Andreas Weigend, Social Data Revolution | MS&E 237, Stanford University, Spring 2011 | Course Wiki

Class_13: Dating and Monetization

Date: May 10, 2011
Audio: weigend_stanford2011.13_2011.05.10.mp3
Other: Notes: bit.ly/SDRdating
Initial authors: [Patrick Lai, plai@cs.stanford.edu],[Kan Cao, kancao@stanford.edu], [Alireza Forouzan, alirezaf@stanford.edu]

Key Points

  • Online Dating Services: Overview of the online dating services.
  • Skout : What is it and how did it start?
  • The Importance of Metrics: What metrics are important for recommending people as well as refining a product?
  • Dialogue with The Data: Do people really know what they want? How can social data be used to help answer this question?
  • Monetization: What are some ways to build a business around people recommendation?

Announcements

  • Tom Glocer (CEO) and James Powell (CTO) of Thomson Reuters will be visiting next Tuesday (5/17). Create a post on the class wiki suggesting different readings for them so they can prepare for the class.
  • A majority of the class voted that we have social hour after class this coming Thursday (5/12) to meet the people you were recommended in homework 3.

Online Dating Services:

Online dating is a system that allows individuals, couples and groups to make contact and communicate with each other over the Internet, mobile phones or even physical world. Here is a great video giving an overview about the online dating services including some interesting figures about these services such as: 40 M people filling online dating profiles every year, revenue of these services will be around $500M/year. This video also discuss some of the research findings of Okcupid dating sites.


This is also an interesting blog about online dating: http://www.welovedates.com/blog/
According to the Wikipedia, the United States generated $957 million in revenue in 2008 from online dating services. The U.S. online dating market is expected to increase spending to $932 million in 2011. At the end of November 2004, there were 844 lifestyle and dating sites, a 38 percent increase since the start of the year, according to Hitwise Inc. However, market share was increasingly being dominated by several large commercial services, including AOL Personals, Yahoo! Personals, Match.com, and eHarmony. By 2007, many prominent studies show that Baby Boomer interest in online dating had soared.

Here is short comparison between two of the largest dating sites:
(source: http://web.spotcoolstuff.com/best-online-dating-sites)
  • Match.com:
You start with filling a one page open-ended profile form, and after that you can wait for being found by some one or being proactive and and start browsing for that special someone yourself. Match is—easily—the largest and most popular online dating service with more than 15 million users worldwide. You’ll find all sorts here, gay and straight, old and young, those looking for serious commitment and those looking for a fling. Monetization is by subscription fee. $35 per month (or the rough equivalent in your local currency) if you sign up for their month-by-month plan.
  • eharmony.com:
eharmony is a much more guided (or regimented, depending on your point of view) system. It starts with you filling out a very lengthy questionnaire about yourself and the traits you value in a partner.How quickly do you catch onto new things on a scale of 1 to 7? Plan on dedicating at least 45 minutes and two aspirin to this questionnaire. Next, you’ll get a list of potential partners based on your questionnaire results. Compared to Match.com, users of eHarmony tend to be a bit older and significantly more inclined towards marriage and long-term relationships. The revenue model is the same as Match.com. The cost per month for eHarmony’s Compatibility Matching System drops significantly as you sign up for longer period of time. One month is $60 (in USD, or the equivalent in your local currency), 3 months for $120 ($40/month), 6 months for $180 ($30/month) or 1 year for $240 ($20/month).

But an interesting trend in online dating services is that people do not know what they want! Their preferences will be built based on what the dating site offers them. So a new generation of dating sites such as Okcupid and Skout formed. As Steve Jobs said:
" It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show them", Business Week, May 25, 1998
I think this also applies to dating services.

OkCupid

Founded by Harvard students (this group also responsible for SparkNotes) in 2001. OkCupid still matches using quizzes, albeit in shorter length and larger quantity, but users can also search by age, religion, location, etc. There are no restrictions on who can sign up. The site generates revenue through advertisements and subscriptions; subscribers can view the site ad-free and access extra features. OkCupid claims to have 3.5 million users.

