Dating app.

Research
Detailed report about potential launch of
the dating app. Exploring new markets,
developing existing ones with updated
approaches.

Prepared by: Roman Nadolskyi

Email: romanadolskyi@gmail.com

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 “Online dating is efficient. We're a fast food society and now you have a pool of eligible people
to choose from.”

Gail Barsky

Abstract: The main aim of this paper is to prepare detailed analytical report and
presentation for the potential dating app’s launch. This research paper is divided into two main
parts: block A mainly analyzes general information about future clone (market size and
dynamics, a thorough analysis of the market’s competitive landscapes and possible markets to
explore, accurate predictions on upcoming revenues and expenses); block B overviews more
practical and implementing measures of the future project (profitable monetization mechanisms,
new effective business arrangements, updated payment schemes for “big” players and regular
customers). Finally, this research will provide you with brief and accurate conclusion whether it
is worth to launch new product from economic and social points of view. All the data are fully
backup and taken from official sources, research magazines and companies’ official websites,
presenting at the end of this research paper as Bibliography box.

Block A: General Information

1. Market size, dynamics and main competitors

The first online dating services appeared in the late nineties. Market changes associated
with the popularization of mobile devices have already passed. The number of Internet users in
developed and developing countries, such as EMEA and CIS regions, is almost not increasing.
What reasons lead to the fact that users continue to make more active appointments online?
To get to know each other better in the real world, people need to go out at least once. In
2020, making a good impression on the potential crush has become much more challenging.
Even an economical going to the cinema will cost a minimum hundreds of dollars- for an
unemployed or student, simply unbearable amount. Therefore, if strangers do not like each other
in the process of communication, then a large amount will be spent in vain. This is one of the
reasons why people prefer to get acquainted in online applications: there you can see in advance
the interests of the interlocutor, talk to him on any topic you want and make an appointment with
a person who has already been selected online or in real world.
A. Market size and dynamics
The global online dating services market was valued at $6,400.0 million in 2017, and is
projected to reach $9,202 million by 2025, growing at a CAGR of 4.7% from 2018 to 2025.The
total international market volume (operating profit and TOP5 market player’s capitalization) for
online dating services in 2018 amounted to $ 8.6 billion, while, according to the forecasts of the
investment holding Social Discovery Ventures, it continues to grow by 8.9% each year reaching
above 9 billion in 2025. The CIS market for online dating accounts for only $100 million, but it
is growing rapidly, a year earlier, the volume for the CIS market was approximately half of that
(47 million). According to the Japanese holding company Nomura Instinet’s analyst Mark Kelly,
by 2022 the global online dating market will grow up to $12 billion. "About half of Internet users
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are not married, and we assume that by 2022 20% of them will be ready to use the services
online dating, which is 310 million people all over the world, excluding China, USA and India”
said Kelly.
To make analysis clear and more accurate, it will be concentrated mostly on data over the
last two full years (2018-2019) and first quarter of 2020. The following graph reveals the
information on revenue raised during the COVID-19 period. According to most recent analytical
research, due to negative economic and social consequences of quarantine, revenue in the online
dating segment is projected to reach only US$1,754m in 2020, leading significant decrease in
total market size (Statista.com). To get clear and comprehensive view on current market
situation, it may be positively stated that future dating services’ start-up has a great opportunity
and potential to growth with approximately 5% yearly, leading to a corresponding 1,5-2 billions
revenue growth in a total market volume
Figure 1. Global dating market by revenue

Source: Statista.com (2020)

Furthermore, some analysts are positively disposed and confident in their judgements, claiming
that ”A couple of years ago, quite detailed studies were conducted, which were published by Match.com,
where the American online dating market was estimated at $ 3 billion total volume. Moreover, the entire
US market was approximately 40% of the world at that time. The revenue of the Match Group holding,
which includes Tinder, in 2018 reached almost $ 2billion, which was at least a quarter of the entire
market world market. The market is growing at about 10% per year. Thus, it can be assumed that the total
market by 2023 will amount to $ 10-12 billion” (Match.com)

B. Market players and competitors

In order to develop competitive and profitable application, you constantly should research
the market, trying to ensure that your innovation will be as efficient and necessary as your
experienced market competitors from different point of view (financial, social, ethical). That is
why, it should be so important to analyze not only the market structure and model, but also the
strategy and business view of your potential market rivals. In doing so, try to monitor an

