Huffpost UK uk
Charlie Thomas Headshot

The £2bn Relationship - The Business Of Online Dating

Posted: Updated:
Print Article
ONLINE DATING
Around half of the UK's singletons are internet dating - but how can the industry grow from here? | Alamy

Online dating has exploded in popularity over the past 10 years. Once seen as a rather nerdy, even desperate way to meet a potential partner (or, let’s face it, a less than wholesome means of finding a sexual encounter) – the industry has now become a much more acceptable way of finding love.

Globally, one in five relationships now starts online and the media is full of stories describing happy marriages which started with the click of a mouse.

Looking at it from a financial perspective, its estimated that globally the industry is worth more than £2bn.

Online dating is now so important to the UK economy that the Office of National Statistics recently added online dating to its basket of goods and services to calculate UK inflation rates.

For this feature, we interviewed more than a dozen dating websites, representing more than five million members (although it should be noted that most people using a dating website will set up a profile with more than one company).

Most generated revenue through a subscription model – typically members will sign up for free, but be charged if they would like to connect to someone’s profile.

Others are entirely free to join and use, but make money through advertising – though this model’s popularity is waning due to the lack of reliability of cashflow.

Some sites also offer extra services, such as buying real and virtual gifts to send your paramour, more in-depth background checks and real-world networking events to boost the coffers.

It’s also interesting to note that the split of male to female members on most of the sites is around the 50:50 mark, and the number of older daters (those from 50 years of age and up) has become a real growth market.

Recession-proof

It appears, judging from the responses to Huffington Post UK’s investigation, that internet dating has not been at all affected by the economic crisis and the pressure it’s put on consumers’ pockets.

On the contrary, some of the brands had even witnessed an increase in members as a result of the recession – it’s cheaper to search for love from your laptop at home than it is spending a night in bars and clubs.

“Online dating is an industry that can sustain a recession – people may cut back on luxury items and the amount they go out and stay to stay at home instead,” Kate Devine, online marketing manager of Mysinglefriend.com, told Huff Post UK.

“This makes online dating websites an appealing and more affordable place to meet new people.”

A recession also makes people reassess their priorities, according to Match.com’s UK & Ireland managing director Karl Gregory.

“It’s traditionally a time for people to reassess their life priorities, meaning that relationships are front of mind, “ he told Huff Post UK.

online dating

Love at the click of a button?

Other website owners have sought to diversify beyond the UK market to help keep the margins looking healthy.

“I've had to be really aware of the recession, both in terms of lowering my acquisition costs and the unwillingness of consumers to spend in the UK,” said Andy Hammonds, managing director of Bright Day, which runs a wide portfolio of niche internet dating sites, including MumsDateDads.co.uk, ChristianandSingle.co.uk and 50UpSingles.co.uk.

“I’ve adapted my focus to accruing profit in more affluent dating markets outside the UK, like Australia for instance. As a result, the last 12 months have been very successful, seeing increases in revenue of over 300%.”

Many use sites like WhiteLabelDating.com to provide a generic software platform to take care of payment processing and customer support, freeing up time to focus on driving traffic to websites.

However, anyone thinking of joining the industry now had better be prepared for a fiercely competitive market.

Matthew Pitt, operations director at Global Personals, which is the driving force behind more than 7,500 dating sites globally, warned “if you are thinking of joining the industry now, you are very unlikely to be successful - unless you have very deep pockets and a differentiated dating offering”.

“Nowadays it’s a mature industry with a few large players dominating the mainstream markets and smaller independents doing OK because they’ve got a strong brand,” Pitt said.

“The latter will find it increasingly tough going forward because they cannot match the investment in technology and resources that the larger sites can to keep their sites at the forefront.

White labeling can erode many of those problems, although some believe following that path can make your brand feel “soulless”.

older computer user

Older daters are now looking for love online, often with help from younger family members

Matt Connolly has one of the newest sites on the market – launched on 26 October, his myLovelyParent site - which encourages children of singles in their 50s and over to recommend their parents for dates - uses a platform he created from scratch.

“There's very little consideration or customisation you can do for your specific audience when white-labeling,” he told Huff Post UK.

“There's (also) the issue that the people who sign up to your site are visible across potentially hundreds of other sites, and that just doesn't feel right. If I join a niche dating site.”

Connolly decided to take the expensive option of building the technology from scratch. “We're putting integrity before profit,” he says. “We want to positively impact the lives of people first and foremost.”

Rise of the tailored dating sites

Niche’s like Connolly’s are a growing trend – among some of the better known are JDate, which focuses on Jewish singletons, Asiand8 and Muslim & Single.

One site, which currently has 5,000 active members is Veggie Romance – a dating site for vegetarian and vegan singles.

