Match 1 FIGHTING OFF THE COMPETITION: MATCH.COM AND THE ONLINE DATING INDUSTRY Cara Peters and Marilyn Okleshen Today‟s young adults are very focused on their careers. Their love lives often are less of a priority, according to the popular press. For example, Inc. Magazine profiled Holly Dunlap, a 32 year-old female business owner as someone working long hours with no time for lunch, let alone a boyfriend. “Such is the catch-22 of many singles who run their own firms. They work so much they don‟t have time to find a mate. And often without someone waiting on the other side of the dinner table, there‟s no incentive to shut down the computer and go home.”1 Because of lifestyles similar to that of Holly Dunlap, the online dating service Match.com emerged from the dot-com bubble as a lucrative endeavor touting an unrivaled customer base. Under the leadership of CEO Tim Sullivan, Match.com became the market leader through product innovation, international expansion, and strategic alliances. However, as the online dating industry matured, Match.com faced a growing number of competitors on a variety of fronts. As the firm changed leadership, the new CEO, Jim Safka, had to address the increasing competition. With over 45 million potential customers in the marketplace, Match.com looked to increase the ways in which its members could find that perfect someone in order to remain competitive. But the question remained: Were the firm‟s efforts enough to protect its leadership position in the industry? Dating Trends Practically everyone has experienced dating in one fashion or another. Some have found it to be easy, while others have found dating to be a significant challenge. According to a study conducted by www.TopDatingTips.com, in 2004 a single person was typically looking for someone who matched his/her unique interests. When daters were asked to choose the most important features in a potential match, they ranked personality (30%), sense of humor (14%), smile (12%), looks (11%), eyes (10%), and education (7%) as key criteria. When asked the maximum acceptable age gap within a couple, 44% indicated that five years was best, 24% felt ten years was acceptable, and mere 8% indicated that age was not relevant to their decision making. TopDatingTips.com identified the significant obstacles daters faced in finding a prospective partner. For instance, 88% reported that it was "difficult" to find someone. Moreover, 59% found it “quite” or “very difficult” to meet new people. When asked to select the best place to meet a potential date, work (22%) was the most popular response, while the Internet (18%), bars (18%), and clubs (11%) were frequently reported. (It should be noted that this was an online survey so the relatively high percentage of respondents favoring the Internet may be inflated due to a self-selection bias.) Aggressive professional pursuits and other priorities often translated into trends that saw daters being single later in life. According to the Census Bureau, in 1970 only 28.3% of the U.S. population was single. By 2000, that percentage had risen to 40.4%.2 In addition, more married Match 2 couples were divorcing, creating an even greater pool of singles. “43% of married couples were not together within fifteen years, and of those who did stay together, 40% reported they were not happy in their marriage.”3 These statistics predicted a pattern of continued growth over time in the number of single daters. Traditional dating was more challenging than in the past. Meaningful community ties that often resulted in long-lasting matrimony were disappearing in part due to extensive individual relocation. Additionally, people who used to search for mates in the workplace feared doing so because of recent sexual harassment cases.4 Accordingly, singles were looking for new, easy-to- access dating outlets. Earlier approaches often relied on friends to play matchmaker, going to bars, or attending social events. In fact, bars and social events were losing their luster because of fears such as "date rape" drugs. In short, work-laden, mediated lifestyles found in an environment full of change made traditional dating methods less practical. Before the Internet, busy singles utilized telephone, newspaper or agency match making services to help them find love. These were useful in pairing people without the need for a physical interaction. With telephone services, the user set up a voice mail box and recorded a personal message about him/her self. Singles searched various mail boxes and contacted anyone who caught their attention. Similarly, newspaper personal ads provided a way to advertise for a mate. Typical ads described the dater, who he/she was seeking, and provided a phone number. Online personals services, also called online dating services, began in 1994 and initially experienced slow growth. Consumers were not enthusiastic adopters due to network effects (i.e., attracting a large number of users). If a