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operating strategy and business view of big market players which are more experienced and
operate on the market for a long period of time.
Nowadays, there are about 8000 online dating services in the world, and each year their
number increases by a thousand. Conventionally, they are divided into three main categories:
services based on character compatibility, location, and intended for a specific audience. Today,
in oversupply conditions by big market players, the niche sites and dating apps for a specific
purpose are at a premium. For example, services for finding a serious relationship: Russian
MonAmour, Themo or German eDarling. That is why, in order to make our new application
more desirable and popular, we should stick to one concrete topic: whether it is application for
serious relationship, ordinary chatter or one-night meeting. Having done that, we will be ahead
of the market biggest part.
In 2016, the American Eve application appeared, which not only positions itself as a
service for serious relationship or dating, but also protects women from virtual harassment - the
more profiles men approve, the lower their rating are.
However, in contrast to the niche services that are gaining popularity and targeted at a
strictly defined audience, the classic dating sites and apps like Tinder, Badoo, eHarmony, Match
remain the main players on the online dating market. According to the rating of the analytical
service SEMrush, compiled for dating applications, the leader in the number of references in
search engine are Badoo and Tinder. The following table (Table 1) presents the biggest market
players in 2019 based on downloads worldwide. The following table (Table 2) shows the Top 5
app ranked per country by women and men. This information is valuable for our project since it
gives clear view about specific market and group of people we should concentrate on to get
higher profit and popularity.
Table 1. Top Dating Apps for 2019 by Downloads

Source: Statista (2020)

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Table 2. Top 5 Apps owned per country by women vs men

Source: BusinessofApps.com (2020)

The last graph discloses information on the total revenue growth of the top dating market
player -Match Group, compared to its biggest revenue maker- Tinder. Tinder is part of Match
Group, which has an effective monopoly on the international (or at least Western) online dating
game. As well as Tinder, PlentyOfFish, OKCupid, and the eponymous Match.com fall into this
stable. Match Group itself is part of IAC (InterActiveCorp). Tinder moved to monetization
system in 2015, offering the Tinder Plus service. This allows users various added features, such
as Tinder Passport (allowing users to move to another location to scout ahead) and unlimited
likes (non-paying users are limited to 50 every 12 hours). Tinder is the main revenue generating
app for Match, accounting for $1.15 billion of Match’s total of $2.05 billion revenue in 2019 –
56% in total. In the below chart, we can see just how rapidly Tinder revenue has grown since
Match Group’s IPO in 2015 – at a CAGR of 123%. 2019’s 42% impressive increase from $805
million to $1.152 billion represents the first year in this period where Tinder revenue has not at
least doubled (give or take $1 million in 2018).
Graph 1. Match Group revenue vs Tinder revenue, 2015-2019

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Source: Match.com (2020)
This steadier growth rate means that Tinder’s share of the total has grown significantly,
with 2019 the first year that Tinder has contributed more than 50% of the total. In 2015 it
contributed a mere 5%. This had risen as high as 47% in 2018. Tinder’s share of Match revenue
is reflected in terms of paying subscribers, with Tinder’s average of 5.9 million subscribers
accounting for 60% of the total of 9.8 million average subscribers over Match Group’s wider
portfolio. As of Q4 2019, Match Group ARPU stood at $0.59 per user. $0.62 in North America,
against $0.56 internationally. North America saw the greatest increase year-on-year, rising from
$0.59 – a 5% increase. International ARPU remained unchanged, with the global figure
increasing by $0.01 – or 2%.

2. TOP 3 markets to launch new application on

It is commonly believed that during the economic crisis, user activity on dating services is
growing. However, experts statistically calculated that in CIS countries (Russia, Belarus,
primarily Ukraine, Kazakhstan) all changes remained within the framework of statistical error
and seasonal fluctuations. Undoubtedly, the decrease in purchasing power caused by negative
influence of the economic crisis, contributed to reduce in demand for online dating services.
Furthermore, according to estimates by J'son & Partners Consulting, the online dating market in
Russia is approximately $ 50 million per year. Industry leader Mamba (operating on the
international market under the Wamba brand) controls about 85% of the market, mainly through
partnerships with Mail.Ru Group and Rambler. Since the online dating market in Russia to this
day remains niche and focuses more on self-developed sites (national incentive program), it
would be rather costly and economically ineffective to launch our new application on their
market. Additionally, our choice will be based on economic and financial benefits for our future
applications, rather than social and geographical. We have decided to exclude from our sample
such popular markets for online dating industry as USA, China and India. In these countries,
market is more concentrated on internally developed services, helping government to actively
promotes and stimulates internal innovations.
Eventually, the first potential market to introduce and launch our future product is
Australia. The principal argument for this option is the fact that the country is geographically
separated from other strong competitive markets and is actively focusing on outsourcing in the
field of development and innovation, thereby allowing unhindered access to its market, which in
turn is actively encouraged by the government using different grants and tax benefits. Other
argument lies in the economic component: average industry growth 2014–2019 was about 6.8%
that was in line with the global one, keeping in mind the fact that the market is relatively new,
and country does not possess own dating applications. Furthermore, The Dating Services
industry has performed strongly over the past five years. Traditionally, many industry operators
have struggled with negative public perceptions in Australia. However, consumers have become
increasingly comfortable with paying for online dating services over the past five years that
gives us additional incentive to enter the market. As a result, online dating has grown to become
the industry's main service, driving industry revenue over the period
The second potential market to introduce our new application is the biggest and most
developed country in South America- Brazil. Primarily, this country was selected based on
ethnographic and cultural preferences: Brazilians are always open to approach new people online
and are glad to welcome technologies that can significantly simplify this. Additionally,
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according to latest publications, eight out of ten Brazilian internet users surveyed said that they
have an account on dating app even though they are disappointed about interface in these
applications. Brazilians have been engaging in social media more and more over the past few
years. Recently, the share of people in the South American country who said they used social
network has increased to 27%, which significantly exceeds the average on the world market.
Moreover, more than four out of ten Brazilians thought they would feel lonely most of the time
soon — the highest share among Latin Americans recently surveyed. Furthermore, over 60% of
Brazilians who took part in another survey stated that a happy relationship was one of the most
important aspects of their lives and they are ready to try their luck online. Another argument in
favor of Brazil, is the fact that Brazil is reportedly the world’s third-biggest Tinder market, after
the US and UK. Around 10% of Brazilian internet users use Tinder (that has potentially no
alternatives) according to a survey by eMarketer, making it the most-used mobile dating app in
the country (as of June 2019). Additionally, according general opinion, Brazil is the perfect
market for new online start-ups since most of the biggest sports competitions, concerts and
festivals take place in Brazil, which attract many young international tourists from all around the
world.
Considering the economic side of this choice, there are some statistically proven claims
in favor of this country:
❖ Revenue in the Online Dating segment is projected to reach US$48m in 2020.
❖ Revenue is expected to show an annual growth rate (CAGR 2020-2024) of 12.5%
(that is much higher than expected average on the market), resulting in a projected
market volume of US$77m by 2024.
❖ User penetration will be 5.3% in 2020 and is expected to hit 7.5% by 2024 (while
the global market is expected to hit 3.6% on average).
❖ The average revenue per user (ARPU) is expected to amount to US$4.27

