Friday, February 08, 2013

Collegiate Athletic Success as Advertising: Is it Effective?

Harvard Business School Professor Doug Chung has written a new working paper titled, "The Dynamic Advertising Effect of Collegiate Athletics."  He explores the impact that athletic success impacts the quantity and quality of a university's applicant pool.  Here's an excerpt from the abstract to his paper:

I estimate the impact of athletic success on applicant quality and quantity. Overall, athletic success has a significant long-term goodwill effect on future applications and quality. However, students with lower than average SAT scores tend to have a stronger preference for athletic success, while students with higher SAT scores have a greater preference for academic quality. Furthermore, the decay rate of athletics goodwill is significant only for students with lower SAT scores, suggesting that the goodwill created by intercollegiate athletics resides more extensively with low-ability students than with their high-ability counterparts. But, surprisingly, athletic success impacts applications even among academically stronger students.

The findings surely will provoke some interesting debate.   Note that Chung finds that going from good to truly great in NCAA football, for instance, can cause applications to rise by nearly 20%.   It takes a significant move in other areas of a university to achieve a similar impact.  For instance, Chung estimates that a college would have to reduce tuition by nearly 4% to get the same rise in applications, or it would have to recruit higher-paid, higher-quality faculty.  What's interesting about this analysis is that some will say that the cost of athletic success outweighs the positive effect on applications.   That's potentially true.  However, Chung shows that there is a cost to other ways of driving applications higher as well... so it's not immediately clear what methods are most cost effective to increase application quantity and quality.  Of course, we have to remember that athletic success can be very difficult to achieve, and it can be fleeting at times.  Schools may spend a great deal of money and never get to the "great" level required to get this type of increase in applications. 

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