Skout


Skout was founded 3 years ago by Christian Wiklund ( @cwiklund ) and originally started in the social-networking space. It later moved into the people recommendation space and evolved into a real-time location-based service that created serendipitous meetings between people who don’t know each other. Skout tries to combine the best of real-world interactions and online interactions using algorithms and data collected from users. It connects roughly 4 million couples per month (as measured by counting back and forth messages). It can be seen as pimping at large scale! Here is the presentation of the Skout in the Demo 2009 by Christian Wiklund. In this video

Some interesting questions to consider:
  • How do online dating sites help users optimize their profiles?
  • How do online dating sites suggest what users should do next to optimize their chances?
  • How do users leverage friends of their friends in finding the match?

Is the future of online dating in virtualized online dates?

Metrics

Skout does not use massive forms to collect data for matching since people don’t really know what they want, instead a large number of metrics are collected. About 300 variables are collected from users, both to refine the product and perform recommendations. There are between 60 and 70 core metrics that define the “equation of the business”, such as:

  • How many messages, how many messages per user
  • How many logins
  • Session lengths
  • How many users are converting to paying users
  • Location, e..g it defines some underlying commonality
  • Time, e.g. people are more likely to be drunk at night
  • Number of previous relationships? Some amusing apps like the Breakup Notifier and Crush Notifier to track relationship success/failure can also serve as metrics.

Here is a comparison of different metrics over three different dating websites including match.com, plentyoffish.com and wealthymen.com.
http://www.giveyourhandabreak.com/articles/unique-visitors/.
The conclusion of this article is really interesting. It mentions that unique visitors are important but they are not the whole story. This is especially true in online dating services because people are a dating site's product as well as its visitors.
People are a dating site’s primary commodity. They are its life and blood. “Millions of unique visitors” doesn’t mean as much if people don’t:
  • visit often
  • stay long
  • view many pages
On dating sites:
  • more visits per person = greater odds of making contact and less time waiting for a reply
  • longer stay per visit = more time spent reading profiles and communicating with people
  • more pages per visit = more profiles viewed
An important issue about metrics is that companies should learn from the dialogue with these metrics and data. Figures are important but the reasons behind the figures are more important. For instance if the number of users grow by 40%, we should know if it was because of improvement in product or because of the increase of marketing efforts.

Some conclusions Skout came up with:

51 percent of the consumers surveyed have met another single person in the Real World that they initiated contact with on their iPhone. The survey findings show that:
  • 69 percent are comfortable meeting up with someone they met on their iPhone
  • 40 percent are using a mobile dating service while out in bars, clubs and restaurants
  • 20 percent are only using the service outside of their homes
  • 35 percent are using the service at work
  • 29 percent of the surveyed consumers would prioritize spending time with family
  • 36 percent would prefer going on “a date or two”
  • 20 percent would prefer at least one “hook-up” and a few dates
  • 15 percent would prefer multiple “hook-ups” and dates before the Holidays are over


Monetization

The complete and ultimate guide to business models from Andreas Weigend on Vimeo.


There is trade-off between acquiring more users and monetization, especially on dating websites where network effect is huge. The solution to this problem is using freemium business model. Freemium is a business model that works by offering a basic product or service free of charge( such as software, web services or other) while a premium for advanced features, functionality, related products and services.

There are some other revenue models on the web. The three most common ways are:
  • CPM (Cost Per Mille), also called "Cost Per Thousand (CPT), is where advertisers pay for exposure of their message to a specific audience.
  • CPC (Cost Per Click) is also known as Pay per click (PPC). Advertisers pay each time a user clicks on their listing and is redirected to their website. They do not actually pay for the listing, but only when the listing is clicked on. This system allows advertising specialists to refine searches and gain information about their market. Under the Pay per click pricing system, advertisers pay for the right to be listed under a series of target rich words that direct relevant traffic to their website, and pay only when someone clicks on their listing which links directly to their website. CPC differs from CPV in that each click is paid for regardless of whether the user makes it to the target site.
  • CPA (Cost Per Action) or (Cost Per Acquisition) advertising is performance based and is common in the affiliate marketing sector of the business. In this payment scheme, the publisher takes all the risk of running the ad, and the advertiser pays only for the amount of users who complete a transaction, such as a purchase or sign-up. This model ignores any inefficiency in the sellers web site conversion funnel.

And finally if you are interested in online dating industry you can attend Internet Dating Conference iDate 2011 at Beverly Hills on Jun 22-24, 2011. Here is the video from 2009 conference.