, source of lead, where it’s been, and if the information has been validated, and are will to pay more for better leads. There are many tricks in the lead gen business that not only lead to lower conversion rates ,but also are compliance issues for the colleges. Schools want to insure compliance in advertising, they want to make sure their brands & programs are represented correctly and want to avoid common tricks & tactics like incentives, co-registrations, call centers, up-selling, second & third chance leads, bogus scholarships etc.
e2’s Search and tracking would allow colleges to offer lead advertisements for those students who have already taken or searched for a free class. These students have demonstrated a desire to learn and within the field of the degree being offered. They would opt in to being contacted and therefore prove to be a motivated lead of high quality. Colleges have therefore a motivated lead with context that is relevant for the call center representative at the college. E2’s lead would come with information on which FREE classes they were taking.
The market can price leads anywhere from $10 to $50 with many priced in the $18 to $25 range. Leads are scored according to their conversion rates and it is expected our leads would score high; somewhere around the 2% rate. Additionally, high quality leads could command a $40 price tag. Assuming a 12 million annual user base with a 2% conversion rate, with each being sold for $40, results in $9.6 million in revenue, per year, for higher education lead gen.
As with lead gen, online advertisers are looking for higher quality leads. With the constant barrage of uninteresting, inapplicable advertisements to the common internet user, click through rates have fallen to less than .1% for the generic site. With our niche education site, however, these advertisements can have a higher value, targeted audience, yielding higher click-throughs and higher revenues.
Using a “cost per thousand impressions” (CPM) pricing model, advertisements and range anywhere from $10-$100 per CPM (Source: http://computer.howstuffworks.com/banner-ad7.htm). Again, assuming 12 million annual traffic visits, $50 CPM, with 10 adverts running at any given time, results in $6.6 million in revenue, per year, for online advertisements.
Adding the totals of lead gen and online advertising revenues results in $16.2 million in annual revenue.Featured image course: http://sempublishing.org/wp-content/uploads/advertising-and-marketing.jpg