February 23, 2005: Online Personal Sites Seek Relationships

With the growth of users to online personals sites slowing, the industry is looking to third parties to convert them into long-term customers.

Concurrent with the growth of the internet over the past decade has been a proliferation of online personals sites, catered to people tired of using the same old pickup lines at a bar or at singles clubs; they can now do the same thing, albeit from the comfort of their home in front of a PC.

As with any vertical market that has grown rapidly on the internet, there have been the inevitable consolidations and shakeouts in the internet personals industry. A number of companies have been able to carve out market share by offering their varied clientele unique services and content.

The industry has also matured enough that a consortium called the Internet Dating Executive Alliance/Online Association for Social Industry Standards, or IDEA OASIS, was formed in July 2004. The association is comprised of more than 200 online personals companies, including Date.com, Friendfinder, Inc., Cupid.com, Relationship Exchange, Planet Out Partners and WebLogsInc. Key goals are to serve as a repository providing information on emerging technologies and to create relationships for members with various third-party vendors that will further facilitate business growth.

JupiterResearch, a division of Jupitermedia Corporation, estimates that the online personals industry is now a $500 million a year business. The company recently rolled out a report, "Online Dating: Serious Daters Offer Salve for Slowing Growth." The report's author, London-based Associate Analyst Nate Elliott, says the industry grew by 73 percent in 2002 and 77 percent in 2003. Last year, growth rate plummeted to 19 percent, to about $516 million per year. While a 19 percent annual growth in any business would be cause for celebration, Elliott says it indicates that the online personals industry has now hit critical mass.

Elliott says that with fewer users (age range is primarily 25 to 44) browsing online personals, dating sites have concentrated on increasing conversions of viewers into paying subscribers to keep growing. Conversion rates increased about 25 percent in 2004 and many dating sites are focusing on serious daters -- those who want to get married or find long-term relationships -- in order to bump up revenues.

"Serious daters present an attractive opportunity for personals sites," Elliott says. "These users convert 20 percent more often, are twice as likely to purchase long-term subscriptions and pay up to twice as much per month as casual daters."

One of the key issues that will play a factor in the long-term success of some of these sites is content, says Michael Jones, president of Los Angeles-based Userplane, which offers Flash-based Web applications that support live text and audio/video communication. The company focuses on enterprise community messaging that enables a broad range of websites to run branded communication applications.

"The content builds the general environment of the site, identifying users' interests, provides discussion topics and assists users in reaching their goal of meeting someone special," he says. "In general, sites that offer something extra -- music and more interactive experiences, for example -- often will give users more to do within their community."

Jones adds those dating sites that have addressed specific affinity areas and incorporate live communications have been most successful in boosting conversion rates.

"These could coalesce around religion, nationality, language, hobbies -- virtually anything that can draw people together is fair game for a relationship site," he says. "Live communication tools like chat and instant messaging give websites enticing methods of attracting users. They are more likely to stay logged in and have more in-depth interactions within the site. The environment is similar to a café where people might meet regularly so they get to know each other better."

Contesting for hearts -- and revenue

A number of companies have rolled out innovative products and services and inked deals with third-party vendors in order to remain competitive and attract new revenue streams:

Comcast

Last summer Comcast unveiled a video-on-demand (VOD) dating service called Dating on Demand in Philadelphia. It proved so popular that the cable communications company expanded it nationwide -- fittingly on Valentine's Day, February 14.

In brief, the service allows Comcast Digital Cable subscribers with VOD the opportunity to view video profiles of single men and women from their home. The company is also partnering with HurryDate, an online dating events company, to hook up singles.

"Dating on Demand is the next wave of dating because they can see the 'real' person -- how he or she speaks, learn about the person's interests and what he or she is looking for in a date," says Page Thompson, Vice President/General Manager of On Demand for Comcast.

Comcast subscribers go to the On Demand menu and select the service from the Lifestyle category. Singles who want to submit a video profile can either tape/submit their own profile or attend local taping events. Thompson says if a viewer wants to meet someone they see on the service, they contact him or her via a HurryDate email account.

eHarmony

Unless you don't have a TV or radio you have probably seen and/or heard the ubiquitous ads from eHarmony that feature the firm's founder, Dr. Neil Clark Warren. eHarmony's pitch to stand out from the dating sites pack is that its detailed questionnaire measures all facets of a person, including its '29 Dimensions of Compatibility,' which are lumped into four major categories -- Character & Constitution; Personality; Emotional Makeup & Skills; and Family & Values. The company has even patented the concept, known as the Compatibility Matching System™.

eHarmony now has five million users and bills itself as 'the internet's premier relationship service.' In recent months, the company has entered into agreements with various third-party vendors to further ratchet up interest. On January 10, eHarmony formed a partnership to provide branded access to its Compatibility Matching System™ to baby boomers via ThirdAge.com. In addition, exclusive content is being developed specifically for those over 40 that will appear on ThirdAge.com.

eHarmony is also partnering with Friendster, an online 13-million member community that connects people through networks of friends. As part of the agreement, the companies are jointly launching a co-branded matching service that combines eHarmony's system with various Friendster services.

Lastly, the company also announced a deal with USA Today. eHarmony will launch branded online personals for USA Today and Gannett's daily newspapers. eHarmony's system will power personals for various Gannett news and information sites, including USATODAY.com, which has more than eight million unique visitors each month. The partnership enables millions of online visitors to Gannett's newspaper websites, such as AZCentral.com, DetNews.com and Indystar.com, to see what eHarmony has to offer.

Yahoo!Personals

Yahoo!Personals provides viewers with a welter of information. Articles, how-tos, success stories, tips from users, and answers to questions from readers are available on the home page, itemized into columns slugged Dating: Tips and Advice; Success Stories: Personals Work; Singles: Life & Times; and Relationships: Beyond Dating.

Yahoo!Personals also offers a number of international sites -- in addition to a U.S.-based site (and a U.S. site in Spanish), there are versions for the UK and Ireland, France, Germany, Australia and New Zealand, China, Hong Kong, Taiwan, Brazil and Canada.

To attract subscribers, Yahoo!Personals conducts regular online promotions. The company is currently offering a 'Find Your Needle in a Haystack' promotion -- users are asked to try the service before February 28 at no charge, and are then entered into a contest to win a trip for two to Paris.

Match.com

Match.com, a subsidiary of IAC/InterActive Corp., has been around for a decade. The company claims that more than 200,000 members have found that special someone since its inception in 1995. Match.com has 30 online dating sites in 18 languages that also support local currencies.

The company also has what it says (eHarmony would beg to differ) is the industry's most advanced matching technology -- the Total Attraction Matching™ system. Match.com has gone mobile too --Match.com Mobile is available to Cingular and Nextel users; if you have a profile on Match.com, you can sign up and transfer it to Match.com Mobile and view/screen potential soul mates from your cell phone or smart phone.

Although there are fewer total users visiting internet personals sites as stated by JupiterResearch, sites such as the few featured in this story are doing a better job of converting users into paying customers and paid subscribers will continue to increase, although at a slower annual rate.

Neal Leavitt is president of Fallbrook, CA-based Leavitt Communications, an international marketing communications company with affiliates in Paris, France; Hamburg, Germany; Hong Kong; London, United Kingdom; Bangalore, India; and Sao Paulo, Brazil. He writes frequently on Internet and high technology topics. Contact him at neal@leavcom.com, 760/639-2900.

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