Dating Services

IAC released its Q4 2014 financial results at the beginning of February, reporting a 9% decline in profit for the fourth quarter from last year. Though revenue growth was in double digits, it was offset by higher expenses that ultimately led to the decline in profit. On the plus side, both revenue and adjusted earnings per share for the quarter beat analysts' estimates.

Here are some of the highlights from the report:

Coffee Meets Bagel has been overshadowed by its more aggressive competitors (like Tinder), but lately has emerged as a serious, lasting contender in the dating app space. The company is showing its app has real growth potential by securing $7.8 million in a Series A financing round led by existing investor DCM Ventures. Quest Ventures and Azure Capital also participated in the round.

This round of financing is followed by the steadily growing success of an app whose founders like to take things slowly, testing what works in each market (starting with its launch in 2012 to New York and Boston markets) before moving on to the next. Recently, the company expanded from an iPhone-only app to include an Android app as well, opening markets further.

Coffee Meets Bagel sets itself apart by making the dating app experience feel more personal. People are connected through their social networks – through mutual friends on Facebook, for instance – so there is a level of assurance that you can avoid the scammers and fake profiles. Also, CMB users receive only one match per day, avoiding the whole Tinder hook-up potential. Each day, users have 24 hours to message their match, and then a week to set up a date before they vanish into the ethers. The point is to keep the conversation going, instead of just letting messages and matches accumulate while users see who else is out there.

While the design is game-like (you can get “coffee beans” by providing information or referring friends to the service, which in turn can be used to access additional features, like the ability to see who your mutual friends are, or to rekindle the flame with a match you neglected to message in time.) The company also teamed up in certain cities with local businesses to offer discounts to places you could go for a first date, although the growth of the app nation-wide has prevented them from doing this in more than a few major cities.

The additional funding will pay for engineers and developers to help build the core business so it can handle the projected growth in users. While the company hasn’t publicly shared their subscriber figures lately, the interest from investors is telling.

CMB has been compared to dating app Hinge and Are You Interested, which also focus on matches based on mutual social media connections.

The additional financing follows the company’s earlier participation in the TV series “Shark Tank,” where the founders proposed their business plans to celebrity investors in the hopes of gaining additional funding. While they didn’t get it from the TV show’s panel of judges, they have been successful in raising the funds elsewhere.

More than one in ten Americans have used a dating app or online dating service of some kind, according to a recent study from Pew Research. And dating apps are only increasing in popularity.

But despite peoples’ love of technology, online daters don’t seem to be finding what they want, and are not so satisfied with the dating app experience. No matter how many new apps hit the market, it seems the inherent problems with online dating (lying, old photos, bad behavior) – are still lingering, and affecting the overall user experience.

People tend to be more critical of dating apps than any other type of app, according to a recent report from Applause, which aggregates app ratings.

According to their report, dating apps consistently rank lower than almost any other kind of app available in stores to download. According to MarketWatch, “while the average app quality score in the U.S. is 67 out of 100 points across all categories, for dating apps, that number is 42 out of 100 — the lowest average score across categories.” The study looked at 53 different dating apps, all of which had more than 1,000 reviews.

While many people may blame apps for their poor online dating experience, the fact that the overall market is leaving people unsatisfied is telling. Online dating is a business, but one that involves people – who can be unpredictable and emotional, especially when it comes to dating.

For one thing, the currency of dating apps are people, so these apps must have a large database with a variety of choices to even compete with some of the major players like Tinder. If people receive the same matches over and over, or somehow “run out of options,” the dating app can be perceived as less valuable than other dating apps. Also, if a dating app user doesn’t like his matches, he’s likely to give it a lower rating, as opposed to others who have a good or even mediocre experience.

Of course, there are other things to consider when it comes to why dating apps aren’t faring so well among users. Some are annoyed with having to pay for special features, or when in-app advertising interrupts the service itself.

Surprisingly, Hinge and eHarmony – two online dating apps that emphasize the quality of their matches – scored low on overall user satisfaction, at least according to their ratings. They both earned an average score of 22 out of 100, and ranked as two of the 10 worst dating apps. OkCupid however, earned 62 points out of 100, putting it in the top 10 category with Skout and Let’s Date. Tinder ranked in the top 20, despite the many complaints and its reputation for being a “hook-up” app.

So what does this mean for online daters?  I guess we’ll have to see how dating apps evolve.

Turns out, Valentine’s Day is not just about couples, hearts and chocolates – it’s about swiping left and right with your dating app to see who's out there. Singles are optimistic about love on this particular holiday - and are saying yes more often to potential dates.

According to popular dating app Tinder, activity from users on Valentine’s Day this year surpassed any day since its launch back in 2012 – that is, the total number of swipes, messages, and matches were at the highest count in the app’s history.

The increased activity in advance of Valentine’s Day began on February 6, leading up to the all-time high on V-Day itself. Overall usage ticked up 7 percent week-over-week from the last couple of years, resulting in a 15 percent increase over the company’s long-term trends. Message activity was up 5.2 percent week-over-week, and matches were up by 6 percent.

Vanity Fair reported that the company found a 60 percent increase in matches per user who logged in to the app on Valentine’s Day from the previous Saturday. Unfortunately, the love didn’t last – user activity was back to normal by Sunday February 15th. It seems the pressure of romance’s biggest day contributed to the app’s popularity, but fizzled out just as quickly. It is also interesting to note that more men were on the app than women on Valentine’s Day, perhaps a reflection of Match.com’s latest “Singles in America” study, where they found that men were much more likely to believe in love at first sight than women.