personals database contained too few individuals, only a small number were interested in using a firm. In addition, early on consumers often attached a negative stigma to online dating services. By 2004, however, growth was no longer an issue. “The anonymity of the Internet, personal websites and photo galleries, and the comfort many feel in corresponding through email had combined to make online dating an acceptable means of meeting people. Take busy, single people looking for romance, bring them together in a visually stimulating, but safely arm‟s- length environment, and gone were days of cheesy come-ons in smoke filled bars.”5 In fact, a survey conducted by Match.com found singles were much more open to the possibilities of finding love online. In 2003 70% of singles believed it was possible to fall in love with someone they met online.6 The key to online-dating service success appeared to be a large membership base and a proven matchmaking formula. Firms such as Match.com gained a competitive advantage by continuously attracting new members and claiming to possess an expansive database of prospective singles, leveraging network effects. Others, such as eHarmony.com, built a competitive advantage on patented, scientific matchmaking software. To appeal to new singles, nearly every online dating site offered limited free trial memberships allowing users to register, post profiles, specify what they seek in a match, and send e-mails. After the trial period ended, users paid a monthly fee. Match 3 One of the main objectives for any online dating provider was to have prospective daters create a personal profile. Each site accomplished this uniquely, but all had a common agenda in helping users find someone who was compatible. Profiles varied in size and scope; often more expensive services had "psychologist created" measurement tools underlying their matching process. In most cases, the user could post pictures on his/her profile, though the number was usually limited to less than ten. Furthermore, pictures were required to be "tasteful." After creating a profile, users defined those certain aspects desired in a match and based their database search on these criteria in order to find those who sparked their interest. When users found an individual they wished to contact, there were several follow-through methods. The first was to send an open-ended email. A second was to contact a prospect by sending him/her teaser emails that say things such as “If you were an animal, what kind would you be?” Most sites also had the option of private instant messaging. A limited number offered chat rooms where members participated in public conversations with others. Match.com research found that current online dating site users went on more dates than singles that did not use such services. “While 49% of singles who have never used an online dating service report having gone on at least one first date in the last 12 months, 81% of current users of an online dating service report they have been on at least one first date over the past year.”7 (Again, this was an online survey so the relatively high percentage of respondents favoring online dating may be inflated due to a self-selection bias.) Online dating sites accepted the responsibility for making initial matches. Beyond the first date, interactions fell into the domain of the individual. Problems with Online Dating Services Anonymity made online dating sites attractive to consumers, but also created ethical dilemmas. Individuals had more privacy with this way, but some participants were abusing such services with “false advertising.” People created profiles with false information and altered or submitted misleading pictures in hopes of increasing their chances of success. According to industry analyst Jupiter Research, credibility issues could significantly harm the industry, which was expected to grow from $398 million in 2004 to $642 million by 2008.8 There were countless popular press accounts detailing individuals who met their match online, only to find out the person was nothing like his/her Internet description. Males often complained females used old or doctored photos. Women, on the other hand, complained that married men used services inappropriately, misrepresenting their availability status.9 In fact, “a recent study found that as many as 30% of people using online dating sites were married.”10 Accordingly, sites were implementing pre-emptive tactics to detect members who were not legitimate and forthright. eHarmony.com asked members True-or-False questions including, „I never tell white lies,‟ to gauge social desirability. Match.com had a six-person “fraud and abuse” team that investigated reported ethical breaches. In 2004, Match.com‟s Chief Executive, Tim Sullivan, estimated that as many as 3,000 profiles were immediately rejected because they were suspect, while another 2,000 were removed because of complaints from other members. Also, Match 