Risks to universities from the rise of agent aggregators

Agent aggregators – single unified platforms that communicate with, monitor and pay agents – are flexing their muscles as higher education institutions try to accelerate out of the pandemic and re-establish global student flows. For institutions putting their brand on the site and paying a fee that is less than agents traditionally are paid may seem a good idea. But they may not be thinking hard enough about the long term in what could be a zero-sum game.

The latest initiative from Ryan Trainor, CEO and co-founder of Adventus, on LinkedIn is aimed at their growing agent network. For the month of April 2021, they will give US$100 for every five students “lodged to an institution in Canada or the USA” with a guarantee that the application will be placed within 24 hours. It’s “only for premium customers, so SIGN UP or UPGRADE today to participate.”

There is nothing at all wrong with initiatives to stimulate the market and drive activity, but the model to date has been that professional education agents offer a premium service, based on their counselling of students into the best university for them to fulfil their educational hopes and aspirations.

Students deserve to know that by engaging with aggregators their personal information is being transferred and their details are being shared with numerous higher education institutions and an extensive network of agents.

Universities should also be aware that their brands are being used to secure traffic for the agent aggregators, both in terms of student engagement and growing their network of agents. One can only hope everyone is entering into these partnerships with their ‘eyes wide open’.

One hundred dollars may not seem like a lot of money, but many agents have been starved of commissions for the past year because of the pandemic and are now ‘pulling out all the stops’ to make up for lost time. Universities are equally under pressure to be first back into the race for globally mobile students. It remains to be seen how interested the regulatory authorities are in the sharing of student data across organisations, time zones and continents.

The rise of edtech

The rise of agent aggregators has been meteoric and backed by millions of dollars in investments from both edtech venture capitalists and strategic investors. Hot money is chasing anything in edtech that has led to accelerated growth in terms of head count and rapid accumulation of both agent and university partners.

This makes sense given predictions that the use of agents will grow exponentially following the COVID-19 pandemic because universities will be less willing and able to travel.

Managing numerous agent relationships over a multitude of countries and multiple time zones is challenging at the best of times, so the birth of the ‘agent aggregator’ may seem to be an answer to every university’s prayers. It seems a tidy solution for time-pressed busy international offices worldwide. It could even encourage some to reduce their international office commitments as a cost-saving.

It may also work for agents with an efficient CRM (customer relationship management) system, offering them 100% commission models without the tribulations of scheduling visits from university international offices.

Larger agents who contract out to smaller ones may find that they face more direct competition, but it’s likely the aggregators will smooth over their concerns. The upside is a smooth mechanism for distributing applications, fewer interactions to manage and probably timely payment of commission from the aggregator as a single point of contact.

From the student’s point of view, they can, if they choose, apply directly through the aggregator sites and get themselves a wider university choice and transparency in tracking their application without an agent intermediary.

With an offer in hand, they can still work with an agent to get support on their visa and other hand-holding that has become a valued part of the service. Or they can leave it all to the agent and await their five, seven or even nine offers that are promised.

The downside of aggregators

While the lure of the aggregator argument is seductive, it is unlikely to be as benevolent as it seems to any of the parties involved. The agent-student-university relationship has developed over time into an ecosystem where good service encourages repeat business on all sides. Breaking that link with a system where a touch of a button allows numerous applications for a single candidate brings a number of downsides.

The rise of agent aggregators encourages agents to focus on multiple countries for their student applicants, but this may not be as desirable as it sounds. The idea of agents is that they are market experts, know their client institutions inside out and can effectively advise students, but widespread use of agent aggregators could lead to a deterioration in the quality of advice provided.

If agents begin to fill out multiple applications ‘on behalf’ of their students to qualify for financial incentives, the commercial drivers may change in favour of certain countries and even institutions.

This type of commercial incentive begins to undermine the universities because it skews the market in favour of certain study destinations and is likely to drive more pointless applications which means more work for universities in terms of processing and conversion.

It’s also a game which, if aggregators secure dominance, will mean every university has to be on every aggregator site to have a reasonable chance of securing sufficient applications. Just in case one aggregator turns off the tap to a particular country, region or institution, universities will need to hedge their bets.

An Amazon of agents?

Whilst Adventus is the first to come out with this kind of incentive, there is nothing to stop their peers, large agents over multiple territories and pathway providers, following suit. If revenue from certain countries is greater, then it becomes easy to incentivise agents to channel students there.

With Australian borders currently closed, it is not a great destination for agents in terms of commissions, while Canada and the United Kingdom seem much more attractive. The only choice for Australia when it opens up will be to buy its way back into favour.

There is an overwhelming threat that if the channels to university are tightly controlled by a few commercial entities that are driven to optimise their revenues, there is little to stop them gearing the international student market in their favour.

If the aggregator market consolidates, a very real likelihood with private equity money looking for a return, universities could face commercially oriented companies that assume the power that Amazon has achieved in retail. The lessons of multiple store closures on the high street are a sign of what could follow.

The imminent sell-off of Australian universities’ interest in student placement service IDP gives us a good insight into the conflicts of interest that could emerge. IDP was initially set up to drive student applications to Australian institutions, but this mission soon expanded to the rest of the world.

As Australian institutions are starved of revenue due to border closures, the sale of their original investment offers a financial boost, but, with no institutional oversight, the commercial drivers may become more sharply focused on market dominance.

Agent aggregators have packed their boards with the ‘great and the good’ of the higher education establishment with a view to proving their credibility to a sector that remains wary when it comes to commercial entities.

But a collection of the most esteemed sector insiders is unlikely to be able to control the direction of travel once ‘the genie is out of the bottle’. It is noticeable that some commercial service providers have made their active academic insiders shareholders who would also benefit if a business changed hands.

The apex predator

As competition for international students becomes ever more cut-throat, it is inevitable that a group of commercially geared organisations will want to control the channels of international student flows into higher education.

Technology has given aggregators the opportunity to become, like alligators, the apex predator in this pursuit of revenue-generating applicants from anywhere in the world. We are already up to our neck in them, but the fight for top spot has only just begun.

There remains time for the sector to think constructively and thoughtfully about their adoption of emerging and, to date, unregulated agent aggregators. But time is short and an industry insider said just last week: “The whole of the Russell Group is watching certain institutions that have signed up with the agent aggregators to see how it goes. If it goes well, they will all pile in.”

A world in chaos may bring unexpected but far-reaching consequences.

Louise Nicol is director of the Asia Careers Group.