Career Education to stress breadth, cut ad agencies

NEW YORK (Reuters) - Education company Career Education Corp (CECO.O) wants people to know it's not just for cooks and fashion wannabes.

And it doesn't think it needs more than 100 advertising agencies anymore to say so.

Chief Executive Gary McCullough, named to the post in early 2007, found he had inherited a company that pigeon-holed itself as a school for people with passions like cooking or fashion, even though 60 percent of its students were working toward careers in business or health.

"We were talking about it like we were doing only arts and design and culinary," McCullough said in an interview on Tuesday.

He said the company -- which at the end of 2007 had about 89,500 students in traditional and on-line schools in North America and Europe -- over the years had gotten into some bad marketing habits.

"We didn't necessarily abide by some of the best practices around how we spent" the marketing budget, McCullough said.

Career Education, based in Hoffman Estates, Illinois, spent $463.6 million last year on advertising -- almost 28 percent of revenue. It will not spend more next year, McCullough said, and it will spend differently.

The company has been spending on its various businesses more equally, without regard for how much they contributed to the bottom line, he said. That will change, although every business will enjoy a basic level of support.

"It really is about making sure we spend in-line with our business," he said.

The company deals with more than 100 agencies to create advertising campaigns and buy media space.

"That's just too many," said McCullough, who has a branding background including the management of Similac baby formula at Abbott Laboratories Inc (ABT.N) and the relaunch of Juicy Fruit chewing gum at Wm. Wrigley Jr. Co.

The more agencies, the more chance of a muddied message in the marketplace, said McCullough. The company is still evaluating where it will cut the roster, he said.

While it already is relying more on the Internet to reach online students, it needs to find the "optimal mix" of online and traditional advertising and marketing, McCullough said.

McCullough's focus for achieving growth is not through acquisitions, but through opening three to five campuses per year.

But he said the company also sees more consolidation in the industry's future and is particularly interested in acquisition opportunities overseas, including Asia and Latin America, where the company does not yet have operations.

"Frankly, it's a hedge against the U.S. market," he said. "You can somewhat mitigate the risk of being associated with only one country."

Ultimately, the company's marketing changes will lead to changes in how the schools present themselves, McCullough said.

"I expect that the way the signage looks, the way the logos look, will morph over time," he said. "But we've had to step back to go forward."

(Editing by Gary Hill and Andre Grenon)