Critics have been quick to point out that Tinder users are primarily looking for last-minute hook-ups, which might explain the Valentine’s Day craze. The company’s founder Sean Rad however, disagrees – noting that people go to bars and clubs all the time looking for potential for hook-ups. So why choose Tinder? According to Rad, Tinder is helping people overcome the challenge of approaching a stranger to say “hi” because the app makes it less intimidating, and the sting of rejection isn’t quite so high.

“People don’t realize this, but we’re an order of magnitude bigger than any other dating app,” Rad told Vanity Fair. “You really have to ask yourself, if that’s the critique of Tinder, are you critiquing Tinder, or are you critiquing society?”

Tinder is rolling out its new premium service Tinder Plus in the U.S. in March, which will allow paying members to go back and rekindle things with someone they initially rejected, and let users browse through profiles of people in other cities. The new service has already rolled out in the U.K.

For those who have been following the trajectory of the phenomenal success of dating app Tinder, for the founders of the app, it wasn’t such a successful match.

Whitney Wolfe was one of the founders of Tinder along with Justin Mateen and Sean Rad, who were the face of the company  as it launched to great success. Then Wolfe and Mateen became romantically involved and when that ended, so did their professional relationship – through reports of abusive behavior and a lawsuit that ended in a $1 million settlement for Wolfe.

The young entrepreneur wants to put all that behind her however. In a recent interview with Business Insider Australia, she addressed the lawsuit, her critics, and the launch of her new dating app Bumble.

Wolfe claims she has moved on, but her history with Tinder is still a bit convoluted. According to Wolfe, she came up with the name and first shepherded the dating app herself by reaching out to students on college campuses, urging them to try it. However, Mateen and Rad have stated that Mateen was the one who brought Tinder to potential users, mainly through the fraternities and his contacts with large social networks at college campuses.

The fight between Mateen and Wolfe got nasty, with text messages back and forth that were exposed in the media. From an outsider’s perspective, neither one of them looked innocent, but in the end, it was a case of he said she said.

Wolfe took her experience at Tinder and decided to try her hand in launching her own female-friendly dating app called Bumble. Although it has the same user-friendly photo-based structure and ease of Tinder, Bumble encourages women to make the first move by giving them 24 hours to reach out to a match before he disappears. (The guys have to sit back and wait for the women to message them.)

Other female-friendly dating apps have come before Bumble with their own spin – like LuLu, which allows women to rate their dates and discuss them with other women on the app. There’s also JessMeetKen, which allows women to promote one of their single guy friends to other women on the site, in order to give them a little endorsement for potential dates. But Bumble is showing promise too, with Wolfe reaching out to college students and encouraging them to give it a try.

“We’re definitely not trying to be sexist, that’s not the goal,” Wolfe told Business Insider. “I know guys get sick of making the first move all the time. Why does a girl feel like she should sit and wait around? Why is there this standard that, as a woman, you can get your dream job but you can’t talk to a guy first? Let’s make dating feel more modern.”

According to Wolfe, 60% of matches on Bumble turn into conversations, and in a little over a month since the launch, there have been more than 100,000 downloads. 

A new "Dating Services in Canada Market Research Report" has been released in January 2015 by IBSWorld. The report requires payment to read the entire thing (no less than $725 US) but they did release a few interesting statistics for promotion that are worth mentioning.

According to IBSWorld the dating industry in Canada grew 6% from 2010 to 2015. They feel this rate is low due to the recent recession but the rate of growth is expected to increase in the next 5 years.

In Canada there are 255 businesses in the dating industry that employee 523 people. On average this means every dating business employees 2 people. In my experience the case more likely is that most of the businesses employee 1 person (the owner), a few probably employ 2 to 5 employees, and the very few employ 5 or more. The reason for such a low number of employees and high number of businesses is the relative ease and extreme low cost required to get into the dating industry. Free dating site software can be found online and web hosting can be found as cheap as $5 a month.

The report also mentions that revenue generated by the dating industry for the year in Canada is $153 million. This seems rather good especially with 255 businesses which would suggest that on average each generated $600,000 in revenue. This is not the case either. Most of these dating businesses probably either make virtually no money or only generate a few thousand a year in ad revenue. A few probably generate 10's of thousands, and even less generate hundreds of thousands or even a few million. I believe the majority of this revenue is made up of one dating site, Plenty of Fish. POF is located in the province of British Columbia, Canada. All of the other popular dating services are based in the United States. POF is a private company and no revenue numbers have ever been officially released. That being said they are one of the most successful dating sites in the world so I am sure their revenue for a year is probably 10's of millions of dollars. For comparison just take a look at the Match.com dating site. They are a public company owned by IAC and they reported the Match Group earned in the fourth quarter of 2014, $241.5 million US. That is only for 3 months so in a year they generate around 1 billion dollars. Now the Match Group is made up mostly of paid dating sites while POF is a free service which generates revenue from ads as well as paid upgraded memberships. I don’t expect POF to earn hundreds of millions every year but as I said, with their traffic I do see them earning 10’s of millions.

Is this latest IBSWorld report worth getting? It definitely would be an interesting read but the thing with the dating industry is that it is global. If you are opening a dating service you usually don’t just target one country. You would target continents as a whole like North America or Europe. If you are considering purchasing the document I would probably hold off and wait for the US version to come. The US is 10 times the size in population of Canada which is a much bigger customer base.