Marc Procelli has a must-read post about the current state of online dating advertising. Marc has come up with some ideas about where he thinks the online dating market is going in 2009 by looking at various verticals.
Given that the online distribution has changed at a robust rate in the last six months or so due to the deepening global recession, so have the distribution costs. It is one thing to purchase distribution on a CPM basis; it’s a whole other to purchase it on a CPA basis through performance networks. There is without a doubt more inventory available at affordable rates today than in recent years. These rates have opened up many more opportunities for publishers to promote at highly scalable and profitable rates on both a CPA and CPM basis. Due to falling CPM rates, publishers are finding creative, profitable and highly scalable ways to purchase on a CPM arbitraging the traffic back into an effective CPA.
… Online dating in the performance marketing space for the past several months has been anything but consistent. This lack of consistency on the advertisers side has resulted in the dating vertical becoming far less attractive then it once was – or that it has been in years.
Marc goes on to say that the upswing in traffic to dating sites is not related to the economic downturn. The real reason why these sites have realized huge upswings is because the sites that were active in the performance network space have pulled back. I couldn’t agree more.
Companies like True, Mate1 and SinglesNet appear to be spending less on their ad buys. I ran into chris Dingle, the new COO at Mate1, at iDate, but I didn’t get a chance to ask him about the serious drop in traffic over the past year.
Marc again:
I view all top online dating sites as being in a current throttled or even neutral state. No one is really promoting aggressively, and the traditionally larger dating sites are so focused on partnership portal marketing that they are not utilizing their largest asset, which are performance networks.
… In addition to all of this, there has been a huge lack of innovation when it comes to acquisition and retention in the space. Most dating sites are acquiring users in the same like fashion, yet spending little or no effort on retention. This is completely wasteful marketing and management. There is a plethora of unrealized potential, likely resulting from so many of the top dating sites being in a state of content, internally viewed as cash cows.
This is exactly what Evan Katz said during our panel at iDate. I have an issue with retention in the dating space. Dating sites should promise to get members off the site as quickly as possible. Figuring out how to get them to stick around is a terrible idea. The industry needs to get past the “it’s cheaper to continue a subscription than acquire a new member” mentality. That works for other types of sites, but goes against the whole concept of online dating, at least from a consumer’s perspective.
The implied contract should be that dating sites will get you a date and off the sites as quickly as possible. Until they understand this and figure out how to get those other 60 millions singles online, it’s business as usual for 2009.
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{ 8 comments… read them below or add one }
My concept of retention for dating sites: you’re not trying to convince people to stay for years. You’re empowering people to use your site more effectively, which will cause them to WANT to continue to use your site in perpetuity.
It all hinges on the average user seeing results. This gives him hope and incentivizes him to continue paying $30/month as long as he’s having success.
If dating sites did a better job, you’d have more members like me: people who date for three months at a time, find someone, try a relationship, break up a few months later and come back again. Why? Because it WORKED last time and it beats the hell out of trolling for strangers at bars.
Dating sites should create a culture of lifetime online daters by helping members use their sites – information and coaching on usernames, photos, profile, emails, etiquette. Until they do, you’re left with the current state of the industry: a low-rent shopping mall where most singles fail and quit.
Remember, a 5% increase in retention can boost your revenue by over 25%.
What could be more important than that?
Evan Marc Katz
I agree Dave, current business disasters in the banking arena should prove the theory of the simple business model – deliver what is promised & reap success, dont & fail! Online dating is the only business where successful matching of a couple means loss of two members. However the wom that is generated will more than bring return traffic. Customers want authentic results because their happiness depends on it & that is why they visit online dating sites. The message to these sites is really deliver or die – any other business model will not work now that the pressure is on economically. Thanks for the post Dave
Good post, thank you Dave. Another part of the issue I find that many CPA and rev/share advertisers have notoriously low-performing ads. Because CPA is a virtually risk-free model – they have less incentive for creating strong ads, comparing to the CPM advertisers – who better know how to make their banners work. Those with stronger ads ultimately have a competitive advantage, – which especially comes handy during the unstable period.
Awesome article. Your totally right in date sites focusing their promotion efforts on promising singles that they will be off their site quicker rather than offering year long subscriptions. I think free dating sites like plenty of fish are stealing lots of market share from big players like date.com and match.com. Unless these large corporate sites revise their strategy, they will soon go by the wayside in terms of relevance.
The industry does have sites like plentyoffish and mingle2 eating away that their userbase. In the past year, mate1 and true have seen their numbers drop off while POF’s have grown.
At this point, all three are roughly on par, but with the paid sites trending down while the free sites are trending up.
They’ve still got some time, but it’s not especially hard to program a dating site, and the paid sites are going to need to hustle to protect their business model.
I would not attribute the drop in Mate1 traffic to free dating sites, there are other forces at work such as ad spend, employee performance, adwords management, affiliate marketing effectiveness and more.
Ah, interesting. That could certainly play a role too. Mate1 does not seem to have a very aggressive presence in the affiliate market — certainly nowhere near Singlesnet’s.
I do know that POF does talk quite a bit about how the free model will eventually take the paid model down. Not sure how valid that is, though.
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