Marketing

Online dating sites like OkCupid and Plenty of Fish have had a free model for a long time, which has managed to expand their membership databases and make them tough contenders with paid sites such as Match.com and eHarmony. But now that free dating apps like Tinder have entered the picture and taken the dating world by storm, the paid dating sites have seen not only a decline in membership, but also in revenues.

Is online dating on its way out?

According to a recent article in The Economist, paid online dating sites have reason to worry. In the article, The Economist points out Cupid, who runs subscription-based dating websites such as Cupid.com, UniformDating.com, and LoveBeginsAt.com, announced a $4.9 million loss in the first 6 months of 2014, up 20% from last year. The number of members has dropped, too. At the end of 2012, Cupid’s sites had 113,000 paying members, but by June 2014, they had just 48,000.

While this is a disturbing trend for online dating sites like Cupid – which haven’t really taken off like other paid sites Match.com and eHarmony – it could weed out many contenders in the online dating market over the next couple of years. However in contrast to Cupid's earnings, eHarmony recently reported incredible subscriber growth and better earnings than they have seen in years, due to focusing on long-term relationships and technology that they market as extremely valuable for finding the “right” match.

But what about popular free dating apps and websites like Tinder and old-timer OkCupid? They have attracted users because of their easy set-up and accessibility. They have made online dating less intimidating, (although a little more sketchy according to some users). Are they responsible for the decline in companies like Cupid? 

Not necessarily. Even free apps and websites aren’t so free anymore.

There has been a shift for the free dating apps and online sites to offer “freemium” services – that is, additional features to the basic service but for a price. In the current online dating market, revenue growth needs to happen for investors to remain interested, and that means charging for services once the user base is built. Tinder recently announced that it will launch a premium paid service in early November, while the basic features of the app will still be free. OkCupid started with a freemium model a while ago, charging users who want to filter profiles according to user preferences, or to be able to review and see reviews of other members.

Still others like eHarmony are adding more personalized matchmaking services at a very high price – thousands per year – for those who want a relationship but would like someone else to do the heavy lifting. eHarmony has not reported numbers to see the success of this particular service.

So what does the future look like for online dating? One thing is for sure: free models likely won’t last forever.

According to Bloomberg News, the popular dating website Zoosk is scheduled to go public. The company filed earlier this year, but the latest stock market volatility might delay their offering until 2015.

Zoosk has long touted itself as a major contender in the online dating game due to its large international user base, alongside brands such as Match.com and OkCupid. The company has more than 27 million members across 80 countries, and the online dating market is reported to be worth $1.4 billion.

The appeal to investors goes beyond the revenues to be had in the online dating market. Zoosk company executives are betting on their extensive user base and tracking technology to help leverage their value. Unlike many online dating websites that rely on lengthy questionnaires and profile descriptions, Zoosk’s technology is purely behavior-based. That is, when users of the site navigate through profiles, send messages, or set filters to view other members, Zoosk is tracking this data and responding by providing matches that have similar behavior or seem most compatible. In other words, they are honing in to what users really want by seeing what they actually do online.

The more a user interacts with other members in the Zoosk community, the more Zoosk learns about that person to give them better matches. To the company’s benefit, it also gives them a wealth of data about their users, which is a valuable asset for investors.

Zoosk is also integrated so users can log in no matter what platform they are viewing on – phone, laptop, iPad or tablet, and is the #1 grossing online dating app in the iTunes store, according to its website. But its marketing expenses might be cutting into its revenue.

Website SeekingAlpha.com has been speculating about the opening price the company will decide upon, based on current statistics. Zoosk’s options granted in April 2014 had an exercise price of $7.72, so SeekingAlpha.com assumes the pricing discussions are in the range of $8-$16, which might not be an incentive for investors looking for a deal (and also looking at how the company can bring in more revenue). Right now, the dating app is free, but members pay to use features like messaging, chatting, and connecting with viewers who have viewed their profiles.

The opening price of the company’s stock is a matter of concern, but what does it mean to go public during such a risky market?

