So You Want To Start a Dating Site

Commenter Tobin says this about starting a dating site:

The cost of technology is getting cheaper and cheaper. I’d even argue that you can get up and running for under $20k ($50k is very high in my opinion).

You’re right that the customer acquisition is key and I believe in a previous post you even mention that it’s more about marketing than it is about product development (which is somewhat sad in itself). Keeping those customer acquisition costs down is going to be key for any new startup in the space.

Somewhat interesting is how there’s an earlier post saying how seeking funding just got easier (via Angelsoft), but now there’s a post about the days of acquiring significant capital is over.

Since it is largely a marketing problem, what are your thoughts on effectively using a seed round of funding ($50k-$250k) for acquiring paid customers. It’s hard to pony up cash against the larger companies (and even smaller companies as more of them pop up) to do traditional marketing plays online.

To Tobin’s point about costs declining – think about the people wanting to build dating sites who have zero experience with Internet business, let alone technology and marketing.They don’t have the first clue about what they are getting into.

Do they figure it out on their own or do they hire someone like me to help them build a game plan based on their goals, expectations and resources that helps them avoid common pitfalls, moneypits and time-wasting initiatives?

Am I doing due diligence on various dating software platforms? Or am I outsourcing that, or does the client already know what platform they want to use?

Is the site generic templates with an amateur logo and no thought about branding or does it implement background checks, advanced search and a customized signup form?

All of these decisions affect the overall cost of the project. Has the person starting the site thought of these issues? I have.

Then, don’t forget that developers will overcharge them because they have to take into consideration the usual delays, client changes mind and other unexpected moments all projects experience.

Then there are hosting costs, software costs, system redundancy (two of everything in different locations, servers, databases, etc), backup systems, fraud-detection licenses and other fees nobody thought to add to the overall costs and as always, much more money for programmers than you expect because as the site comes together, feature creep becomes a major issue.

A simple email communication system can easily grow into a beast of a sub-project. “Can you add images to incoming messages? How about threaded discussion? What about folders?” There’s a few thousand dollars right there, earmarked during a 15 minute conversation 2 months into the project.

A designer will charge several thousand dollars for a decent design that doesn’t look like a $29 template. If you can find a great design for less than, you have an angel on your shoulder and should consider yourself lucky.

A seemingly simple task such as applying a custom design to boxed dating software is very difficult, takes longer than you would expect and you end up putting out a lot of small fires, making compromises and someone, usually me, ends of spending far too much in the project management role trying to get things done. I say this from a lot of personal experience working on dating sites.

Does the client give themselves a crash course on software development, internet marketing, system administration, graphic design, traffic acquisition, branding and PR? Or do they hire me do take care of all of this?

Building a dating site can be incredibly frustrating and difficult, and that’s with forgiving and reasonable clients and a great dev team, software and project plan. Even if the client has a gun pointed directly at the head of everyone involved with the project, things happen. White label solutions take some of the pain away, but once your site is up, marketing your site remains a primary challenge, you loose ownership of your members and you can’t customize your site as much as with dating scripts.

Attracting funding can be difficult. To Tobin’s point, $250k is not a lot of money. I know people who raise $50,000 to kick around an idea for a few months. If the idea tanks, they shoot it in the head and move on to the next one.

Everything is relative, right? Maybe $75,000 gets a strong niche site launched and initial marketing started. Me, I wouldn’t start a mainstream dating site without $5 million. A niche you can do for a lot less, but even the niche sites spend staggering amounts of money on marketing.

Engage raised more than $5 million, OkCupid raised, $6 million, and these are free sites with 500k members. A passionate entrepreneur with $20k is going to have a hell of a time getting any traction. I’m not saying it can’t be done, only that there are a lot of other ways to make money on the internet besides getting into the dating game. It’s not easy money anymore, I’m sorry to say.

If you’re going to acquire a company for their paying customers, you’re going to end up spending a lot more than $250k for a decent ROI. I’ve never seen a dating site with a reasonable number of paying subscribers go for that amount.

Food for thought, companies like match and eHarmony spend more than $250,000 every day to market their sites.

Thanks to Tobin for the comment, it’s been a while since we talked about the effort and resources required to start a dating site. Feel free to disagree with anything I’ve said in the comments.

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Comments

  1. Dave – a point I have to take issue with above re. whitelabel:

    “you loose ownership of your members and you can’t customize your site as much as with dating scripts.”

    Any decent white label dating provider (eg. us) will offer shared ownership of data so if you’re unhappy you can take your members away later. Don’t work with anyone who won’t allow this.

    Secondly re. customisation – with a good API (again, which we have in development) you don’t even need to use templates and can just connect directly to the API in any language (exactly like Flickr does).

    If you go niche, your marketing costs will be a lot less than Match or eHarmony as your audience is much more specific.

