What the IPO of Tinder owner Match Group means for the online dating sector
8 min read
11 November 2015
Ross Williams, founder and CEO of online dating company Venntro Media Group, explains what’s next for online dating businesses as the sector reaches maturity as Tinder parent Match Group plans an IPO.
With plans to raise up to $467m in the next three weeks, the highly anticipated public offering is a sign of a growing confidence in the online dating sector, with analysts predicting a boom in positive financial growth in years to come.
One in five adults have used an online dating site or app, with the UK online dating market alone forecast to reach an estimated market value of £225m by 2019 – an increase of more than a third from a market value of £165m in 2014.
Despite more online dating products on the market than ever before, there is still a clear and identifiable demand for an increasingly diverse array of dating services.
In the last year alone, Venntro Media Group has seen 200 per cent revenue growth in the US. What’s more, an increasing number of businesses are looking to get a slice of the pie. We have established new partnerships with more than 70 media publishers in the last 12 months, all looking to use online dating to monetise and engage their audiences.
As well as an increase in demand in the US, European markets are also developing rapidly.
French dating app Happn has been extremely successful in its European expansion,raising £14m through three rounds of funding – a clear example of the potential that more casual online dating businesses hold.
The development of the mobile app sector plays a large part in the dating industry’s growth in popularity over the past few years, successful in ‘normalising’ the notion of dating online.
Nonetheless, it can be notoriously difficult to garner a sustainable revenue stream from apps – something that can often put investors off, as highlighted by tech adviser Andrew Chen earlier this year.
However, with an estimated value of more than $3.4bn, this clearly isn’t a problem for Match Group.
By operating as a group, the company can maintain a stable income across its variety of products. While some may generate less income like Tinder, they’re still important for driving sector innovation.
Read more about the online dating industry:
- Dating app Happn “not afraid” of Tinder as it raises $14m and tops 6.5m users
- Online dating firm Venntro Media Group on how to win a new user every three seconds
- The UK’s fastest growing private companies: Hot 100 2015 – (36) Global Personals
Meanwhile, products like Match.com offer consumers a more enriched service, and generate high revenues through their use of traditional subscription models as a result. Combined, these products contribute to a positive balance sheet.
Venntro itself follows a similar model, which we know to be successful. Having a diverse range of dating and lifestyle products within its portfolio allows the group to offer consumers a suitable product for them during all points of their dating lifecycle.
When they’re ready for something more serious, they’ll make the transition to Match.com or JustSingles.com. And if they’re looking or love later in life, they could use OurTime.com or JustSeniorSingles.com.
This approach enables dating businesses to ensure that they don’t lose their customers to anyone else – and has surely played an essential role in allowing Match Group to achieve a 22 per cent share of the market.
Moreover, a portfolio approach is also important in helping us to adapt to shifts in the market. It means that we can adapt easily to different variables such as the ageing population, broader consumer interests and the growth of on-the-go lifestyles, better catering to consumer demand.
It’s no secret that consumer retention is limited and difficult to sustain, thus having an impact on growth and revenue. Cross-selling members between products is an opportunity only afforded to those that take a portfolio approach.
While Match Group doesn’t appear to be actively cross-selling at present, at Venntro Media Group we’ve found this to be a successful way of retaining and engaging our customers.
The core benefit is that this reduces built-in churn and acquisition costs. In fact, the propensity to subscribe increases by 33 per cent when a customer is a member of more than one site within our portfolio.
While offering multiple products is important, the biggest opportunity for expansion for dating businesses is to explore services that maintain a relationship with consumers after they’ve found a relationship.
Lifestyle products that help consumers to develop their own relationships, such as social networks, booking apps and lifestyle apps, like Dojo and Avocado, have huge potential in allowing dating businesses to increase the lifetime value of their customers.
In June this year, we launched Venntro Ventures, our corporate venturing division. Acting as an incubator to nurture and invest in new tech startups, this is essential in enabling us to stay on top of emerging trends and markets.
While a tried and tested model is great, innovation is crucial and the Match Group are acutely aware of this; in fact, Tinder came out of the group’s own incubator.
It’s an exciting time for the online dating industry. Looking at what our peers have done well, the key to growing a successful and profitable dating business is to scale, diversify and execute brilliantly.
Get it right and you’ll be swiping right all the way to Wall Street.
Ross Williams is the founder and CEO of Venntro Media Group, the UK’s leading online dating and lifestyle company which hosts 25,000 dating sites around the world