4 Match.com was currently testing a pilot program giving its members the opportunity to post “certified” photos indicated as such by an official Match.com time-date stamp.11 Unethical abusers were not the only drawback of an online dating service subscription. One of the most common fears was the lack of protection against sexual predators. There had also been a stigma attached to individuals who used these services. “When online dating first emerged in the mid-90‟s, it carried a certain sleaze factor. It used to be that online dating was reserved for the socially awkward – the people who really couldn‟t get a date. Add the possibility that the date might wind up being a geek, stalker, or criminal, and many singles just didn‟t want to take the chance.”12 Using the Internet to find a date connotated a sense of desperation: clients were lonely, depressed, unattractive, and had no other options. Online dating companies have focused their efforts on increasing the public's awareness of their services and benefits. Match.com believed that public relations should be a large part of its marketing strategy. As such, the firm persuaded Oprah Winfrey, Katie Couric, and Dr. Phil McGraw to feature stories about the firm‟s successful matches. The idea behind these public relations efforts was that an educated public was more likely to adopt the service. Arguably, the 1998 movie You’ve Got Mail served as the industry‟s best public relations campaign. This film increased general knowledge of online dating and made falling in love with someone online acceptable. Recent research also showed an erosion of the online dating stigma. For example, from 2001 to 2002, most matchmaking sites experienced quadrupling revenues. Finally, by 2004, online dating was the most lucrative segment of the web industry surpassing music, investments, and entertainment.13 Moreover, two out of five singles had tried dating online.14 A 2003 survey of Match.com‟s customers found that 81% felt more comfortable talking about online dating in public than in the previous year.15 Company Background Gary Kremen conceived Match.com in 1993 and initially named his company Electric Classifieds, Inc. At the time the firm was "the leading on-line classifieds advertising technology outsourcing company and perhaps the most widely accessed „community‟ on the Internet.”16 Mr. Kremen saw the potential market for online personals. He wrote a business plan and raised over $8 million from venture capitalists. In 1996 he sold the company to Cedant Corporation again for $8 million, of which he received $50,000 in cash as well as a lifetime site membership. In May of 1999 the company changed ownership once more when it was purchased by Ticketmaster CitySearch for $43 million in stock.17 Ticketmaster, owned and operated by InterActiveCorp, was a large online and offline multi-brand interactive commerce company with over 25,000 employees. At the time, InterActiveCorp also owned CitySearch.com, Expedia.com, Hotels.com, The Home Shopping Network, LendingTree.com, and AskJeeves.com. Tim Sullivan served as Match.com CEO from 2001 until 2004. Before coming to the firm, Mr. Sullivan acted as Vice President of E-commerce for Ticketmaster CitySearch and prior to that worked at the Walt Disney Company as Vice President and Managing Director for Buena Vista Match 5 Home Entertainment. Match.com grew substantially under Mr. Sullivan‟s tenure. It became the recognized leader in online personals. Mr. Sullivan attributed the growth to product innovation, international expansion (i.e., the acquisition of London based uDate.com in 2003), and strategic alliances with MSN and AOL.18 The growth generated significant revenue for the firm as shown in Table 1 and Figure 1. By early 2004, Match.com was considered the premier online dating site. The company garnered more than 900,000 paying clients and 12 million consumers worldwide had created personal profiles on the site. The independent measurement firm ComScore Media Metrix named Match.com “the world‟s biggest online dating and personals property.”19 By January of 2004, Match.com‟s personals, which included the recent acquisition uDate.com, had over 29.6 million unique visitors, nearly three times as many as its closest competitor.20 Partnering with various firms helped Match.com extend its domain. The firm was responsible for running personals pages for America Online, Microsoft‟s MSN, BET Interactive, iVillage, Earthlink, the New York Times, Excite and Oxygen. Furthermore, Match.com partnered with uDate.com and kiss.com, owned by the common parent company InterActiveCorp. Finally, Match.com joined Comcast.net in 2003 to provide online personals on Comcast‟s Relationships Channel. This partnership resulted in a co-branded web site available to the more than five million Comcast broadband customers.21 In September 2004, Jim Safka became the new CEO of Match.com. Mr. Safka came from AT&T wireless where he was Vice President and