The third potential market to enter with our new dating service is Germany or other
German-speaking countries. German-speaking countries are a hotly contested market for online
dating sites. New dating apps are shaking up the sector, which is worth millions not only for
market as a general, but also for every individual market player. According to online dating
industry estimates, more than 11 million users regularly visit dating websites – attracting ever
more service providers to the hotly contested German market. Dating sites bring in about 186
million euros a year in total, according to Pamela Moucha from the dating service comparison
site singleboersen-vergleich.de that are fairly divided between different participants. The big
advantage of the German market is the fact that dating services here are mostly concentrated on
some certain groups of people- there are sites catering to single parents, disabled people, farmers,
seniors, heavy metal fans, especially tall people, as well as the especially small - the list goes on
and on. Therefore, if our product will be specialized on some concrete aspects, it would be more
valuable from efficiency point of view. The following graph (Graph 2) presents us one more
argument in favor of Germany- half of its users fully pay for all chargeable services that will
generate a stable from of cash for our service.
Considering the economic side of this choice, there are some statistically proven claims
in favor of this country:
❖ Revenue in the Online Dating segment is projected to reach US$64m in 2020.

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 ❖ Revenue is expected to show an annual growth rate (CAGR 2020-2024) of 9.0% (that is
much higher than expected average on the market), resulting in a projected market
volume of US$90m by 2024.
❖ User penetration will be 5.7% in 2020 and is expected to hit 7.6% by 2024 (while the
global market is expected to hit 3.6% on average).
❖ The average revenue per user (ARPU) is expected to amount to US$13.46.
Graph 2. Share of adult population who were using online dating app in 2019

Source: Statista.com (2020)

3. How much can we earn in 3 years

Even 20 years ago, who could imagine that the Internet would become such an integral
part of our lives. What can we say if we not only order services, clothes and food online, but
even learn how to build full-fledged virtual relationships? Have you ever thought that on online
dating sites you are able not only meet new people, but, for example, earn money: not virtual, but
real money? Many dating sites, as well as online video chats, have their own affiliate programs:
they can offer you different sorts of paid services for a certain level of subscription. Therefore,
let’s take a close look on how much our dating site clone can earn in 1, 2 and 3 years. For
analysis simplicity, we will be using USD as a common currency and our research will be based
on two methods: market research (the revenue will be calculated based on average market data
for different dating sites during their first 3 years) and statistical research (the real revenue model
for the dating sites with corresponding actual numbers will be implemented).
Market method: the following figure presents the information on how much dating apps
have earned in 2019 in one minute. Having presented this information, we may conduct simple
mathematics to evaluate how much can be earned in three years.
▪ The average revenue (without outlined Tinder) in one minute (globally on the market) in
2019 was 57$.
▪ The average revenue for one hour is approximately 3420$.
▪ The average surveyed person spends around 85 minutes daily at online dating services (
85 minutes daily multiplied by 57$ is equal to 4845$ for a day)

