Today’s guest post is by Ross Felix. Ross has been paying close attention to Spark Networks for quite some time and is well-versed in the challenges it faces today.
For those of you who aren’t that familiar with Spark Networks, it’s made up of several components: Jewish Networks (aka: Jdate), Other Affinity Networks (small niche sites bought approximately 5 years ago), General Market Networks (American Singles and others) and finally, their Offline and Other Businesses (Hurry Date and some of their travel events).
JDate members should be happy as the Jewish Networks division added just under 3,000 members in the first quarter of the year. That said, the fresh meat came at a lower average monthly fee. In other words, more people are jumping on those holiday savings. If you missed the last one for Mothers’ Day, don’t worry, they’ll probably offer deep discounts over the Memorial Day, Fathers’ Day and July 4th. Questions still remain as to what percentage of JDate’s members are paid members, and how many members cannot send or receive emails. (Match.com’s numbers improved to just over 10% in the first quarter of 2010 – if you assume 1.6 million paid members and their advertised “15 million members.”)
If you’re a member of Spark.com (formerly American Singles), I’m truly sorry. Average users dropped to just 7,813, a far cry from the 92,041 members at the end of 2006. Basically, Spark has said that they’re managing the decline of the brand. They are VERY successful at that. If you’re considering joining the site, just remember, they intend to continue reducing the ad spend, and have no intention on growing the brand. Honestly, they should probably go with the band-aid approach and just close it instead of continuing to collect monthly fees for a site that they’re killing off.
Other Affinity Networks, most or all of which were purchased from another company about 5 years ago has had mixed success. Where Spark Networks only invested 7% of the Jewish Network’s revenues into advertising, they had to pay 58% of their quarterly revenues to keep this unit going. Their plans are to focus only on 2 or 3 of the brands in this unit (there are more than 15) and to stop or reduce advertising the rest of their brands in this category. If I was a member of one of their smaller sites in this category, I’d be concerned about whether I was paying membership fees to a declining brand.
Major warning signs (as I see them):
1) The company has again announced that it’s going to continue to “manage the decline of the brand” for American Singles, and most of the Other Affinity Network sites. Frankly, if you aren’t a member of JDate or one of their top niche sites, you’re in trouble. Why? Because those sites are basically going to be the red headed step children of their stable. They’re going to get no love at all, which is truly sad for a dating site.
2) They’re going to focus on merging their legacy systems (SQL/.NET for JDate & Spark.com with the LAMP platform for their purchased sites). While that would normally be considered a positive (cost efficiencies, better customer service, best of breed), unfortunately they’ve also stated that they will not innovate at all in 2010. Ouch. Many think that the JDate platform is already years behind the rest of the market, now they’ll be even further behind.
When the company was asked “Is there any legal risk from the members of all of those sites that are not being advertised suing” company management said, “No, we’re not concerned about that.” If I had paid 6 months in advance for a site, and I just found out it was being intentionally run into the ground, I’d be VERY concerned.
So overall impressions: The company added more members, but had to sacrifice some of their monthly fees to get them, which questions the value of their product offering. They’re basically shutting down everything but three brands, but are still wasting money on some of the same brands that they intend to kill. In short, they should probably just sell off the brands that they intend to kill, and invest the money in their core brands instead of burning it on dying products.