General Manager of E-commerce.22 Figure 2 summarizes the firm‟s background activities over time. Product Innovation Match.com, one of the oldest online-dating sites originally presented a very basic web storefront which evolved to encompass numerous options and features. (Figure 3 presents Match.com‟s homepage in May, 2004.) When first accessing the site, an individual could browse millions of profiles to locate those of interest. A user could perform search features to narrow down profiles with respect to sex, age, and location. He/she could also utilize keyword search. A new client had the option of creating a free profile including a picture. It took up to forty-eight hours for a new profile to gain approval so that other members could view it. Once a profile was created, a user could initiate “reverse matching” which would show him/her the current members looking for someone like him/her. Over time Match.com grew thanks to its new product development strategy. In the process of improving its initial website, Match.com added a feature called, “Total Attraction Matching,” which matched the user on certain preferences indicated in his/her profile. Along with the profile came the ability to send “winks” to anyone matching given interests. “Winks” served as ice- breakers. However, this was essentially where the benefits of free membership stopped. If a client wanted to email someone whom he/she found interesting or respond to someone who had communicated with him/her, he/she must sign up for full membership and pay a monthly fee. In 2005, Match.com offered one-month subscriptions for $29.99, three-months for $16.99 per Match 6 month, and six-months for $12.99 a month. Match.com designed its site so that a new user had to create a free account in order to access the pricing schedule associated with full membership. A full paying member had a variety of website options and features at his/her fingertips. For example, a unique service available to paying members was “Match Mobile.” This service allowed users to search for dates, send messages, or even flirt with other members using their AT&T Wireless mobile phones. This service, launched in February 2003, was the first wireless matchmaking service from any of the leading online dating sites. The mobile phone service catered to 18-24 year olds and matched users based on geographic location. The service worked in the same fashion as Match.com's website, but the user was accessing the member database from his/her her mobile phone. Match.com unveiled “MatchLive.com” in 2002, another product innovation for full paying members. This service provided singles the opportunity to participate in events or parties in the city of their choosing. New York City first hosted MatchLive events, and the services have been expanded to more than fifty-seven cities in the United States. MatchLive promised to provide singles with “a range of fun, and often flirtatious, romantic and social opportunities, including cocktail receptions, a sunset sail, a scavenger hunt, swing and tango lessons, networking events, cooking classes, neighborhood tours and even bowling.”23 Subscribers paid an extra monthly fee of $24.95. In addition to receiving access to these in-person gatherings, paying members received reduced event ticket prices, advance notice of upcoming events, and access to a comprehensive online calendar. The following year, Match.com added the ability to allow members to make “friend-based connections.” Members could create a profile tailored specifically for friends and search for potential companions who have similar interests and values, like a social networking community. As part of this service, a member‟s "friends list" was visible when viewing his/her normal dating profile. According to Match.com, the firm “has provided features that incorporate friends into the dating process, including a popular feature where members can forward a full page of search results or a particular member profile to a friend.”24 A December 2003 Match.com survey found that 45% of its members had developed friendships with people via the site. In 2004, Match.com started including real-time video to its Match.com messenger. This service allowed Match.com users to view potential dates “live” via a webcam while sending and receiving text-based messages. This added value because daters could chat and see each other in real-time and not be constricted by still photos alone. For its users who did not have webcams, the company partnered with Logitech to offer a convenient way to order them through Match.com. Those Match.com members who purchased a Logitech QuickCam received a special, limited-time promotion of three months free video service access. Furthermore, the real- time video service was available free on a trial basis of seven days, after which members were required to pay a $4.95 monthly subscription fee.25 Also in early 2004, Match.com launched its own version of the popular trend speed