Private equity is playing for control in higher ed marketing.

Universities and colleges across the United States have seen it coming for years, and now it’s finally here. An ongoing downhill enrollment slide contributes to an average of three schools shutting their doors for good every month while tuition prices nearly keep pace with high U.S. inflation. Student debt has hovered at an all-time high and more college-aged adults are entering the workforce directly from high school instead of opting for university study.

Private Equity Bets on Higher Ed Marketing

Higher-ed, on the surface, might seem like a bad bet. Yet, private equity firms see bullish potential amid industry chaos and restructuring. Some of the country’s deep-pocketed fund managers have spoken with their money, investing millions into higher-ed marketing over the past few years.

“There’s a paradigm shift that happened during COVID and in the years after,” said Mike Wilkins, partner at Los Angeles-based Shamrock Capital. “Universities are still catching up on behavioral changes in their marketing. And more than ever, they’re looking for a trusted partner, not just a vendor.”

Wilkins spearheaded one of the industry’s most eye-popping moments in recent years when Shamrock announced last February it was acquiring marketing giant Carnegie. The investment firm didn’t share the terms of the deal, but Shamrock’s takeover of a majority stake in Carnegie implies a major spend. And per Wilkins, the firm is far from done pumping money into the field.

Shamrock added Tampa-based Sextant Marketing to its portfolio last November, then merged it into Carnegie. Wilkins shared in an interview with Volt that Shamrock is in exclusive talks to bring on yet another firm soon. But the firm’s power moves, while among the most high-profile, are far from unique. 

BlackRock and Owl Ventures are among several other investment giants to pump capital into higher-ed marketing since 2021.

“It’s incredible in the last three to five years how fast the change is happening,” said Americus Reed, a professor of 25 years in Penn Wharton’s marketing department. “When you see those investment firms, it’s kind of like the canary in the coal mine. 

“The entire business model of doing higher ed is being challenged,” Reed added, “so it’s not all that surprising that there’s a litany of startups and early-stage investment opportunities blowing up right now.”

AI and the COVID Effect on Enrollment and Marketing

The smorgasbord of college and university offerings slowly evolved in the early 2000s and 2010s to include online classes, continuing study programs and more programs for adult learners. But COVID-19 and the onset of chat-based artificial intelligence accelerated that move at warp speed, interviewed experts say. Those rapid changes, along with the long-impending enrollment cliff, have challenged universities to attract students while also shrinking budgets nationwide.

“In many aspects, COVID transformed the education environment,” Wilkins said. “Universities had to think about continuity and engage with students when they couldn’t show up to campus anymore. But when the pandemic ended, there was a paradigm shift. More people valued the flexibility of online education, while others were keen to get back and participate in the traditional on-campus setting.

“So from the marketing side, it was a bit of a refresh in answering how to reach students and prospective students,” he added. “The challenge for universities now is figuring out how to continue meeting students where they are.”

Wilkins said while all schools must adapt, the need is most pressing for less-selective schools, community colleges and small private universities. Across the street from Shamrock’s Los Angeles office, the highly selective UCLA is having no problem attracting students—its Fall 2024 freshman class saw a near-record 146,000 applications for less than 7,000 available spots. For a two-year university in the rural midwest, though, just finding enough people each semester to fill an incoming class could determine whether the school can survive.

With Carnegie, Shamrock felt it had an “incumbent” in the admissions, marketing and enrollment space that could help both the elite-level UCLAs of the world and the little guys alike. For a highly selective school that’s not struggling with enrollment, Carnegie helps university presidents and provosts to instead focus on getting the absolute best students in their classes to be “great stewards of the brand.”

“People who, when they go out and become alumni, are giving back to the school and encouraging other great students to study there,” Wilkins explained.

Shamrock also valued Carnegie’s deep reserves of data analytics, Wilkin said. He contended that Carnegie’s digital capabilities could lead the company into developing platforms and curriculums for university clients to meet exploding online enrollment, in place of the controversial OPM model.

“With Carnegie, we saw they didn’t have the same scale yet, but they were digital-first and data-enabled, they understood the assignment,” he said. “So with our capital and resources that we bring, we wanted to pour additional fire into new projects while also amplifying what they’re already doing. Carnegie is solving acute needs for a massive industry that has a lot of noise right now and is looking to its trusted partners.”

A representative from Carnegie did not respond to multiple requests for comment. Interview requests to BlackRock and Owl Ventures also went unanswered.

Building an All-in-One Higher Ed Marketing Firm 

David Bolt, president and CEO of Michigan-based GMB, considers his company of 220 employees across six offices to be among higher-ed marketing’s most nimble and forward-thinking. He has legitimate receipts to back up that claim. 

Just weeks after stepping into the firm’s top executive spot in 2014, Bolt decided to go all-in on education even as concerns about a possible enrollment cliff started to brew. At the time, GMB was an architecture firm that had also been operating in healthcare and corporate interiors during its nearly 50 years in business. But Bolt saw an opportunity in education and stuck to his guns.

Fast forward to 2023: GMB turned from architecture-only into a higher-ed marketing firm when it bought the South Carolina-based agency Up&Up. Bolt said he reached out to several marketing companies before identifying Up&Up as a team that “saw the world in the same way as us” and buying it. Bolt plans to add more niche firms to GMB — think safety and security, financing, and IT — as part of his dream to create an all-in-one “integrated service” firm for higher-ed.

“We tell schools, ‘you’re part of a team that’s all working together,’ he explained. “Their CMO is working with their director of facilities, who’s also working with their admissions. So our belief is why would these schools all want to hire a bunch of separate firms to help with jobs when they can hire just one firm that understands how it all already works together.”

But why would an architecture firm venture as far out as marketing, finance, and security? Bolt said his first campus tour with Up&Up brass when courting the firm gave all of the answers.

“Someone from Up&Up commented, ‘Hey, they could use a refresher on some of the buildings, but we don’t offer that.’ We had a similar experience doing refreshes on some campus buildings, thinking we don’t really understand who you are or the students you’re trying to attract,” said Bolt. “So we decided, well shoot, if we combined forces with something like a marketing agency, how much more powerful and amazing could this be?”

Bolt says the merger is already paying off. Since taking over as president, he’s doubled GMB’s staff and earned the likes of Indiana University, Northwestern, Central Michigan and Ivy Tech Community College as GMB clients. The Up&Up merger also brought Clemson, Coastal Carolina, and Athens State University, among others, into the fold.

“It’s more than just marketing or A&E separately,” he said. “Schools are dealing with complex problems, and we bring a holistic approach to addressing it.”

The Future of Private Equity in Higher Ed Marketing

Americus Reed has taught marketing at Penn Wharton since 2000 and has published dozens of research papers on how social attitudes shape consumer behavior. If there’s anything he’s learned during the past five years, it’s that AI has enormous potential to help higher-ed marketers reach students. Most importantly, the technology is here to stay.

That’s where private equity firms come in, according to Reed. The chaotic higher-ed landscape, with more students than ever questioning the value of university study, offers an “open sky” for existing players to grow their market share. It also opens the door for new players to make their mark.

“It’s sort of like the settlers panning for gold, it’s all out there right now and it’s wide open,” Reed said. “These private equity firms are looking to come in and take things over that are more established. But they also want to find opportunities for the next billion-dollar companies that will really revolutionize education.”

Wilkins and Bolt agreed, saying their respective firms both hope to capture as much of the new market as they can. The key? Buying up the right companies to help strike gold instead of merely eating up capital.

“There’s a lot of value to be added very quickly,” Reed said, “and I would not be surprised if this trend is on the uptick for a fair amount of time in the future.”