There is little doubt the online dating market – both in the adult and mainstream space – has seen tremendous growth and expansion over the past few years. You can’t watch TV for more than 30 minutes without seeing an ad for Match, eHarmony, ChristianWhite 35to36Lovers.com or some other dating site.
And there is good reason for that. The numbers of people using online sites to find dates has skyrocketed, which has translated into more revenues generated. According to a recent report by IBISWorld Inc., online dating industry revenue rose 5.9 percent from 2011 to 2012; and it is expected that the continued strong demand will produce $2.6 billion in revenue in the next five years.
Online dating is a terrific business model with which to generate revenue, provided steps are taken to help drive success.
While those figures relate to the mainstream online dating market, the adult space definitely echoes those trends. For years, online adult dating sites have been a steady source of income for many site owners and affiliates. And here at CCBill, we see that consistency. The market is strong and growing; with solid retention rates, particularly on the gay side, and ample opportunities for cross sales.
But what is driving the demand? How are business owners achieving success? Is there an opportunity for adult dating site owners to generate more business through mainstream dating sites and vice versa? To better address these questions and delve a bit deeper into the online dating market, we enlisted the help of international private label dating provider, Dating Factory.
(Note: CCBill provides billing services for Dating Factory, and what follows is a brief look into the market from the perspective of the two organizations. However, references made to practices, tools, or functionalities could apply to business models both within and without this specific market segment.)
As previously referenced, the mainstream and adult online dating markets are booming. In fact, the sustained growth is evident in the number of rebills and amount of client retention we see from our partners like Dating Factory. But growth is only one part of how this market has evolved. By further examining consumer behaviors and market dynamics, Dating Factory has been and is able to effectively identify and pinpoint areas where things have changed, or are changing.
‘It’s easy for anyone to sit here and say many things have changed during the last few years,” said Tanya Fathers, Co-Founder and CEO of Dating Factory. “But the identification of trends as they occur is a key factor to maintaining success. For instance, consumer demand is climbing, which is great. And perhaps because of that, Visa and MasterCard are becoming quite concerned with the number of fake profiles. So, as an operator, you need to be mindful of what is happening on all sides. Maintaining the proper balance of addressing customer wants while employing industry best practices will result in success.”
One particular area that has seen a great deal of success is niche dating sites. If there is one thing online adult consumers are known for, it is having some specific tastes from time to time. The dating market was quick to realize this and as a result, has been able to offer and maintain an ever-expanding network of sites.
Speaking of networks, new methodologies have emerged for promoting dating sites and monetizing traffic. Dating Factory has a platform designed to maximize affiliate traffic across a vast network of dating sites. Fathers indicates that a good number of website owners are also creating their own network of dating sites, and cross promoting them to drive additional traffic. We are seeing that trend as well, with the increase in dating sites and associated transactions during the past few years. These networks result in more revenue for affiliates and site owners alike.
With all the growth in both mainstream and adult online dating sites, a logical question becomes how can businesses effectively operate sites in both segments? In reality, this can be accomplished using some of the same business practices leveraged in running adult dating sites.
“We see a lot of partners that traditionally have excelled in adult start to promote mainstream sites,” said Fathers. “I think adult site owners are ahead of mainstream operators when it comes to successfully targeting consumer niches, and that strategy is something that can definitely be applied to mainstream consumer audiences.”
Additionally, there are a number of adult business practices and tools that can be applied to mainstream niches which are often more accepted by mainstream media. For instance, SEO (search engine optimization) techniques, traffic acquisition, and traffic generation strategies currently leveraged on the adult side can create opportunities for realizing revenues from any niche sites targeted to mainstream consumers. Custom payment forms featuring different looks/designs and brands can be developed to have more appeal to mainstream, as well as adult, audiences. And one-click payment functionality can be offered so consumers can quickly upgrade their profiles or even add a new niche dating site on the fly.
At the end of the day, delivering results is what it is all about; regardless if you are running dating sites in the adult space, the mainstream arena, or both. Keeping differently segmented sites successfully operating can sometimes require the help of some experts, and that is where partnerships can be a key factor. The structure and involved parties of these partner arrangements can vary, to include anything from a white-label platform provider, to a billing company, to online traffic generators. Whatever the case, entering into partner arrangements like these is a great way to springboard into operating a successful site.
A partner can help provide things like an affiliate system. Or a tool for creating custom payment forms. Or offer oneclick functionality for upgrades and cross-sales. Even an entire white label dating system can be obtained via partnership. The point is, by working with providers that offer services like these, dating site operators can concentrate on running their business, rather than potentially getting bogged down in some aspects of it they may not be familiar doing.
“Working with strategic partners has allowed us opportunities to showcase what we can do for operators of large, medium, and single sites. To give a more concrete example, some companies would only work with us if CCBill was involved, which made getting that partnership set up an important step in our own business operations. Furthermore, the customizations we provided for some of the largest brands in the adult dating market via partnership arrangements have produced a number of referrals and word-of-mouth recommendations coming back to us, which has really helped fuel our growth,” Fathers said.
Whichever side of the online dating spectrum you look at – adult or mainstream – one thing is certain. The markets have been and are continuing to grow, and grow rapidly. Online dating is a terrific business model with which to generate revenue, provided steps are taken to help drive success. Steps like knowing the market, identifying a niche (if applicable), branching out into both adult and mainstream, and enlisting the help of partners to achieve success. $2.6 billion in the next five years is a lot of money. How much share of it you end up with is the question, and the opportunity.
Paul Kluzak, a sales executive with CCBill, started with CCBill in 2001. Kluzak’s support background and extensive e-commerce history make him an ideal resource for those site owners both large and small who are looking for a partner and some tutelage in today’s business world.