dating, “Online SpeedMatching,” combining the Internet and the telephone to let users go on four- minute virtual dates. Members signed up for a pre-scheduled time online and then logged on to participate in the event. Users were given a number so their phone call and computer were Match 7 synchronized. While engaged in the phone conversation, a profile containing the participants‟ ages, locations, biographies and photos was on their computer screen. By May 2004, Match.com offered this service in over 57 U.S. cities. In its first six months of operations, over 20,000 singles participated in SpeedMatching. Match.com claimed that 65% of the service‟s participants made a SpeedMatching connection.26 Another innovation offered by Match.com was its travel service, MatchTravel.com. The site gave singles the opportunity to meet new people by going on vacations or travel adventures. The events were set up to include the same ratio of males and females and used a host to facilitate interaction. The vacations and travel adventures booked through MatchTravel.com typically entertained groups ranging in size from fifty to more than three hundred. Match.com partnered with Expedia.com (also owned by Match.com‟s parent company, InterActiveCorp) to create and host these casual, vacation-oriented opportunities. Marketing Communication Match.com engaged in all forms of marketing communication ranging from TV spots to corporate sponsorships to online advertising. “We have run television commercials, print ads, out-of-home advertising, online advertising and email to increase awareness of Match.com."27 Match.com co-sponsored the 2002 Wimbledon tournament in which its name and web address appeared to millions of television viewers. Match.com‟s advertising campaign highlighted the success stories of real members and informed singles how many people were using the company‟s services. According to the firm, “by harnessing word-of-mouth testimonials from real people who have met through the service and married, Match.com hopes to build its brand as a relationship site, and to do so with free creative content from its members.”28 The corporation spared no expense in creating publicity. For example, on Valentine‟s Day 2004, the company held an event in Madrid, Spain, where it displayed a seven metric ton chocolate heart, breaking the world record for the largest chocolate sculpture by two tons. "Match.com's record breaking chocolate heart is really a celebration of dating, romance and love, not to mention the purported aphrodisiac qualities of chocolate, just in time for Valentine's Day," said Trish McDermott, Match.com's Vice President of Romance and Resident Dating Expert.”29 On the game day, Ms. McDermott, ran a free hotline for singles with last minute questions and those in need of dating advice. Ms. McDermott provided insights and perspectives on gift giving, date night activities, romantic dilemmas, and dating choices.30 Match.com also ran promotions to attract new members to the site. In January 2004, the firm offered its members the chance to attend a party with fashion guru Diane von Furstenberg. The event offered dating tips from Match.com dating professionals along with fashion tips tailored to a variety of dating scenarios, including coffee dates, dinner dates, outdoor dates, or encounters at a cocktail lounge.31 In August that year, Match.com teamed up with Mercedes Benz USA in an event where singles test drove a car together to see if they could find a spark. “Wheels of Attraction” was designed as an extension of Match.com‟s SpeedMatching so that singles participating in the driving sessions were in essence going on short dates as passengers and drivers. This event gave Mercedes a memorable way to show off new models and provided available singles a chance to find a Match.com partner.32 Match 8 The Competition By 2004, there were more than 850 online dating services worldwide. U.S. sites alone garnered $473 million in total revenues that year.33 In June, Yahoo! Personals saw 6.5 million unique visitors; Match.com more than 4 million, and eHarmony saw 1.5 million. Among these competitors, eHarmony attracted the most new members that month.34 Match.com considered eHarmony, Yahoo! Personals, and LavaLife its primary competition. Table 2 compares Match.com with these key competitors. Yahoo! Personals. Yahoo! Personals introduced its services in 1997, and rapidly climbed to the number two position in the online dating marketplace (behind Match.com). Users of this site simply needed to have an existing Yahoo! email account before posting personal ads. Profiles could be created in a few steps and users could add photos, voice messages, and videos. Profiles were normally approved and posted within 24 hours. Yahoo! Personals attempted matching potential mates based upon what they put in their personal profile and what they indicated that they were seeking in a partner. The Mutual Match system allowed a user to be