Anyone who has been in the dating game in this century knows about online dating. Aside from pathetic long-termers like myself, that means pretty much everybody…
Not everybody knows what a great business model it is. Not everyone knows how much money it makes. About 11% of all online users have a profile on an online dating site, according to research by Jupiter Media. Not very many people at all cruise match.com without any interest in the content – but I do. I am envious of match.com. I am truly in awe of the business that has been created out of little 1's and 0's. Match.com is the ultimate Internet business model. Here's why I like it:
1. It's sticky – you could cruise all over the place for free until you find something that catches your eye. I have a mentor that was interested in the business model and was cruising through the site to see how it worked. He signed up to show his staff the interactivity, someone caught his eye, and ended up finding his wife. They're still married 5 years later.
2. It's tempting. Everyone has heard an Internet dating success story from a friend or a family member. Everyone has heard a horror story, too – but they're not as powerful. Friends say that only 1 in 10 dates are worth their time. But that doesn't stop 'em! If you're looking for love, you know about Internet dating sites.
3. They're simple. 3 step process: a. browse b. create free profile c. signup and get some dates
4. Powerful upsell opportunity. Not long after you sign up and post your profile, you'll start getting little notes saying – somebody really good looking wants to talk to you! Or – Aren't you lonely? Well you don't have to be – this hot dude or gal wants to talk to you!
5. 100% web based. No product fulfillment, no warehouses, no widgets. Just a few machines on a rack, a few programmers, a few designers and a few marketers.
6. CHA-CHING! Oh yeah, and a whole bunch of people to carry all your cash to the bank. Last year (2005) Match.com made $249 million in revenue, with 26% growth over the previous year. In that previous year, they were already a mature company… Personals.Yahoo.com made around $170 million. Lavalife made $72 million. Major private companies include eHarmony.com, AmericanSingles.com, Date.com and uDate.com, which all must have made close to or more than Lavalife (according to similar amounts of traffic). Jupiter Research estimated that the segment would make around $516 million last year.
7. Major niches to fill This product has niches galore. Major niche fillers include jdate.com (alexa = 1,193), ChristianCafe.com (7,431), BigChurch.com (10,513), CatholicMatch.com (5,002), and many many more.
8. Easy to find customer This customer looks for you. It's a need that's being fulfilled through technology. On the web, it's easy to present your site to someone who's looking for you.
Where's the beef?
Online dating is flush with major players, and minor niche fillers (see section 6 above to find out why).
Match.com $$ breakdown
Alexa rating: 85
Approximate monthly visitors: 15,000,000
Monthly revenue: ~$20,800,000
Revenue per visitor: $1.38
Number of ferraris you could buy per month: 104
The revenue per visitor number is key to understanding what kind of marketing you can do. Match.com probably doesn't do that much marketing, because they're the market leader, and brand recognition and word of mouth drives most of their traffic. But, for the smaller niche players, they need to understand what they can pay for each visitor and still be profitable.
How to steal this idea
Online dating is very much a mature market, with not much space left for traditional players. Even the niches have been exploited and fulfilled. But, the point of this assignment is to understand the basic business model so it can be adapted to other areas. So – what other areas can the ideas of online dating be applied?
Basic principles:
1. Browse the content
2. Create a free profile
3. Pay to play
Similar services:
1. Social networking – MySpace is all the rage… they don't make money off of monthly memberships like Match.com, but they make plenty off of selling advertising to their sizable traffic supply.
2. Gambling – Big gambling sites these days offer a free zone where you can play with fake money before you sign up to lose your real money.
3. Forums – Same premise as the social networking – get the traffic from the content, sell them advertising.
4. Vacation rentals – Provide a place to upload your vacation rental for free – then send the owner emails saying that people are interested in contacting her to rent out the place. Force the membership fee in order to see the requests. This model could be applied to any recurring service.
Summary
Online dating is a killer Internet business model. Take a program and make millions. No fulfillment. No warehouses. You can take the basic premise of providing a service people want and automating it with a program, and apply it to other markets.