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Global ELT market cooling down says Student Marketing

Double digit growth may be more challenging for most ELT providers as the sector moves into a phase of consolidation, according to industry consultancy firm Student Marketing.

“In the past if a school didn’t do something right they might lose agents, now they lose students and a social network"

Industry revenue is now increasing by around 2% compared to 10% growth in the last decade, reported Student Marketing CEO Samuel Vetrak at the ICEF Berlin Workshop last week.

In a presentation, Vetrak told delegates that in order to be profitable in the new consolidating landscape, educators should alter their strategies to focus on junior programmes, extended stays and familiarisation (FAM) trips.

There are some 16,000 education agents worldwide who move more than US$11bn annually

He forecast a decrease in numbers from top source markets Russia, Colombia, Brazil and Turkey for 2014. However he singled out China, Pacific Asia, Saudi Arabia, Venezuela and Mexico as “markets of opportunity” for this and next year.

The UK has the largest share of the ELT market but saw just 2.6% growth in student weeks from 2012-2013. Ireland meanwhile saw student weeks jump 28% and Australia 25% according to Vetrak. Malta was also in the black with 3.3% growth but Canada (-1%) New Zealand (-9%) and South Africa (-8.5%) all saw a decrease in student weeks. The US was also down 4% in student numbers.

Still, with more than 500 language schools in the US and the UK, the cool down spells more competition and low margins for providers.

According to Student Marketing, there are some 16,000 education agents worldwide who move more than US$11bn annually.

The highest concentration of agents, 800 or more, occurs in China, India, Russia, Brazil and the USA with agencies sending on average 125 students abroad per year.

Vetrak added that around 12% of this global agent network accounts for 78% of all ELT students who use agents.

And with increased rivalry in the sector, agent commission increasingly becomes a crucial point of negotiation.

“Agent commissions are increasing faster than gross price,” commented Vetrak. “Schools are pushed for creative solutions.”

According to Student Marketing, on average agents receive 17% commission– a figure that includes higher education and pathway providers which traditionally pay less commission than adult ELT programmes.

“Agent commissions are increasing faster than gross price”

Marketing costs are also rising for in-country agents as in-field promotion becomes more popular. Between 2012 and 2014 promotion at universities  increased 13%, 10% at high schools and 9% at language schools.

To increase revenue per capita, Vetrak said educators should focus on promoting extended stay programmes and work with more and smaller agencies outside of capital cities where competition is highest.

On-shore partnerships could also prove lucrative to educators as well as joint marketing activities in source countries.

Underlining the continued power of word of mouth marketing in the sector, Vetrak also told delegates to establish a referral programme encouraging past students to share their experience online.

“In the past if a school didn’t do something right they might lose agents, now they lose students and a social network,” he said. “The rise of customer review platforms has increased the power of word of mouth.”

Vetrak also indentified a “super trend” in the industry of students now preferring to study English abroad for a specific purpose including employment benefits rather than as a goal in itself.

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