matched with people that have the same likes and dislikes and would automatically alert members of new matches so they could send emails on a timely basis.40 Yahoo! Personals users could search the member database with keywords that appeared in a profile‟s title or description. The more detailed the search criteria, the more precise the results. Yahoo! Personals also offered a free Personality and Love Style Test in order to find the best match. In 2005, Yahoo! introduced a new version of its service, Yahoo! Personals Premier, in an effort to cater to individuals looking for long-term relationships. Yahoo! Personals Premier differentiated itself from the competition by offering greater personal choice and smarter tools to help users find a more meaningful partnership. Premier offered the Relationship Test, a tool that gave the user a better understanding of what he/she was looking for in a relationship. After completing the test, the user created a profile that was more in depth than the standard Yahoo! Personals profile. The user could then access Yahoo!‟s new SmartFit advanced searching and matching system that generated a better sense of with whom they were most compatible. Yahoo! Personals required a user to be a paying subscriber to initiate contact with others. However, a person did not have to be a paying member to reply to a message. The site also allowed sending short “icebreaker” messages for free. Yahoo! Personals incorporated its popular Yahoo! Messenger, allowing for instant messaging. Yahoo! Personals subscriptions began at $24.95 for one month and topped out at $99.95 per year. eHarmony. eHarmony, founded in 2000 by Pasadena-based relationship expert, Dr. Neil Clark Warren, capitalized on his 35 years of clinical expertise with the latest software designed to help people build long-lasting meaningful relationships. Officially launched in August, 2000 and with over 5 million registered users, eHarmony was the first online relationship service based on scientific research and an in-depth relationship questionnaire. eHarmony differed from other dating sites because it required users to fill out a 436 item psychological survey prior to letting Match 9 users browse the member database. (These 436 items factor analyzed to 29 key matching dimensions.) Based on responses, the site actively matched psychologically compatible members.35 eHarmony, however, unlike other dating sites, offered no instant messaging. “To initiate contact with someone, you select a list of questions for your match to answer. The next few steps are progressively more personal, until-if both parties agree-you can communicate directly.”36 In other words, a user could engage another member with a few rounds of “teaser” questions including multiple choice options and then progress to open-ended questions. After completing this exchange, the user could access another member‟s email so he/she could contact him/her directly. By 2005, eHarmony was adding 10,000-15,000 new members daily. And, according to the site‟s press room, “on an average day eHarmony receives notice from ten members of an engagement, marriage or other long-term, committed relationship.”37 The significant growth was attributed to eHarmony‟s “scientific” approach to matchmaking and word of mouth promotion. eHarmony argued its competitive advantage was built on identifying important personality factors prior to making a match. The firm claimed its detailed questionnaire allowed members to know more about a prospect up front and guaranteed an 80% similarity level between matched clientelle.38 The firm stated that its “goal is to get people in good relationships. We would rather give no matches than bad matches.”39 eHarmony‟s scientific approach did not come without a significant cost to consumers. The firm had one of the highest subscription rates in the industry, beginning at $49.95 for one month or $249.95 for a yearly subscription. eHarmony owned the only patent in the industry for its personality questionnaire, the Compatibility Matching System. Lavalife. Lavalife was a privately-held Canadian firm providing online and phone-based dating services. In contrast to its competitors, Lavalife‟s advantage was in its phone services available in more than sixty-five markets in North America and Australia. Lavalife, previously known as Interactive Media Group Limited, began as a small phone-based dating service and achieved profitability within five years.41 With the growth of e-commerce in the 1990s, Lavalife purchased the Webpersonals URL and proceeded to launch its web-based services in 1997. Services on the site were initially free. However, in 1998, Interactive Media Group began charging users for access and, shortly thereafter, the firm was renamed Lavalife.com.42 In March of 2004, MemberWorks Inc. of Stamford, Connecticut purchased Lavalife for $152.5 million in cash with the goal of gaining access to the growing personals market. 