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 ▪ Having calculated that, we may evaluate how much can be earned in one month (with no
subscriptions). It might surprise you to find out that millennials spend 20-25 hours a
week on dating apps, according to a new survey conducted by Business Insider ( 22,5
hours in a week multiplied by 3 420$ for an hour is equal to approximately 77 000$ in a
one single month)
▪ Thus, we can calculate average revenue for the first year of our new site on the market-
approximately 1 000 000$- that is relatively higher than top dating sites raised in their
first year (Badoo, eHarmony, Plenty of Fish).
Now, we have the most interesting part of our valuation- how much we can earn in 3
years? The answer to this question is not as simple as it seems. In doing so, we should take our
annual revenue and multiplied by the average rate of growth on the market (6.5% yearly, in
2019). Additionally, to get correct results, we should raise our growth rate to the power of 2. The
final formula looks as follows: 1 000 000$ + (1 000 000$ * 6,5%) = 1 065 000$ -in two years;
1 065 000$ + (1 065 000$ * 6,5%) = 1 134 225$ - in three years.
Table 3. This is how much dating sites make in a minute in 2019.

Source: Application Developed Magazine (2019)

Statistical method: Having made a statistical research, it was found out average fees that
online dating services charge on their online customers. Based on that and the amount of paying
site users, it was calculated the potential revenue for the online dating services and membership
payments available on for most visitors at the registration level. Of course, we acknowledge the
importance of having paid services and premium memberships on our future site clone, they
alone cannot guarantee a steady and fixed flow of income. Additionally, we can continuously
attract new members to our site and keep them engaged and returning to our site for more
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interesting content and activities by providing them a wing range of different services with the
subsequent possibility of abandoning them. Please, take a close look on presentation tables
below.
Table 1. How much on average you can earn with some of the most popular paid services
and different number of paying/total users (2019)

Source: BusinessofApps.com (2020)

Table 2 shows you how much we can earn on average with just the one premium
membership and three membership periods. As a matter of fact, we are going to create several
premium memberships, for example, Silver, Gold, Platinum user groups, and so on.

Source: BusinessofApps.com (2020)

According to the first table, where we can implement two the most popular services for
the new customer of online dating sites (lift-up in search and e-card), we surely can raise in one
month having 25 000 paying users (the average number for new dating sites) is approximately
800 000$ ( 25 000 paying users * 1.75$ +25 000 paying users * 0.90$= 795 000). Furthermore,
this revenue with no additional income for advertising that both types of users will observe.
Now, to get our potential revenue in 3 three years, we should use the same method as previously:
800 000$ + (800 000$ * 6,5%) = 852 000$ -in two years; 852 000$ + (852 000$ * 6,5%) =
907 380$. Keep in mind, this is an average revenue for the country with average population and

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Internet users. As you can see, the revenue from both methods is more-less equal. Additionally,
if we are going to implement the model in the last table, our potential income will be
approximately the same as in both previous examples: 148 500$ * 6 half-year periods =
891 000$, having in mind the fact that on average, one-third of total users buys the membership
card. The main advantage of this method is a steady flow on cash generated here, regarding the
fact whether the user visit the site daily or on monthly basis. There are other ways to earn
additional revenue with our dating site, for example by displaying third-party banners on our
website, or by selling merchandise with the gift store.

4. Business plan, marketing budget

The market for online dating is very dynamic as companies with new and innovative
business models displace older ones and rapidly acquire new users with strategic marketing
tactics. If your company has a powerful idea to enter the online dating market, it will need an
equally powerful business model to communicate the opportunity to investors. Otherwise, it will
risk appearing overly generic to investors that will quickly dismiss the opportunity as another
imitation.
The dating app market is extremely competitive. Securing investor funding to get your
dating app off the ground can be difficult. If you’re going to impress investors, you’ll need an
amazing dating app business plan. Furthermore, dating apps have complexities that are not found
in other software categories. That is why, preparing an informative and comprehensive business
plan is very important at the introduction stage. Writing a mobile app business plan is drastically
different than doing so for other types of businesses. There are many considerations that need to
be made and the overall business plan format may differ as well. Dating applications operate
much differently than other types of apps. Although free dating apps often generate many
downloads, they also have low retention rates. The average retention rate for dating apps is
fractional when compared to other app categories – such as social media.
A successful dating app business plan must showcase realistic assumptions, from the
duration spent on these apps by customers each day to the price that they are willing to pay to
use it. Let’s start from the formal definition
Dating service is a very wide term which is used for all the companies, groups or
individuals which help people find their potential romantic partners. The dating services are
usually based on the religion, nationality, location, sexuality and other preferences of the target
society.
Business Plan
1. Our mission: We make being single more fun and rewarding by connecting people
who may not have otherwise met in real life. We celebrate that being single is a journey. And a
great one. Being single isn’t the thing you do, unhappily, before you settle down. We stand up
for how a whole generation chooses to live their lives
2. Our vision: To bring the real feeling of communication into the virtual world by
providing the same qualities that people gain from interactions into its platform while focusing
on dating.
Online dating services usually provide un-moderated matchmaking over the Internet,
using personal computers or cell phones. Most sites and apps allow members to upload photos or
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videos of themselves and browse the photos and videos of others while more recent platforms
connect the app to the user's Facebook account.

Figure 2. Most active users on the online dating market.

