Milestones

eHarmony was on the brink of disaster in 2012, ready to be sold to the highest bidder on the auction block, at least according to a recent article on Online Dating Insider. But the company was determined to turn things around.

According to eHarmony executives, “We took our hard won stash of capital and used $153.2M to buy out all the “Class B” shares, and we began the pursuit of our own company.  We asked five of our former and highly-esteemed board members to step aside and give us a chance to do more of what we needed to do to bring this company back.  We made tough decisions…let some people go, terminated vendor contracts. Moreover, we have cleaned up “our house” by appointing an all-new executive management team that is a more aligned team than we have ever had before.”

For those of us who did not know eHarmony was on the brink of financial ruin, this letter came as a surprise. In the time they were desperately struggling to tread water, Neil Clarke Warren, the company’s founder, came back on board as CEO and reminded the company of the reason they were successful in the first place – their focus on matching for long-term relationships.

While most dating sites and apps have gone in the opposite direction – focusing on quantity instead of quality of matches, and casual meetings instead of long-term relationship potential, eHamorny’s serious focus has paid off.

“Instead of losing 100,000 end of period subscribers each year, suffering...losses of 50% every single year, our EBITDA for 2014 will literally be dramatic and the cash in the bank increasing substantially each month. EBITDA is currently running $9.4M ahead of plan as we work with our forecasts. Our end of period paying subscriber count has hit its all-time high...”

eHarmony was not afraid to get rid of what wasn’t working. Trimming staff by over 30%, they went from about 300 employees to only 190 in all of the U.S., U.K. and Australia. They have also dropped vendors who weren’t contributing to the primary focus of the site – relationships. (That is, focusing on the long-term potential.)

eHarmony’s success rate speaks for itself. It claims to have made more than 600,000 marriages, and has only a 3.86% divorce rate (compared to the over 50% divorce rate of Americans in general).

The company plans to take its technology in other directions besides love. They are planning the launch of Elevated Careers by eHarmony, where they hope to make successful coupling between potential employees and employers by using the same psychologically-based matching system to help people find their dream jobs.

While the company didn’t offer exact figures, they did claim to have hundreds of thousands of users as well as 1.2 million matches. It looks like they have turned things around, though most of us didn’t even realize how much they were struggling.

To find out more about this dating service, you can read our eHarmony review.

I could say something about how hard IAC/InterActiveCorp is trouncing the competition, but…um… It hardly has any competition. The media conglomerate, helmed by Barry Diller, has been killing it in the online dating realm for years and shows no signs of stopping.

Thanks to its two massive dating sites, Match.com and OkCupid, IAC was already the biggest player in the game when it decided to shake things up last December by creating a special division for its online dating holdings called the Match Group.

This year, IAC has made more powerful strides in its quest to dominate online dating. It increased its majority stake in Tinder, the mobile app at the top of the mobile dating heap, and acquired most of the Brooklyn-based dating site HowAboutWe.

Slowly but surely, IAC has bought its way into the dating market. By the end of 2013, IAC reportedly hosted 30 million active users throughout its dating properties, 3.4 million of whom are paying subscribers. The Match Group is now responsible for approximately one quarter of IAC's total revenue. And they're not shy about singing their own praises.

“We are not just the acquirer of choice,” said Sam Yagan, chief executive of the Match Group, “we are the only acquirer.”

Investors, on the other hand, are a little more wary. Analysts are convinced that online dating's growth is likely to slow, despite the fact that the market has never been stronger in the US or abroad. The primary bump in the road is free mobile dating services, which are making it increasingly difficult for other dating services to generate a profit.

Mobile dating now accounts for around 27% of dating site services. As mobile audiences grow, dating sites are finding it challenging to turn those users into paying members. They are also challenged by a crowded market, which becomes more congested all the time as various niche sites pop up. Although many don't last for long, they're still successful in drawing audiences away from larger, more general dating sites.

With that in mind, IAC’s future may lie in Tinder. So far the app has put growth above revenue, but it is estimated that Tinder could eventually earn $75 million a year. First, the company has to figure out how to monetize it without losing users or slowing growth. Yagan is feeling positive about the future.