43, 44 Unlike other dating firms, Lavalife initially created a chic, hip site targeted toward a younger demographic. From its inception, “the whole thing is clearly meant to radiate a cool and sultry lounge atmosphere. The name is meant to echo such a lifestyle with the „lava lamp.‟45 The firm offered services for three distinct segments: those looking for a date, a relationship, or an intimate encounter, allowing members to narrow down the field of potential matches. Initially registering on Lavalife was as easy as creating a profile, one that could include up to ten photos. Afterwards, Lavalife offered few options for communication among its members. They could instant message whoever was online; they could send “smiles” to flirt with others; or they could send an email to someone who sparked their interest. Match 10 With respect to fee structure, Lavalife used a credit system. Responding to email and instant messages within the site was free, but the user purchased credits in advance in order to initiate contacts. For example, “if a user wishes to buy 50 credits, then the cost will be $14.99. However, sending a single email to someone costs six credits, though each additional email to that individual is free.”46 Specialized Interests. In addition to traditional online dating competitors, alternative online websites were dramatically flourishing. The creators of these sites hoped to take advantage of those seeking someone with specialized interests who might not be attracted to more mainstream, traditional online dating service providers. “People are getting more and more specific in what they are looking for,” says Bill Tancer, Vice President of Research for Hitwise.com, an Internet- traffic-monitoring company. “Now there are sites like Conservative-Match.com and Liberal Hearts.com [based on specialized political interests]. There‟s a site called Animal Attraction – meeting people through their love of pets.”47 Moreover, there was a site designed exclusively for “beautiful” people called DreamMatches.com, where only attractive individuals could create profiles. Prospective members submitted their photos to the firm, and after confirmation, members voted as to whether the person was beautiful enough to become part of the database. There was even a site which attempted to attract cheaters to sign up, AshleyMadison.com. Its owner thought of the idea after he came across an article revealing that one-third of online-dating site users were already in relationships. AshleyMadison.com claimed a membership base of 225,000, though all were not paying customers since profile creation was free.48 In-Person Services. Many innovative dating services combined in-person and online dating approaches. According to the popular press, they were growing in popularity also. Two which had received a lot of publicity were Eight at Eight and It‟s Just Lunch. At Eight at Eight (8at8.com), an individual created a short profile indicating musical, sports, or other interests. He/she was then matched with seven other singles similar in age with common interests to attend a dinner party in their city. Eight at Eight was currently active in twenty cities nationwide.49 Its Just Lunch (itsjustlunch.com) was a less formal, more relaxed environment in which clients met other singles from the firm‟s database who demonstrated their specific requirements. These encounters usually occurred over breaks and all members had to do was to show up at the specified time; the lunch was fully arranged by the dating service. Speed-dating services with an Internet presence were also increasing in popularity. In Speed- dating, a participant went on roughly twenty-five three-to-four minute dates in a single evening. Firms such as 8minutedating.com and hurrydate.com were key competitors in this domain, along with local, in-person dating services specific to certain cities. Another hybrid service that was emerging was cell phone networking. For example, Dodgeball.com offered a unique dating and friend-making service. When its users “check-in” from a given location, their spot was sent to pre-selected friends as well as friends-of-friends within a ten-block radius. Photos were sent along with the notifications. Through their cell phones, groups of near strangers were socially networked in a casual, real-time, real-world setting.50 Match 11 Social Networking Communities. By 2004, social networking communities had become quite popular among young singles. These consumers were increasingly inclined to use social networking communities such as Friendster.com, Friendfinder.com, and Facebook.com to build social contacts and generate dates. These sites scored higher on independent traffic trackers than any of the traditional dating sites, including Match.com or Yahoo! Personals, posing a serious threat. Analysts argued that these social networking communities gave users a more personal experience than those provided by the typical search function available at traditional online