Source: Digital.com (2020)
The following financial plan represents the future prediction of our main operations and
expenses that we may incur during implementation period. The assumptions and projections are
supported by the figures and strategies described in the business plan.
For a period of 12 months, that will include app development and market penetration of
our online dating site, it will require a total funding of 300,000$.

Total Budget Required Before VAT

Fix assets
48,500
OPEX 58,500
Work force 226,500
Marketing expenditures 68,000
Unexpected expenditures 9,250
Total 410,750
Income during the losing period (First 137,500
year)
Total required investment 273,250

MAIN EXPENDITURES

2% 12% Fix assets

17%
14% OPEX
Work Force
Marketing expenditures
55% Unexpected expenditures

Source: BusinessofApps (2020)

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 Marketing budget:
Perhaps one of the most important sections of any business plan for an online dating
company is the marketing section. This includes a combination of point including the overall
user acquisition strategy, retention plan, and brand positioning. Aside from the most mainstream
companies, smaller dating websites acquire their positioning through their ability to target a
niche and attract a specific segment of the market, a good marketing strategy generally reflects
this
Now that we have a basic understanding of the costs to run a basic website, let’s analyze
some of the features that are worth paying extra for. We’ll only focus on add-ons that can turn
visitors into customers, increase your online traffic, and raise our ranking on search engines like
Google. We are going to analyze relatively new ways of targeting the audience that appeared to
be effective and cost moderated.

❖ Search Engine Optimization (SEO)

In fact, it is mandatory, especially if we’re running a dating online website. SEO is a
series of tasks that ultimately determine where our website ranks on search engines for a
keyword. The idea is that our website should be the one people see high above others if a search
for our specialty is queried. SEO costs vary per agency, but it is one of the pricier expenses of
anything related running a website. We can expect to pay an upfront cost (between $3,000 and
$9,000), in addition to a monthly maintenance fee (approximately $200 to $500 per month, on
average). The bigger our company, the higher cost we can expect to pay. SEO is an ongoing
battle, it’s never a one-time thing. We set aside a budget to pay for a company that knows what
they’re doing, with a proven track record. The more credible they are, the more they charge.
❖ Pay-Per-Click (PPC) Advertising
We can find PPC ads on the sidebar of Google search engine result pages, the bottom of
YouTube videos, and on banners and footers on many websites. They are found everywhere, as
publishers obtain a commission anytime an ad is clicked. Because they are so widespread, and
paid ads are targeted to specific groups, they are effective in helping businesses get increased
traffic, especially for the start-ups. We will pay for every ad clicked. The costs per click depend
on how many people are bidding on the same keyword we are trying to be seen for. The costs
depend on how much competition we have in the area we are targeting. Prices can range from
$100 per month to $1,000 per month, and higher.
❖ Conversion Rate Optimization (CRO)
Conversion rate optimization can increase website conversions with call-to-action (CTA)
tactics like landing pages, newsletters, sign-up sheets, buttons, and other options. One method
may work better than others, so it’s best to test which CRO is the most effective with proper A/B
testing. A single A/B test package for CRO generally ranges from $300 to $600

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 ❖ Content Marketing
Customers tend to favor businesses that produce memorable content. Customer trust is
established with information that people can depend on. Such content can be delivered through
blogs, videos, social media imagery, charts, demonstrations, infographics, white pages, podcasts
and other forms of multimedia. Every form of content marketing differs, but none of it is cheap.
Infographics can cost at least $500 to produce a single graphic, while video production can reach
rates of $3,000 to $5,000
❖ Social Media
Social media is a great platform for you to creatively promote your business, without
selling to anyone. You can showcase what you have to offer in fun and creative ways, perhaps
through humorous memes, video footage, statistical infographics or even a simple message.
There are many forms of social media, and you might be charged to have each one maintained
and updated. The content on social media should not be identical on all networks, so taking the
time to customize content will cost you. Monthly maintenance and updates could cost between
$250 per month to $2,500, depending on the agency you use
According to Digital.com (2020) the average Large Dating Website (a large scale website
with several hundred pages, custom design layouts and imagery, a content management system,
unique functionality, and supplementary features (such as personalized development, blog
integration, multimedia creation, and more) with at least two methods of advertising listed
above, can expect to incur from 25 000$ to 40 000$ expenses on marketing in a year.