    We’ve seen people go from nothing to US$100k/month gross revenue within about 12 months. After revenue share and their marketing costs, they’re generating about US$10k-15k/month net profit which is a decent amount. And their budgets started at around US$2k/month.

    So it is possible to compete with the big boys – have a larger piece of a smaller niche pie.

    Ross

  2. Traditionally, the ability to export members has not been a feature, glad to see this is changing.

    Re: templates, I was speaking more about my personal experience with platform solutions, good to hear you are addressing this issue. Can’t wait to see your API, curious how that will work.

    Thanks for the transparency into earnings, often this information is held close to the vest.

    Overall, seems like WLD is doing good things, hope you will continue to keep us informed.

  3. Hi Dave:

    I mostly agree with the post.

    I also think sites like True, Match, Chemistry, Engage, PerfecMatch, PlentyOfFish, eHarmony, Yahoo!Personals, Ulteem, Meetic, Parship, Be2 and others had reached their operating ceiling! No matter what bells, whistles, horns, drums or other pyrotechnic devices they try, they are not going to increase their paying members or active members in their database.

    And the paradox is that the US, Canadian, European and Latin American markets remain enormous.

    There is Plenty Of ……. Room, for new players.

    Regards,

    Fernando Ardenghi.
    Buenos Aires.
    Argentina.
    ardenghifer@gmail.com

  4. Hi Fernando

    What do you mean by ‘operating ceiling’ exactly? Can you explain this a little more, as I’m not sure I follow you, if the market still remains huge?

    Thanks!
    Matt

  5. Hi Dave,

    Good post. Many entrepreneurs underestimate the costs of starting up a dating site. Although it is possible to install an out-of-the-box solution and adapt the look and feel with templates, this is never enough for a successful dating website.

    In my experience, most of the costs are in attracting traffic to your site and taking care of your branding. In addition, it takes manpower (i.e. hours and dollars) to maintain your site and keep it free from scammers and fakers.

    Having a dating website is an ongoing process, that will cost both time and effort. People that start a dating site and expect quick money, will get disappointed soon enough. A profitable dating site starts with a good plan, and a pocket full of money.

    Eric Klaassen

  6. Singles market is around 90 million, dating industry has 3 million paying subscribers, with 30 million people trying online dating each year. Accuracy depends on the source.

    The stigma has gone away for 1/3 of the singles in the US. That leaves 60 million people that haven’t tried it for one reason or another.

    That’s a pretty big market that’s just sitting there waiting to be addressed.

    The big sites like Match can’t reach them. Neither can PlentyOfFish or SinglesNet. What’s needed is a new site like Fling, (talking about it coming from out of nowhere to take on Adult Friend Finder.)

    Will it be based on ad spend, viral marketing, leeching members from social networks or be popular purely based on functionality?

    Against my better judgment, something tells me that traditional matching systems are not going to drive people to a new site.

  7. Although we’re talking about dating sites, I feel the issues you are highlighting need to be addressed by any team whom are building a social application. In no particular order, someone who is a principle at a startup needs to get their hands dirty with the following:

    * Marketing
    * Technology (development and administrative)
    * Usability
    * Legal
    * Sales
    * Customr Service

    I think hiring you is a good step, and certainly good for you, but in the long run they’re going to need to run it themselves and be immersed in the industry they are trying enter. It boggles my mind when I talk with aspiring entrepreneurs who want to enter a space because it is “cool” to them and I find out that they have NO insight into that sector. I usually encourage them to explore their idea and emphasize that they will need to devote a significant amount of time really learning the industry they are entering.

    There’s a lot of “if you build it, they will come” mentality that floats around in regards to internet startups. A lot of people fail to realize that accessing and building your market is probably the hardest part any startup with a shoestring budget is going to face (I’m facing this myself). People will say they are going to make it “viral”, but they don’t really understand what that means. They think “send to a friend”, building a product that forces you to interact with others (engage), and cheeky videos or pages on social networks. Unfortunately they miss the point, the viral aspect is that the product itself is so attractive that they want to find ways to tell others about it. Sure you can make it easier for them, but if the product isn’t interesting they aren’t going to try and tell others about it.

    Not challenging anyone, but just throwing it out there for discussion, I still didn’t really get an idea of what an effective use of a small budget would be? Futher more what strategies would you employ to keep your customer acquisition costs low?

    On a side note… what gives with the current trend on some of these niche sites?

    Engage.com has lost significant traffic.
    Meetmoi.com has pretty much flatlined.
    LoveHappens.com (engage before engage) was shut down my monster.com

  8. ” I usually encourage them to explore their idea and emphasize that they will need to devote a significant amount of time really learning the industry they are entering.”

    Whereas I tend to discourage, unless there is that glimmer of hope that the person is capable enough to run the business in the long run.

    As they say, you get out of it what you put into it.

    Starting a dating site with a small marketing budget is a mistake. Then again, we should define small.