“It is not a winner take all dynamic,” he said. “There is a lot of concurrent usage. Unlike a car, the majority of online daters use multiple products, so you want to have a portfolio — a multibranded approach.”

These days, it's almost hard to believe that online dating wasn't always part of our lives. It feels seamlessly integrated into our daily routines - to the point that it's even infiltrated our phones - but in reality the industry didn't get its start until the late 90s and the road to 2014 was far from smooth.

In the early days of online dating, it was quietly laughed at by the polite and openly scorned by the impolite. It was viewed as an impersonal way to find love, and using an online dating site came with a heaping spoonful of stigma. But over time, a new generation of tech savvy singles arose and with them came a revolution.

Now daters of all kinds, young and old alike, have discovered the benefits of using online dating services and the industry has exploded around the world. As always, with success come new challenges. Online dating still faces criticism, and someone is always ready and willing to tell a horror story of a first date gone awry. Complaints are registered about fake profiles and less-than-truthful users who conceal their identities. Scammers have used online dating sites to cheat people out of thousands.

Online dating is now facing the challenge of maintaining the safety and protecting the privacy of its users – a task that becomes increasingly difficult as more and more of them join dating sites. Different countries are approaching the problem in different ways. In the US, laws have been passed that require background checks for new users. In Singapore, the government acted as a matchmaker through the Social Development Network. In the UK, the Online Dating Association was founded by industry members to take collective responsibility for regulations.

All of these have been important steps towards creating a regulatory framework that will address the issues facing online dating as it continues to expand. Primary among those issues is the rise of mobile dating. Many major dating sites now have a mobile component, and there are plenty of services that are only mobile applications.

The key word here is "innovation." As an increasing number of competitors enter the market, online dating services are forced to get more creative. Creativity is a great thing, but it too comes with challenges. As dating services explore uncharted territory, they will encounter new questions about security and privacy. If dating services want to be here for the long haul, they'll have to match technological innovation with regulatory innovation.

The end of August marked a very special milestone for eHarmony: the website’s 14^th birthday.

All those years ago online dating was still a young industry, and founder Dr. Neil Clark Warren (yep, the guy from the commercials) revolutionized it with his research-based approach to matching people for marriage. eHarmony famously created algorithms based on 29 Dimensions of Compatibility scientifically proven to predict successful long-term relationships. Fourteen years later, those algorithms are still going strong.

Since its inception, eHarmony has racked up more than 45 million subscribers – meaning approximately 1 out of every 7 people in America has subscribed to eHarmony at one point or another. The site is responsible for more than 600,000 marriages in its lifetime. On average, 438 people marry every day in the U.S. after being matched by eHarmony (that’s nearly 4% of all new marriages in the country!).

eHarmony has seen many major changes in the last 2 years, when Warren returned as CEO after previously leaving the company. Amongst the milestones are:

• The launch of eH+, a premium matchmaking service
• A cross-platform redesign of the website
• Record numbers of subscribers and mobile users
• New levels of profitability

“We are so proud of what we have achieved at eHarmony,” said Dr. Warren. “Our success in online dating underscores an opportunity to impact areas beyond online dating. We are launching new verticals in the coming months and years that broaden our reach--verticals that will build eHarmony into a relationship site. Soon, eHarmony will influence the way we look at finding a job, finding friends and solving loneliness.”

As it enters the next phase of its teens, eHarmony has big things in the works. Chief among them is Elevated Careers, a service to match employers with prospective employees and help people find their ideal jobs.  After 3 years of research, eHarmony hopes Elevated Careers will help users find fulfilling, meaningful jobs that last longer than the national average of 4.6 years.

When asked how eHarmony plans to make it work, Warren told Business Insider “The first thing we do when getting involved with a company is we want a short inventory filled out by every person in the company. Just asking how they perceive the culture of the company. We want that culture to be matched up with the culture of the person who’s the applicant.”

“The second thing we do,” he continued, “is we want the org chart of the company, so that if an individual wants to work in a particular part of the company, we want to know what skills are required of the applicant.”

And finally, he added, “we want to know whether the personality match of the applicant and the person they’re going to report to is a good fit for the company and individual. If we can get the culture, skillset, and personality right, we’re convinced that the typical 4.6 year average duration at a company in America, we’ll be able to take that way up.”