5. Traffic: cost, difficulties and purchase

Definition: Site traffic is the total number of visitors who came to our web resource for a
certain time. Its sources can be search engines, social networks, various Internet resources
(blogs, forums, etc.) and direct visits (browser bookmarks, manual entry of the site address in the
address bar). The aggregate traffic from all sources makes up the total traffic to the site.
Why do we need traffic? Attracting visitors is the key task of any dating site. High-quality
targeted traffic allows us to expand our customer base for companies, increase sales to online
stores, and increase advertising revenue for info portals. In addition, boosting traffic is an
effective way to find investors, advertisers, and business partners.
The cost and purchase: According to information presented in analytical reports, most
online dating sites bought traffic from HitLens. The main advantage of this company is the fact
that they offer one single fee for all countries and sites. HitLens monthly cost consists of a $9.95
set fee and a potential fee for extra pageviews.
The $9.95 fee includes:
• Service activation for unlimited projects. No need to pay per website as with other
vendors.
• Monthly subscription fee of $9.95 is credited to account of our site in its entirety
and covers a part (or all) your costs, depending on the volume of visitors your
websites attract.
• The $9.95 price covers a certain amount of page views in both HitLens plans:
Power plan - 16,000 pageviews, eCommerce plan – 12 000 pages views.
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 • If for all our sites our requested traffic doesn't exceed the limit, we will \ pay only
$9.95. If it does, we will pay $0.59 or $0.79 (according to the plan) per thousand
pages views. For example: 17 000 pages views will cost 17*$0.59=$10.03.
• Monthly page views are rounded up in 1,000's.
• If we switch from the eCommerce to Power plan, changes will take effect at the
beginning of the next month. The eCommerce plan allows tracking ad campaigns
(response, conversions, ROI) and analyzing your income by referrer (sales,
registrations, subscriptions, sales cycle, etc.)

Depending on the volume of traffic (number of pageviews) you will qualify for bulk
discounts. This fact is relatively efficient for online dating sites since they are requested for a
huge amount of traffic for their different projects. The following tables shows the discount
percent depending on volume of traffic we request.
Number of Pageviews Discount Number of Pageviews Discount
26,000-50,000 5% 451,000-650,000 31%
51,000-80,000 10% 651,000-1,000,000 34%
81,000-125,000 15% 1,001,000-1,500,000 37%
126,000-200,000 20% 1,501,000-2,500,000 40%
201,000-300,000 25% 2,501,000-5,000,000 42%
301,000-450,000 28% 5,001,000+ 44%

Before buying traffic, we need to discuss a list of possible issues that may arise during
the process. As in any business, we may experience some difficulties regarding different aspects:
➢ Avoid Bots. The negative association with buying web traffic comes from shady
websites that send hundreds or thousands of bots to our site in exchange for some
cash. Bots can’t exactly use our services, so we should not waste our marketing
budget here.

➢ Skip the Bad Links. Buying shady backlinks is another method we should avoid
at all costs. Links from untrustworthy sites may seem like a quick way to boost
the flow of traffic, but they can do real damage to our SEO. Too many bad links
and we might get slapped with a penalty from Google.

➢ Convert That Traffic. The whole point of buying traffic is to convert it. While
buying traffic might make it seem like we’re just trying to get visitors, we must
remember the reason behind the purchase. Be sure when we buy website traffic
that it places us in front of our target audience.

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 Additionally, since most of the Internet and online dating sites are mobile phones users, it
would be efficient and more valuable for us to adjust our requested traffic to different device
proportionally (Figure 2.)

Source: BusinessofApps (2020)

6. IOS vs Android
We are going to launch our mobile application on both platforms – IOS and Android.
Experian reports iPhone users spend an average of 26 more minutes per day with their device
than Android owners. Android users spend more time talking and Web surfing, and Apple users
spend more time texting online, emailing, visiting web dating applications and social
networking. That is why, the platform that we launch our app on matters significantly.
The following figure presents in-app purchase per user in these two platforms. Simply
stated, the average purchase per user on IOS platforms are more than double Android’s.
However, that doesn’t mean that we should choose one over another. It directly states that
average IOS users brings twice us much revenue as Android’s one. While IOS may have a higher
number for the average purchase, Android dominates in terms of total users. This is one method
how we can manage revenue split on different platforms.

Source: BusinessofApps (2020)

The second one refers to commonly known method- Warner Brothers or Netflix approach. This
method is integrated by most companies that have launched their mobile applications on both platforms.
As a mobile app developer, we would be intrigued to know how to monetize our apps and how much of
that would we be giving away to Apple or Google Stores. For any paid apps or subscription-based apps,
both Apple App Store and Google Play store work with 70/30 revenue split. i.e App developer keeps 30%
and Apple/Google keep 30%. This however changes for subscription-based apps whereby after the first
version of user’s subscribing, both Apple and Google let the app developer keep 85% of the revenues.

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 The 70/30 apps revenue split model is something that was introduced in the 70’s by Warner Bros
for VHS tapes. The tapes were physical and costed a lot of money but with online dating services, the cost
of selling an additional app is not much (in fact nothing) and therefore the outrageous split is not
justifiable. Some of the apps like Mamba and Bumble have already figured out ways to bypass the
revenue split by removing online payments/in-app purchases from their apps and instead directing users
to their website for payments.