“Nobody wishes they went public today or over the last week,” Max Wolff, the chief economist at Manhattan Venture Partners, an investment firm focusing on late-stage private technology companies, told Bloomberg. “A regular bout of intense selling, like we’re seeing now, makes people feel like it’s smart to stay private longer.”

So the next move is up to Zoosk, but the company anticipates that investors are willing to bet on it.

Please read our Zoosk review for more information on this service.

At the recent Forbes Under 30 Summit in Philadelphia, Tinder cofounder Sean Rad made the surprise announcement that the company is launching a new premium service in early November. The upgrade will allow paying users more options beyond just swiping left and right.

This might make some Tinder fans uneasy. After all, the value of the app is in the sheer number of people using it. Will restricting certain new features to paying customers cause others to drop off and look for other cheaper alternatives for hooking up?

Not according to Rad. He says the premium service will include functions that Tinder users have long been asking for - including the ability to travel and use Tinder in multiple cities. Currently, you can only use the service locally, which means if you live in Los Angeles you can't look for hook-ups in New York.

But will people pay for this type of technology? Several hackers have taken advantage of Tinder's technology already and used it to create the very features users have been requesting and the premium Tinder will be offering - such as fooling the GPS-based technology into thinking you are in another city so you can scroll through profiles in multiple cities. Also, several hackers have come up with technology to "mass-like" profiles in mere seconds without having to manually scroll through, which is a very popular request from current Tinder users to increase their odds of a match.

And what about Tinder's current features - will new users have to start paying for basic services, or will some features be taken away to add to the new premium service? Rad says there will be no changes under the current free app, so users can rest a little easier. Forbes reported that people now swipe through 1.2 billion Tinder profiles a day, and that each day Tinder makes more than 15 million matches. The company needs to hang on to these users because its value is in the numbers. 

But Rad is trying to continue Tinder's growth, and that means it's time to add revenue - especially for investors like Barry Diller.  “We had to get our product and growth right first,” says Rad. “Revenue has always been on the road map.”

Forbes said the Tinder founder hinted at offering other types of services that go beyond dating, including features for travelers, though he didn't cite anything specific. Could we see a Tinder app that includes restaurant, car service, or hotel choices in the near future?

Clearly, Rad has big plans for his popular app. But we'll have to wait and see how the market (and their pocketbooks) respond. For more on this dating app you can read our Tinder review.

Are you living a luxurious lifestyle? Do you only want to date other people with money – others in the top 1%? If so, there’s now an app for that.

New dating app Luxy is billing itself as “Tinder, minus the poor people” – or the other 99% of Americans apparently. If you think it’s some kind of joke, it’s not. The company sent out a press release, declaring the need for an income/trust-fund-based dating app with statements like: "With the rise of high-speed digital dating, it's about time somebody introduced a filter to weed out low-income prospects by neighborhood."

Dating apps have become immensely popular since the launch of Tinder, and so there are many developers trying to distinguish their technology not through functionality, but through marketing gimmicks. This seems like a PR stunt, but according to its spokesperson, it was definitely the company’s intention to create a dating space for the wealthy.

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.

We live in a crazy world. And at the moment, nothing is greater proof of that and the fact that there is a Christian Mingle movie.

Yes, that Christian Mingle. The dating website that promises devout singles it will "find God's match for you." Someone in Hollywood apparently thought that sounded like a rip-roaring good time of a rom-com, and here we are, wondering what led us to this strange and confusing place.

Oh yeah, and did I mention that the lead role is played by Lacey Chabert, most notable for her turn as the ditzy Gretchen Wieners in Mean Girls? It just gets better and better.

Allegedly there is also a plot. It follows Chabert’s character, a 30-something marketing executive named Gwyneth Hayden, whose life is perfect except for one thing: it's missing a man. In a moment of desperation, she joins the Christian Mingle dating site in hopes of changing her fortunes – even though she is not a Christian. Here’s a synopsis of the rest of the film: