Online Education Stats

Part
01
of three
Part
01

ATI

Assessment Technology Incorporated (ATI) is estimated to allocate 13.3% of its revenue to marketing and 69% to payroll expenses.

Below you will find a deep dive of my findings and methodology.

METHODOLOGY

To answer your request, I researched ATI's website as well as business information profiles and articles in the industry media. I found that ATI is a private company with no publicly available data regarding internal financial information such as payroll and marketing budgets. However, I approached the problem with a triangulation method to come up with estimates of ATI's marketing and payroll budgets as percentages of its revenue. I used Glassdoor to determine ATI's estimated revenue and calculated its marketing/payroll budgets based on industry benchmarks as well as a case study for a similar company. Please continue below to see the results of my research.

ATI

Assessment Technology Incorporated (ATI) is a private online education company. ATI has no publicly available information on its financials as well as internal budgets.

However, the company has a profile on Glassdoor with the following information:
• Estimated annual revenue: $5-$10 million
• Size: 1-50 employees

Using these data we will triangulate an estimate of ATI's marketing and payroll budgets as a percentage of its revenue.

MARKETING BUDGET

Gartner's 2016-2017 CMO Spend Survey includes a comparative chart of marketing budgets as a percentage of total revenue per industry (p.4).

I chose the High Tech industry as the best representative of ATI's category, since ATI is a technology company focused on educational materials. Other industry choices include media, CPG, manufacturing, retail, financial services, and transportation/hospitality.

According to Gartner, high technology companies allocate 13.3% of their revenue to marketing. This translates to roughly $665,000 on the low end ($5 million revenue) and $1.33 million on the high end ($10 million revenue) for ATI.

Also, according to Forbes, small businesses with less than $5 million in revenue use 7% to 8% of their revenue for marketing. Since ATI's revenue is estimated to exceed $5 million, the higher marketing budget percentage (13.3%) can be considered as a close estimate.

PAYROLL

As to payroll, I could not determine an industry benchmark either for the high-tech or education industries as this varies widely even within the industries themselves.

I also found no industry benchmark for a company like ATI (technology) in the Bureau of Labor Statistics' resources as these types of companies are lumped either in Sales and Office or Management, Professional and Related occupations.

However, I found a company similar in size and annual revenue to ATI which also belongs to the technology industry. Inc reported that Buffer, a social media analytics and scheduling services company, is radically transparent with its finances. Buffer is based in San Francisco and is close to ATI's size and estimated revenue:

Buffer
• Annual revenue: $7.8 million
• Size: 64 employees

Buffer disclosed that it allocates 69% of its revenue for its 64-strong staff's payroll. This includes employees' base pay and taxes. For Buffer, payroll expenses amount to $403,000 against its revenue of $7.8 million. Also, because it provides digital products and services, Buffer allocates 11% or $64,853 to software, hosting, and servers.

ATI also provides digital products and services to its target audience, educators. Applying Buffer's payroll percentage (69%) to ATI's revenue would yield $3.45 million on the low end ($5 million) and $6.9 million on the high end ($10 million in revenue).

CONCLUSION

To wrap it up, Assessment Technology Incorporated (ATI) is a private online education company with no publicly available information on its financials as well as internal budgets. However, Glassdoor estimates ATI's annual revenue to be $5-$10 million and company size to be 1-50 employees. Based on Gartner's research, high technology companies spend 13.3% of their revenue on marketing. This translates to roughly $665,000 on the low end ($5 million revenue) and $1.33 million on the high end ($10 million revenue) for ATI. Also, Inc's case study shows that a technology company similar to ATI's size and revenue allocates 69% of its revenue to payroll expenses including base pay and taxes.
Part
02
of three
Part
02

Hurst

Hurst Review Services spends around 12% of revenue on marketing and around 36% to 40% of revenue on compensation. These percentages were triangulated, as the actual percentages are not publicly available. Below you will find how we arrived at these answers.

PERCENT OF REVENUE SPENT ON MARKETING

The portion of revenue that Hurst Review Services (Hurst Review & Ratings) allocates to marketing is not publicly available, but it appears from the information we have gathered below that the company's marketing expense as a percentage of revenue is around 12.0%.
Given that Hurst Review Services offers services that are designed to help nursing students pass the National Council Licensure Examination (NCLEX), the company can be considered to be operating specifically in the exam preparation and tutoring industry, which, in turn, is in the education sector. Based on page 34 of the Highlights and Insights Report that The CMO Survey published last February, firms in the education sector spend on average 12% of their revenues on marketing.
We could have computed a more accurate percentage if the company's marketing expense is available, but, unfortunately, the amount could not be located anywhere in the public domain. This is unsurprising given that the company is privately held and is not required to make public its financial information. An extensive search through the company website and through articles and reports mentioning the company name did not yield the amount the company spends on marketing. We, however, were able to get some information on the company's revenue. Three business information sites provide an estimate of the company's revenue. As can be seen below, both Hoovers and Manta provide a very specific amount, while IncFact provides a range. The amount provided by Hoovers and Manta does not seem reliable, though, given that both companies estimate that the company only has 6 employees when there are, in fact, 65 employees of the company registered on LinkedIn.
Revenue
---
Hoovers: USD 1.36 million
If we assume that IncFact's estimate is more accurate, we can compute how big 12% of the company revenue is. The calculation below shows that the percentage translates to a range of USD 1.2 million to USD 6 million for the company's marketing expense.
Marketing Expense
---
Min: 12% x USD 10 million = USD 1.2 million
Max: 12% x USD 50 million = USD 6 million

PERCENT OF REVENUE SPENT ON COMPENSATION

Regarding the percent of revenue spent on compensation, on the other hand, the percentage could not be readily located in the public domain as well, but as you may see below, we have found a number of figures that enabled us to estimate it at around 36% to 40%.
Four sites offer estimates of the number of employees the company has, and these estimates are shown below. As mentioned above, the numbers provided by Hoovers and Manta are not accurate at all. There are 65 individuals on LinkedIn that are currently employed at Hurst Review Services, which was founded way back in 1988, almost 30 years ago. Also, both IncFact and LinkedIn provide ranges that indicate the number of employees is much, much higher than 6.
Number of employees
---
Hoovers: 6 employees
Manta: 6 employees
According to salary information provider Paysa, 36 profiles indicate that the salary of employees at Hurst Review Services ranges from USD 60,061 to USD 112,450 and averages at USD 91,561.
Average salary
---
Paysa: USD 91,561
Since it appears the LinkedIn company page is created by the company itself, we will assume that the employment size range shown on the page is the most accurate of the four estimates. If we multiply this range by the average salary provided by Paysa, we can estimate that the company's compensation expense is in the range of USD 4,669,611 to USD 18,312,200.
Compensation expense
---
Min: USD 91,561 per employee x 51 employees = USD 4,669,611
Max: USD 91,561 per employee x 200 employees = USD 18,312,200
As can be seen below, however, dividing these compensation expense figures by IncFact's revenue range yields irreconcilable estimates of the percentage of revenue that the company spends on compensation.
USD 4,669,611 / USD 10 million = 47%
USD 4,669,611 / USD 50 million = 9%
USD 18,312,200 / USD 10 million = 183%
USD 18,312,200 / USD 50 million = 37%
However, using the United States Census Bureau's American FactFinder, we were able to find the total revenue and the total payroll of the exam preparation and tutoring industry in 2002, 2007, and 2012. Dividing the total payroll by the total revenue gave us the following percentages.

Compensation expense as % of revenue
---

These figures are from the Economic Census, which the Census Bureau conducts every five years. Though 2017 had already passed, the Census Bureau will only start releasing data for 2017 in September 2019. We consider the figures relevant because the Economic Census is "the most extensive collection of data related to business activity." Also, since no definite decreasing or increasing pattern can be observed from the figures, the figures indicate that Hurst Review Services's compensation expense is likely around 36% to 40% of revenue.

This range is slightly above the 15% to 30% range recommended by consultants for businesses in general but is somewhat close to the figures 47% and 37% determined above. Should you wish for the exact values, you may want to consider purchasing IncFact's premium company report, which shows the breakdown of the company's operating expenses into advertising, salaries and wages, and other operating expenses. The report has a price of USD 45.

CONCLUSION

To sum up, our research indicates that the percent of revenue that Hurst Revenue Services allocates to marketing can be estimated at 12%. The percent of revenue the company allocates to compensation, on the other hand, can be estimated to be in the range of 36% to 40%.
Part
03
of three
Part
03

Kaplan

As of 2016, the estimated marketing spending of Kaplan University was $123.41 million, a 20% of the total revenue. Its estimated payroll or compensation spending was $144 million, a 23.3% of its total revenue. Before the acquisition of Kaplan University (a for-profit school operating under Kaplan Higher Education) by Purdue University last April 2017, the online education school was owned by Graham Holdings. Back in 2015, Graham Holdings sold 38 KHE campuses to the Education Corporation of America which left about 15 locations which are now operating under Kaplan University with 29,156 students enrolled online.

While there were no precompiled reports available in the public domain pertaining to information on what percent of overall revenue is spent on compensation and marketing for Kaplan University, we were able to come up with estimated figures using any available statistics from news articles, press releases, government sites, and annual reports. Please note that most figures and data used for the triangulation was 'before' the acquisition deal and some older sources was utilized in order to complete this request.

COMPENSATION SPENDING

In order to estimate Kaplan University's spending on payroll or its total staff's compensation, we first determined the total number of current staff and the university's average annual salary.

Currently, Kaplan University employs a total of 3,600 staffs including instructors, professors, and administrators. According to the analysis of 1,259 Kaplan University employee salaries, employees of this university earn $40,000 annually on average. From this figure, the estimated spending on compensation was $144 million.

$40,000 * 3,600 = $144 million

According to the annual report released by Graham Holdings for FY 2016, Kaplan University's revenue was $617,047,000.

Compensation spending % share from revenue
= (Compensation spending / total revenue)*100
= ($144,000,000 / $617,047,000)*100
= 23.30%

MARKETING SPENDING

A study released in 2015 stated that more than 20% of the total revenue was allocated for marketing from for-profit colleges which include Kaplan University. Back in 2009, a report released by the Senate website stated that Kaplan spent $373 million, a 23.7% share from its total revenue, for its marketing activities. This shows that Kaplan University has somewhat maintained the 20% mark of its marketing spending over the years.

Using the 20% share to calculate estimated marketing spending and assuming that the university has maintained this percentage until it was acquired in early 2017, then estimated amount spent was $123.41 million.

$617,047,000 * 20% = $123.41 million

CONCLUSION

Kaplan University's spending on compensation and marketing hits a total of 43.3% share from its total revenue, 23.3% for its compensation spending and about 20% of its marketing spending. The company's revenue sees a decrease from $1,010,058 in 2014 to $617,047,000 in 2016. In 2017, all the remaining campuses of the said university was acquired by Purdue. Kaplan University currently has over 29,000 online students enrolled in their programs.

Sources
Sources