Block B: Analysis

7. Monetization mechanisms
If you had to communicate on such sites, then you know that the service owners provide
visitors with a huge number of paid services: this is sending romantic SMS, congratulations to
your chosen one via the server, and raising the participant’s profile to the VIP zone, and sending
gift pictures to friends. Since there are a lot of people using online dating sites, the main revenue
for owners consists of teaser and contextual advertising from other companies. However, there
are self-developed ways to convert online traffic into real money- monetization mechanisms.
Monetization is, broadly speaking, the process of converting value provided by the
company into money. The term "monetization" may also be used informally to refer to
exchanging possessions for cash or cash equivalents, including selling a security interest,
charging fees for something that used to be free, or attempting to make money on goods or
services that were previously unprofitable or had been considered to have the potential to earn
profits.
There is relatively wide scope of different monetization mechanisms that may effectively
increase our revenue. We have selected TOP5 strategies that have proven to be the most
effective from a financial point of view for dating applications that are just entering the market.
We decided to introduce both standard options used by other experienced applications (Tinder,
Mamba, Badoo) and relatively new methods of earnings.
1. Freemium
Freemium method is free in the basic/light version. Additionally, all additional options
can be purchased for a fee.
The success of Freemium applications depends on the number of users who are loyal and
willing to pay for the expansion of functionality. An example of Freemium is Mamba and
Badoo. The application is free, but some “goodies” (for example, advanced features of to boost
profile) are hidden from the user until they are paid. The main advantages of this strategy that
freemium applications attract many loyal users who are ready to use it for months The Freemium
principle is very flexible and suitable for most dating applications that just entering the market.
2. Subscription
This model can be used by relative new applications that do not have several million users
yet, but they have valuable information that interested people will want to acquire. This
monetization strategy involves the purchase of useful content provided by our application. An
example of a mobile application with a subscription is Tinder. The program gives users access to
other profiles in a limited amount. If the user wants to get unlimited access, he pays a

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subscription. The main advantage of this strategy that subscription provides a steady cash flow
from users and motivates us to provide interesting and relevant content.
3. Free Trial
The idea behind Free Trial is that the user gets access to all the features of the application
during the trial period. It is usually 30 days. After the user has experienced all the advantages of
the product, he is likely to want to purchase its full version will all services provided (Zoosk).
The main pro of this method is the fact that free trial period allows you to evaluate all the
advantages of our application from user’s point of view.
4. In-app purchase
Applications monetized in this way sell virtual goods (dating apps, games). An example is
the MeetMe mobile application, a service for meeting new people. Here, users can pay to
increase profile visibility. Instead of charging for our content regularly, we can create premium
content that requires a single-time payment to unlock. An app using this method will usually
have free and premium content which allows to lure users in with more general information first
and then offer to purchase something more complete or in-depth. The main advantages of such
monetization schemes are flexible monetization model, optimal new dating applications and in-
app purchases can increase user loyalty to our brand.
5. Rewarded content
A form of ad-based monetization in which users are offered to complete an action and get
a certain in-app benefit in return. Such actions usually include watching a video or downloading
other apps from the store. Since most of the dating app users are not willing to pay a few dollars
per month, for instance, popular dating apps like MeetMe, have implemented in-app advertising
in order to have a constant revenue stream. In the case of MeetMe, in order to access some extra
features, like the boost of their profile, users have also the option of watching a Rewarded Video
instead of subscribing to the premium edition of the app.
6. Passing gifts
If we desire to increase revenue from our mobile dating app, then we should monetize
multiple services before providing it to users. Users get more engaged when they connect with
other users and passing gifts will help them to increase communication. We can add price value
on those gifts and users will buy these gifts from the gift store while sending the links to other
users. In the big picture, it will allow us to create maximum revenue by purchasing or selling the
gift items across our application.
Monetization strategy for a mobile dating app is not limited, and we can earn revenue
from many processes altogether. All the methods mentioned above helps in generating profits
while giving a better platform to users.

8. In-App Advertising
In-app advertising is a proven monetization strategy. Users actively download free
applications, and applications developers profit from displaying ads. In such a strategy, it is
important to collect as much data about the target audience as possible. This data is then
analyzed and provided to advertisers who are willing to pay for the ads.

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 Figure 2. Monetization methods used by popular apps

Source: Sweetpricing.com (2020)

Ads organically fit into social networks, instant messengers and dating applications. A
good example is the Match.com application. The social network collects arrays of data about
users and shows them targeted ads. All these reasons are why mobile advertising has grown to be
the leading form of advertising. Advertisers spend more money on mobile devices than on TV —
and by 2022, mobile advertising in the US will exceed TV, print, desktop, and radio combined.
Globally, mobile ad spending was $180 billion in 2018 and is projected to hit $217 billion in
2019. That’s a massive opportunity for in-app monetization. The following graph presents the
clear evidence why we decided to implement such type of monetization methods- it generates the
highest possible revenue for applications. The main advantage of this scheme is the fact that A
free mobile app can quickly attract an audience and the strategy is efficient if the advertising is
targeted. One of the benefits of in-app advertising is that there are many different types of ad
formats, so we can choose the format — or mix of formats — that is best for both generating
revenue and building a strong user experience.
Graph 4. Proportion of in-app revenue contributed by in-app Advertising, 2013-2017

Source: BusinessofApps (2020)

