Six Reasons to Rethink Your Online Dating Site

Online dating sites usually fail because online dating usually fails. The simple reason is that everyone expects quick results, no one can make that happen, and users get very unhappy very quickly. Even the main industry rag, Online Dating Magazine, admits that the success rate is a mere 1 percent, compared to an estimated fifty percent for startups in general.

I certainly understand why everyone wants to take a shot at it -- the "need" is huge. In the U.S. alone, the target demographic for these services is 90 million singles that are between 19 and 45. Then there are the 40 percent of frequent users that are already married. Some say that's a billion dollar "recession proof" opportunity.

But make no mistake about it, this is a tough and oversaturated market to enter at this stage. Here are six key reasons, from a business perspective:

1. Direct competition is huge. There is no opportunity for "first mover" advantage here. The same Online Dating Magazine estimates that there are more than 2,500 online dating services online in the U.S. alone, with 1,000 new online dating services opening every year. Some estimates say there are 8,000 competitors worldwide.

2. No longer a growth market. After years of dramatic growth in the 70-80 percent range, online dating revenues have leveled off in the U.S., according to a recent report. Subscriber numbers are actually falling slightly. Lawsuit claims and Nigerian con artists are up, and disillusionment is growing. The honeymoon is over.

3. Entry cost is very high. This business suffers from what Paul Graham calls the 'chicken and the egg problem' -- no one wants to use a dating site with only a few users. So sites have to invest heavily in viral marketing to achieve critical mass, which competes with current social networks, while users expect to join both for free.

4. Intellectual property is tough. It's hard to invent and patent more "scientific" methods on how to match people. Most people, especially women, don't even want to feel like they can be 'matched' by a computer. E-harmony.com has already defined the 29 DIMENSIONS® of compatibility, how many more could there be?

5. Social networks. "Social networking" is really the new term for dating, with mega-sites like Facebook, and the hyperlocal site Foursquare. After all, isn't dating all about making new "friends," and finding them in all the right places? If you want a more intimate (virtual) encounter, try the Facebook SuperPoke application.

6. Sophisticated search engines. I'm already seeing search engine parameters that can match image features, so singles will soon be able to search cyberspace for their ideal partner, without the need to join any dating site. How about the next generation search engine, answering the question, "Who is my ultimate soul mate?"

Perhaps I shouldn't suggest that no one can win in this space. However, because 99 out of 100 fail, and because some have an unsavory reputation, you won't find many Angel or VC investors who are interested. Plan to focus on that other popular tier of investors -- founders, family, friends, and fools.

Certainly if you expect to get any traction in this market, you need some real innovation. The trend is to more niche markets. But you better hurry, because potential winners like Women Behind Bars, Herpes-Date.com, and eHarmonyPets are already taken.

So please don't send me any more business plans along these lines, looking for investor funding, with no marketing budget, and promising huge returns. Investors are looking for real innovation, not copycats with more bells and whistles. So are customers. Let's give it to them.

 

Follow Marty Zwilling on Twitter: www.twitter.com/StartupPro

Comments

[Susan Page]

10:04 AM on 06/20/2011

If you are living with herpes, online dating could be better than you imagine. Among many online herpes dating site, I prefer SingleHerpes.com. They claim they have 560,000+ genuine profiles, 15,000+ daily active members, 500+ blog and forum posts every day, 30+ success stories per day! Not sure if the statistics are true, but they do have any active members.

[JAT3]

03:57 AM on 05/31/2011

Lets be real. The fact is not the site itself! Whether online or offline its about the potential other person being real. No fake or old photo, no lying on age, income or interests etc... And if all that flies the straight and narrow along with some degree of physical attraction... there is still communication, chemistry and connection throw in.

Come on before online...the traditional way of going out to a bar and or almost any social gathering has alcohol involved. So when do you get to real person only talking because they had a few shots? Didn't people give out wrong numbers, and now will give you a number only to screen you or number call or return a call. So it either way is not better or worst....other then the experience of the individuals you come across in whether they decide to be real or superfacial in the first place.

This story is misleading and off the mark IMO.

[steveninnes]

02:09 AM on 05/31/2011

What amazes me is that people think that they can make a dating web site and it will automatically generate money for you.

This is no different to making any piece of software or any product. if the product is the same as the others then you have a hard sell on your hands.

I agree with your statements entirely, and to the poor fools that never think about it then just keep doing what you are doing. At least the coders are making money out of you?

[jflorish]

09:35 AM on 05/30/2011

Online dating is good, it at least allows you to meet single people and talk or see them before meeting in person. You just have to be more carefull about trusting and meeting someone, but thats true anywhere. It's a high percent that doesn't work out, but its also a high percent that doesn't work out elsewhere......

[daceymathers]

12:35 AM on 05/30/2011

There are various online dating sites that are fake so one need to take the safety steps for their online dating sites and the points you have mentioned should be considered while promoting your website it may help to get the best results.

[Jack Daniels Esq]

12:02 PM on 05/29/2011

I always thought that HP a PG13 portal .....?

[Alina Smith]

03:18 AM on 05/28/2011

No dear you are not right online dating can be successful if it is done with proper way.Online dating is a way of life for many singles.Probably the most common guidelines of all dating sites is one and also the same: by no means hand out your individual data too quickly.

[RevSpaminator]

02:24 PM on 05/27/2011

Another reason the online dating sites are dropping off.. you have a better chance of success meeting people face to face (bar, church, etc..) than you do online. Online feels safe until you actually (try to) meet someone and realize they are not who they say they are. Their picture is about 5 years and -60lbs old? The wedding ring line on the finger is way too pale to have been 'divorced' for more than 10 minutes? They forgot to tell you online about the dead people that talk to them? They don't mention that their idea of international cuisine is Olive Garden and freak out when you take them to a really nice XXXXXX (you pick) restaurant? You spent endless hours in online conversation but can't even get together for coffee? I'm not saying it never works, I'm just saying that most of time it doesn't and you end up sitting home alone instead of getting out and finding yourself.

[Eydie Stumpf]

12:30 PM on 05/27/2011

I met my husband online, we dated online, we married - and the only reason our 13 year marriage is over is because he passed away this past October. Don't say online dating doesn't work unless you've had first hand experience. Sure, for some it doesn't work - but I betcha that their relationships made the traditional way didn't work either.

[deweydecimal]

12:55 PM on 05/28/2011

This article is really more about online dating sites per se, versus online dating, which I agree is hugely successful.

[trumbull desi]

06:03 PM on 06/02/2011

Wow ... that's really harsh and unnecessary.

[Kabrinis]

12:20 PM on 05/27/2011

The Seventh Reason to Rethink Your Online Dating Site.

Who needs another dating site when we already have this! :)

Hello!

"My name is Elza, im From Russia
I like to internet meeting.(i find you mail in google)

If you are interesting to chat, meet, change photos, hot webcam talk wit me
please visit my page on site: www.urlremoved.ru"

simle find "Elza"

bye

[RevSpaminator]

02:27 PM on 05/27/2011

What would Stalin have thought if you were tell him that the Bolshevik revolution would lead to this?