For more on this dating site and to find out why it has been such a popular online dating service you can read our review of eHarmony.

SNAP Interactive has made its online dating site Are You Interested (AYI) a priority, and it looks like it’s paying off. The company announced that AYI has become the number one grossing application in US Lifestyle category in the Apple iTunes Store as of August.

The company hit other big milestones, too. In July, its mobile apps contributed to the highest percentage of total logins ever, at 38%. New mobile subscription transactions were up 57% year-to-date compared to the same period in 2013, and total mobile logins were up 33% YTD compared to the same period in 2013.

AYI began as a Facebook-based online dating site, and has since expanded to its service to develop its mobile platform. SNAP said that it has put a huge focus on mobile in the past year, specifically improving the user experience for iPad, iPhone, and Android phones. The goal was to create a seamless cross-platform experience for everyone, no matter what device they were using.

Mobile has become a crucial part of the online dating market, and its numbers are only going up. Traditional online dating sites have been developing and marketing their mobile platforms for this reason – many daters want more ease and accessibility - and don’t want to have to sit in front of their laptops when they can use their phones to connect with potential dates. Popular apps like Tinder, Hinge and Grindr have also created a new market of younger daters who find dating via phone apps to be the most convenient way to meet people.

Snap's Chief Executive Officer Clifford Lerner commented, "Mobile is the primary platform for an increasingly large segment of online dating users, and we were determined to create an excellent experience on all mobile platforms to take a leadership position in the market.  We're excited to be the #1 Top Grossing application in the US Lifestyle category in the Apple iTunes store.  It shows that iPhone users have really embraced the AYI app and user experience we worked so hard on.  We believe mobile is an important engine of growth in the online dating industry, and we're pleased to be one of the leading providers of online dating applications."

Snap's Chief Operating Officer Alex Harrington added, "Mobile is not only strategically important, but also a very lucrative platform for the Company.  In July 2014, approximately 52% of our user acquisitions occurred on mobile platforms, which helped diversify marketing sources and increase marketing efficiency."

SNAP Interactive hasn’t mentioned any future development plans for AYI. For more on this dating service you can read our Are You Interested review.

Dr. Neil Clarke Warren left eHarmony a few years back, only to take control of the company he founded once again in 2012 to implement a turnaround strategy for its drastically sinking subscriber base. As it turns out, this new strategy has been key to eHarmony’s unprecedented recent success. This past week, the company announced that it has the highest number of subscribers in the company’s history, and has grown its base of users 54%.

This is quite an accomplishment, considering the growing popularity of dating apps like Tinder and Hinge. The market is crowded these days, so you have to effectively differentiate yourself in order to compete. Traditional online dating sites have struggled to make their offerings more competitive and accessible.

eHarmony is an especially interesting contender in the online dating industry. Going against the grain of its competitors who offer an easy sign-up process and a high number of matches, eHarmony has a rather lengthy and grueling sign-up process that can take up to 90 minutes to complete before you receive your matches. And you only receive a few matches at a time, ones that are selected by eHarmony, not you. On top of that, there is another “guided communication” process to complete with each match before you can just send them an email to meet for a date.

It seems to be working.

All of these steps are important to eHarmony’s goal: compatibility matching. This was the original intention behind the launch of the site, and founder Dr. Warren has remained firm in this vision, which numbers show is paying off. He brought in a new management team to improve the website and mobile design, the technology, and implement a new marketing program.

As a result, the company has gained subscribers who are also more willing to stay longer and pay more than in years past.

“eHarmony was created as a way for individuals to begin a relationship already a step ahead – with someone who is truly compatible,” said Dr. Warren in a statement. “We are proud of what we have achieved over the past two years, securing the largest subscriber base in our history. We are confident in our ability to continue to grow eHarmony in the future.”

With so many dating sites and apps competing for sheer numbers, it’s interesting that eHarmony’s more serious approach to dating and its focus on the goal - helping people find long-term relationships – is paying off. There is indeed a market, and a need, for people to find and make real-life lasting connections, and the continually growing numbers prove it.