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 There are the following types of mobile ads that we may introduce in our application to
approach higher revenue and bigger audience.
✓ Banners. This is the most common type of advertising. Banners often have the
lowest CTR and, as a result, CPM. But at the same time, they have the highest fill
rate.
✓ Interstitials – ads that interrupt the interaction with the app and require some
action (either close the ad or click on it). As a rule, this is a full-screen ad. Most
often, it is shown either at the app launch or during some event in it (for example,
if you have completed a level in the game).
✓ Video ads. It is a variant of an interstitial, i.e. a full-screen ad where the video is
shown to the user. There are different types of video ads. For example, in terms of
user loyalty, they can be skippable and unskippable. If a video lasts 30 seconds,
then the skip button usually appears after 5 seconds. If the video lasts 15 seconds,
then most often it is unskippable.
✓ Native ads are ads that look like part of an app’s interface or content. A vivid
example is Facebook ads. These ads look natural in the app and, in most cases, do
not annoy users.
Graph 5. In-app Advertising statistics

Source: Sweetpricing.com (2020)

9. Creatives
There are many types of businesses that operate solely through a worldwide network. One
of them is dating and social networking sites. Promotion of dating sites is very different from any
other type of promotion. The success behind the dating app highly depends on the promotion
before launching the dating app which is generally known as pre-promotion of the app and after
app launching, we also have to do the past promotion of a dating app to make it more successful
and popular. The following list reveals common creative ways to promote our dating
applications that we are going to implement
▪ Get in Touch with audience. This one is relatively new and interesting. The main
idea behind this technique is to present the real numbers of successful rate
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 received during pre-launching period (what is the percentage of people who
actually met somebody in real life or have long-lasting relationships.
▪ Create a promo video. We make it creative, funny, thought-provoking. Tell a real
story that lies behind this process and hard work. Keep in mind, users appreciate
that
▪ Feature the app in emails. Our new app needs to be engraved into every aspect of
our marketing, that includes all of our emails. As a business, we will send out
countless emails and not include our app in each of those is a missed opportunity
that will eventually help us to target more audience.
▪ App Store Optimization (ASO). It may take a lot of time to reach the top apps, but
this is one unique way to definitely climb to the top. We simply ask users to write
a good review and rate our app after they have completed a task or surveyed. This
will make our app trending and people will naturally start downloading it. Even
the respective app store will recommend our application in different locations.

▪ Use a Real Blog to Promote the App. This is one of the best techniques to
promote good content and bring in significant returns. Another great strategy that
you could implement is to encourage guest blogging. This will incorporate other
people into your app ecosystem – user reviews are always taken seriously, and
your app gets an instant boost in the number of downloads. Identify bloggers who
write on niches that relate to our app. For instance, a dating app can be pitched to
bloggers write for singles.
▪ Post on Pinterest. We use blog images, infographics and visual content from our
app to create content on your Pinterest board. We can even use happy customer
photos or hold contests.
▪ Optimize our email signature. While writing an e-mail to different entities, we are
sure to provide a catchy one-liner about our app along with the link to download it
in our email signature

9. Payment options for “whales”

The term "Whale" is borrowed from the casino industry, where it is used to describe a rich
gambler who bets extraordinarily large amounts of money. In online dating industry, this term
refers to a person who can spend a large amount of money on different services and, in total,
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accounts for 50% of revenue. Here, we analyze two methods of how to attract and save for a
long period of time such “whales”.
➢ Creation and optimization of bundle prices
A solution for setting our in – app purchases is to determine a price for our services. In
this case it is crucial to know our audience. A survey made by AppAnnie for Monetization
Trends shows that 2% – 5% of monthly active users are willing to make in – app purchases. With
the right approach they can be converted into whales which are those players ready to buy more
expensive goods if they consider them worthy. The biggest amount spent on in – app purchases
comes from whales which are just a few but very loyal gamers.
➢ Make Them Refer
The ones that already made in – app purchases are the most reliable players which will
spread the word about our application. Encourage them to do that and we will gain more than
money. Additionally, one of the best examples of this is that we would reward whales with more
premium options for watching videos or allowing banners in their profiles for a minute. Thus, we
will receive additional income not only from whales, but also from advertising provided with
cashback for big players.

Conclusion
The two main channels for using online dating services are dating websites and dating
apps. Furthermore, on the basis of devices, online dating has been divided into mobile and
desktop. Revenue models for online dating are divided into membership subscription and
freemium, trial and in-app purchases
The global online dating market has witnessed continuous growth in the past few years
and is expected to augment even further during the forecast period (2020-2024). The market is
expected to be driven by various growth-enhancing factors such as rising internet penetration,
increasing smartphone penetration, rising single adult population, changing perception of online
dating, etc.
However, the market is not free from challenges that are hindering its growth. Some of
the major challenges faced by the market are online dating scams and less acceptance in
developing economies. Moreover, the market growth would be bolstered by various market
trends like growth in blockchain technology, rising use of big data and increasing adoption
among the older generation

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