    The idea that people will just find your site with PR and a blog is a complete misnomer. Hooking into your target community is key. Most startups don’t get this. If they do, they don’t understand how to identify associated markets. Multiple channels, exploring opportunities and trying anything that’s cheap and might work is where to begin. Spending lots of money on adwords is not working for many sites. Or if it is, they are losing just as many people, it’s a vicious cycle.

  9. Man, am I glad I got into this 10 years ago and not today!

    And to think how little I knew about *anything* online back then…Then again, no one told the bumble bee he can’t fly based on aerodynamics.

    The higher the barriers-to-entry, the better for those of us who have already made it….

    Ahhh, gotta love those barriers-to-entry…:-)

    Now that I have annoyed tons out there, think I’ll go back to my pina colada;-)

  10. Barriers to entry?

    Look it’s quite simple – start spending £1000/month on PPC and about 6-8 weeks later you’ll have got £1500-2000k back.

    Then increase your spend to £2k/month and another 6-8 weeks later you’ll be able to profitably increase your spend to £3k/month.

    The only barrier to entry is ambition – we’ve had partners go from nothing to US$100k/month in a year by doing this.

    Gradually these white label partners are taking market share from established dating sites that run their own software, hosting and marketing.

    They’ll continue to do so – the only thing dating sites on a white label platform need to worry about is measuring their marketing and making sure they’re getting the best return.

    Everything else is taken care of and there’s no overheads – those barriers to entry really aren’t there, don’t get complacent guys!! :)

  11. michael Jacobson says:

    Hi Dave:

    I am launching a new online dating site, and I am possibly interested in retaining your services as a consultant.

    I liked what I read. Please get in touch with me.

    Best,
    Michael Jacobson

  12. Hi, great post there!

    Meanwhile, I also write about these things and would be grateful for you to pass by my site and say hello.
    My site is http://www.1soulmate4u.com

    Would you like to swap links?

  13. This is my first post on this site. I’m new to the Business of online dating but not to online dating. I’ve met my current G/F on one. I’ve played around with setting up a dating site for my area for the longest time. I have a HUGE niche in my area which is a HUGE market. I think I have a good marketing plan. The niche involves one of the highest ranking radio stations in my area. I also have an high end designer who said she will do the design CHEAP less then $500.00. This person has won awards on her designs. The only thing is I don’t have a lot of money to gamble on the ideal. I do have hosting, but it’s not the best. I do have a FREE script but once again don’t know if it would hold up the traffic if it took off. Is there room for other site? Sorry every time I talk to someone about this they say I’m stupid if I don’t try. I even went to a business advisor and he said the same thing.

  14. You CAN make money with Google ads on a free site. You just have to do it right!

  15. I need your advice in starting dating website in Russia and in Europe, I’m doing research and feeling this is complecated.

    Thank you

  16. Tatyana, why do you want to start a dating site in Russia? Aren’t there enough already?

  17. John Henry says:

    Dave, are you saying not to start a site? Can someone really compete with the major sites? I have a niche in the area and want to start a site, but read some people saying not too and others saying I’d be dumb not too.

    John Henry

  18. John, depends on the niche, your experience and the resources available to you. Every person is different and there are always edge cases where something like SinglesNet comes out of nowhere.

  19. John Henry says:

    Thanks for the reply. I keep asking myself if I should do it or not. The Niche is for the Philadelphia PA area. I do have some resources, but no experience or huge pockets to fund it. I’ve had this project on my plate for a year or so, but the market has so many players in it and keep thinking, how and why am I different? Sorry for the rant. Its a snow day and the project is on my mind.

    John Henry

  20. Hi dave. Read what you wrote and I feel like I can learn a tremendous amount from you. Can we exchange emails? Thanks
    EliteCoreConcepts@hotmail.com

  21. Travis, use the contact form to contact me.

  22. Hi, i need help with this question. i need to do a presentation for this question this friday and im stuck, dont even know where to start. it would be grealty appreciated if you could help. thanks.

    You’ve been given a demographic profile of 18-24 year old women to launch a new dating service on the internet.What are the limitations of this profile?
    In what ways might they affect the media plan if you have no other information? What else do you need to know to ensure your plan will expose the advertising to the right people efficiently and effectively?

  23. Hi Summer,

    Some suggestions:

    1. Where to target this demographic online? How do you acquire these women? Facebook allows exact age/gender targetting. Also look into rate cards for websites targetted at younger women, maybe Cosmopolitan magazine or others.
    2. To start a site, just use a white label platform, it’s free to setup, you can select to only have members that suit that demographic (eg. only want women 18-24 to appear in the database)
    3. You can’t have a dating site targetted to just women – otherwise where do you get the men from?
    4. Location is important – no good having 18-24 year old women from outer mongolia.

    Can you give us a bit more information about what your presentation is about? Is it about starting a dating site or is it about how to acquire women?

    R

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