Unlike the majority of dating sites, its membership is hugely skewed in favour of women – just 30% of the sites daters are men.

The only other major site with that heavy a bias was SeekingArrangement.com, a sugar-daddy dating site aimed at rich, older men who wanted to meet younger women.

Founder Brandon Wade told Huff Post UK the split was currently eight women to every man, largely caused by the fact women can join for free, and men are expected to pay a subscription.

“One reason why SeekingArrangement.com has done so well is because we are a ‘lifestyle’ dating business. And sugar daddies or sugar babies tend to be in the dating pool for long periods of time,” he added.

dating doubles

Would you double date online?

At the young end of the market, DateWithAMate targets 18-35 year olds who want to double date, rather than searching online on their own.

This, the owners said, would help get young friends out dating together, and increase not only safety, but also the enjoyment.

Charlotte Cory, founder of ffifty.com, set up her site after leaving her husband at the age of 49 and realising that no one should be on their own in mid-life. She is now remarried to a man she met through internet dating.

“It’s hard when you are over 50 and been married for a while, it’s not likely you come into contact with many single men you want to date in the normal course,” she told Huff Post UK.

“You need to go online. In this day and age there is no reason why you should have to spend the second half of your life on your own if you don’t want to.”

The older dater market has attracted a lot of new entrants, including Cupid, which offers traditional dating sites such as cupid.com and girlsdateforfree.com, as well as what they call “casual” sites – such as benaughty.com, flirt.com and clickandflirt.com.

“When we identified a growing number of mature members appearing on our dating sites we started to roll out new products specifically for them,” said Sean Wood, communications director at Cupid.

“They are among people of similar age group and more likely to have similar interests.”

older dating

Silver surfers are now happier to meet online

Interestingly, older daters spend more time looking at the sites than younger ones – they also go on more dates than any other group.

“There are two reasons for that: they have more time, and they just want to be social, said Global Personals’ Pitt.

“They’re not panicking, they’re much more relaxed in themselves about who they are and about meeting someone.”

Niche isn’t necessarily good though, according to one of the market’s biggest players.

Match.com, which also owns MatchAffinity and Dating Direct, believes narrowing your outlook could cut off huge swathes of potential daters.

“Although we are seeing a proliferation of small niche sites powered by white label providers, generally these sites cannot deliver the same breadth and quality of experience for members,” said Match.com’s Gregory.

“Every few months a new online dating start-up pops up and advertises aggressively, but many just come and go. We’ve been around for more than 10 years in the UK, and we’re confident we’ll still be leading the way in another 10.”

Future challenges

SeekingArrangement’s Wade neatly summarises the key issues affecting the dating industry: “Over the next 12 months, I see two issues becoming increasingly important; mobile applications to make dating websites more accessible and background checks to make online dating safer.”

Bright Day’s Hammonds said around 40% of all MumsDateDads.co.uk traffic already comes from the mobile web app, and mobile users tend to stay on the site for longer than web-based ones.

“App development is always an option, but it isn't always cost effective due to the 30% commission requested by providers. Native web apps are actually more economical to run and revenues are far higher,” he added.

AsianD8 told Huff Post UK a significant amount of its traffic was coming from mobile, leading it to invest in in-house app expertise.

“We have launched a number of complimentary apps and mobile websites to ensure that we capitalise on these trends,” a spokesman added.

EHarmony’s country manager Bryn Snelson said it had recently launched the Bad Date Rescue app, which allows users to activate a call to rescue them from a bad date. Fun it maybe, but mobile apps are serious business for eHarmony.

date

Date going badly? There's an app for that. (Or you could just throw a drink in his face)

“The importance of apps are they offer a real-time, on-the-go experience, allowing our customers to access and to communicate with their matches at their own pace,” Snelson explained.

“The flexibility means we can become part of our customers’ routine, which dating naturally is, therefore increasing opportunities for communication with their matches.”

There aren’t many areas where dating websites would welcome government intervention (in fact SeekingArrangement.com’s Wade specifically told us that the government should “stay out of people’s bedrooms”), but monitoring safety levels was an area most wanted help with.

“The government will need to work alongside dating websites to ensure certain standards are adhered to. Safety has become a big issue in recent times – new regulation by the government will ensure companies will have to invest in safety measure such as ID checks,” said Asiand8’s spokesman.

Many others said government regulation could lead to a code of conduct to protect their businesses’ reputation, as well as consumers’ safety.

There’s a crossover between safety and mobile here too; some apps allow you to see how close potential dates are to you – Grindr, the app used by the gay community is probably the best known – but research suggests women in particular feel uncomfortable about broadcasting their location.

As the stigma surrounding online dating continues to subside, and companies work hard to offer personalised, safe and successful dating experiences, this is a market set to significantly grow.