Given yesterday’s impending acquisition of Singlesnet, I wanted to throw out a few things that I have been thinking about lately.
Recently dating industry insiders have been talking more about how to compete with Match.com.
In my mind, to compete with Match its important to understand the company’s history, various marketing strategies, branding and several other factors, including how they leverage being part of IAC. It’s also important to understand the downside of being too big, positioned in the marketplace as the Kleenex of dating (which has its own challenges) and a number of other factors that I share with my clients.
Sam from OKCupid asked the industry at iDate why Match was stuck where it is in terms of growth, and according to people present, nobody in the dating industry sitting in the same room could answer the question. I found that disturbing, so I’m going to kick off the conversation here.
As I have said for several years now, the US dating market, based on how business is currently done, is maxed out. After a decade and billions spent on marketing, market penetration leveled off at around 30%. You could add another 10% based on Zoosk, social dating and other rounding errors, but I’m sticking with my 30 million daters online each month number until enough people say different. There is room for a few more sites of considerable size, but there are always the outliers. It’s incredibly difficult to ramp up a new site these days, almost easier to do a roll-up play and be a mini- IAC. Much like the owners of Ashley Madison are attempting.
Match’s days of near-term innovation are pretty much over, it maxed out in the US years ago, and it’s in acquisition mode now, and it’s hungry. Why is Match maxed out? It’s because their current model doesn’t have much headroom. They could increase their ad spend 200% and it wouldn’t make much of a difference. (Their marketing is incredibly inefficient, but that is for another blog post.) They clearly know this, hence global acquisition mode. This is a typical corporate strategy with many benefits and it’s the only road for Match right now. I’m surprised that we haven’t heard more about their efforts in Asia.
Growth through acquisition is perfectly fine for the more than 1.4 million people that pay to communicate with each other on Match and its associated brands. The bigger Match gets the better it is for the entire online dating industry, because people will get tired of Match and want to try something new, which drives the need for innovative new dating brands, matching systems and marketing opportunities. Think Google and Bing.
So, the US dating market is tapped out, plain and simple. Or is it? Of course not. My entire online dating consulting business is based on this premise.
For Match, optimizing the site and testing bells and whistles based on features circa 2004 is an exercise in maintaining the status quo. What’s old is new again. New features may drive pageviews, but they sure don’t drive signups.
Match can optimize the user experience all they want, but that’s tweaking the knobs and dials as opposed to the sea change they require to drive considerable growth. For many sites, things like landing page optimization can greatly increase signups and revenue. Match is already so optimized, there’s not much more then can do on this front. They do have a crack team in place working on this, but we’ll never know the results of their work because it’s going to be nuances not clubs-to-the-head change, which they simply cannot afford to do.
The online dating industry will grow as a whole only when it becomes more effective. It’s a marketing-driven industry with portions of it slowly evolving into performance-based popularity. Take away advertising from online dating and the whole industry collapses, as compared to old-growth Internet companies like Amazon or eBay.
Some argue that dating need a new model. It might be social, or lifestreams, or groups, or matching based on deep understanding of tastes and preferences, or DNA or or something else. This is why I will do whatever I can to help and promote companies like IntroAnalytics, Basisnote, Thread and Gelato. Even Chatroulette might finally bring video profiles back to dating sites, watch Woome what is doing to capitalize on the popularity of Chatroulette.
These are the companies taking online dating to the next level. Who knows, maybe even the mighty Match will acquire some of these innovative dating industry upstarts if they don’t copy them outright.
Whatever Match does or doesn’t do, it’s great to see the dating industry keeping things interesting and giving me things to write about.
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The opportunity for online dating?
Ask your friends a question – where would they prefer to meet their perfect partner, the person that would make them happy for the rest of their lives (of course they should really look inside themselves for the answer to that second part, but we’ll leave the social philosophy for now):
Would they prefer to:
1. Have their eyes meet with mr or mrs right across a crowded bar?
2. Be introduced by mutual friends?
3. Meet at a friend’s wedding?
4. Meet online?
The fact is – online dating should be the DEFAULT place to go for people who are single and don’t want to be single.
It’s not.
That’s what I believe is needed to help the industry grow – Match is still only getting a fraction of single people to pay for their service, the real market size certainly isn’t realised yet.
In terms of what they’re going to do yet – the writing was on the wall when they appointed a lawyer as their CEO. It’s acquisitions baby and will continue to be until they rule the world :)
Ross
Love reading this kind of analysis David. I sure don’t know what the next sea change will be, but it is out there. And like you imply, a small, nimble startup is likely to be in a position to risk rapidly deploying, tweaking and adapting it to find a new “sweet spot” in social tech. Now if I could just finish my “pheremones over HTTP” API that I’ve been working on… haha.
I think the niche dating sites are the most valuable for daters, places where they can go to find the kind of people they want to find. If match was better at offering this kind of community where people can express themselves, as they do on social networking sites, this could be an interesting strategy.
Of course this kind of categorization is more intricate than keywords and tagging and would take an adept person to manage and launch, wonder if the efforts would outweigh the benefits to the company.
Perhaps we’ll see an aggregation site surface which help you find your niche community, would be more effective, perhaps, helping all dating sites, big and small, to flourish.
great post thanks!
There are tons of things they can do.
1) Don’t they still require people to pay to even see emails? That’s rude and it’s got be driving customers away. Related to this it’s also rude pay to for the check “if it’s read” feature. We can already reading without paying.
2) The virtually useless matching criteria they use. Why they don’t combine with Chemistry is beyond me. They can laugh eHarmony all the way to bank with this one.
3) Make profiles dynamic, making their own Flicker, Twitter sub-sites, etc. By this logic, they’d be making match its social networking universe. If Match isn’t on Second Life, why not? Better yet, why not build a “Dating Life”?
4) They need to get creative in their marketing. I’m just making this one up, but whatever happened to the old buy one, get one free trick? A person buys a membership and they get a free membership coupon to give to a friend. Netflix does this.
Do they also do targeted ads? I don’t think I’ve seen any dating company advertise in magazines like Popular Mechanics, a typical guy magazine I reckon. They should be carpet bombing all the men and women magazines.
1) Yes Yes and Yes.
2) It’s not useless, just less than useful. But Match has some smart people behind the scenes working on matching and capability. Nobody laughs at competitors making $200 million a year.
3) Why not just tie into Facebook? (that would be a big surprise). Adding a small update field at the top of a profile is straightforward, I bet match thinks that it wold confuse people, it’s not like they haven’t thought about it. So many lost opportunities here. Second Life? Please, moving on.
4) You think Match is going to give away subscriptions? Moving on. Good point about targeted ads, they aren’t. Although I absolutely love their new ad campaign, they are finally learning how to market to their customers in a way that isn’t pandering or out of touch. Popular Mechanics, lol. Actually I don’t remember seeing Match print ads.