dating sites.51 For example, in 2004 friendster.com had over 19 million profiles in its member database while facebook.com had more than 6 million.52, 53 A Maturing Industry Compared to the numerous firms that failed when the dot-com bubble burst, online dating sites had seen tremendous growth. But by 2004 most were beginning to experience lower growth rates which were resulting in a leveling of total revenue. “Until this year, revenues for Match.com and Yahoo! Personals, two of the biggest players in the industry, had been doubling annually. Profits had been piling up even though fewer than 20% of these sites‟ users have paid to seek their mates.”54 According to Jupiter Research, competition among online dating sites in the U. S. was going to be fierce now that the segment had moved beyond an introductory phase. Jupiter Research “forecast that the online dating market was expected to increase 9% in 2005 to $516 million, a dramatic, if inevitable, falloff from the heady early days when the industry was new and reported growth rates of 70 or 80% each year.”55 Analysts could only hypothesize about the future of online dating. One perspective held that online dating was just another fad, one that was quickly losing energy. Another perspective posited that online dating was an industry on the verge of maturity. Whether online dating was a fad facing the end of a good run or an industry facing maturity, clearly Match.com had to address the challenges of increasing competition in order to maintain its growth and leadership position. Under the tenure of CEO Tim Sullivan, Match.com became the market leader through product innovation, international expansion, and strategic alliances. By 2004, Match.com claimed over 900,000 individual paying subscribers. When new CEO Jim Safka took over in September 2004, he faced the increasing challenge of stimulating growth for the firm. Yet, several questions remained: Can the firm continue to grow in an intensely competitive environment? What can the firm do to maintain its number one position in the industry? Match 12 Table 1 Match.com Revenues Year Revenues in millions 2000 $29.1 2001 $49.3 2002 $125.2 2003* $185.3 2004 $198.0 *Post-merger with London-based uDate.com Source: Interactive Corporation‟s Annual Reports (2000-2004) Match 13 Table 2 Features of Match.com versus its Primary Competitors Company Membership Monthly Auto Instant Video/Voice Base Fee Matching Messaging Ads eHarmony 5 million + $49.95 No No No Lavalife 8 million + None No Yes Yes (Credits) Yahoo! 9 million + $24.95 Yes Yes Yes Personals Match.com 12 million + $29.99 Yes Yes Yes Match 14 Figure 1 Graphical View of Match.com's Revenues $250.00 Dollars (in Millions) $200.00 $150.00 Series1 $100.00 $50.00 $0.00 1 2 3 4 5 Year (2000-2004) Match 15 Figure 2 A Timeline of Match.com’s Activities 1993 1996 1999 2001 2003 2004 |-----------------|-----------------|-----------------|-----------------|-----------------| Electric Sold to Sold to Sullivan Acquired Safka Classifieds Cedent Ticketmaster named UDate.com named Founded Corporation CitySearch CEO CEO Created alliances with AOL, MSN, & Comcast.net Match 16 Figure 3 Match.com Homepage Match 17 References 1. Evans, Rory, and Stephanie Clifford (2005), “Love for the Workaholic,” Inc. Magazine, February, Vol. 27, No. 2, p. 53. 2. Salkever, Alex (2003), “Finding Love, Version 2.0,” Business Week Online, June 10, http://www.businessweek.com/technology/content/jun2003/tc20030610_4294_PG2_tc104.htm, retrieved on January 23, 2006. 3. Mulrine, Anna (2003), “Love.com,” U.S. News and World Report, September 29, http://www.usnews.com/usnews/culture/articles/030929/29dating.htm, retrieved on January 23, 2006. 4. Op. cit. Salkever 5. Gragam, Judith (2003), “Love at First Click,” www.Brandchannel.com, February 10, http://www.brandchannel.com/features_profile.asp?pr_id=110, retrieved on January 23, 2006. 6. Match.com Press Release (2003), “Match.com National Singles Week Research Indicates Singles are Dating More This Year and are Optimistic They will Find the Relationship They are Seeking,” www.Match.com, September 19, http://corp.match.com/index/newscenter_release_detail.asp?auto_index=43, retrieved on January 23, 2006. 7. Ibid. 8. Reuters News Wire (2004), “The Funny Odds of Online Dating,” www.CNN.com, June 10, http://www.cnn.com/2004/TECH/internet/06/10/bad.dates.reut, retrieved on September 13, 2005. 9. Lomax, Alyce (2004), “Online Dating‟s Creep Factor,” The Motley Fool, August 24, http://www.fool.com/news/commentary/2004/commentary04082401.htm, retrieved on January 23, 2006. 10. Op. cit. Mulrine 11. Op. cit. Reuters News Wire 12. Op. cit. Gragam 13. Op. cit. Mulrine 14. Op. cit. Lomax 15. Op. cit. Salkever Match 18 16. Jupiter Media (2002), “Search Engine Strategies Conference Expo 2002,” www.Jupitermedia.com, http://www.jupiterevents.com/sew/summer02/Kremen.html, retrieved on February 18, 2005. 17. Match.com Corporate Information (2005), “Match.com Spokespeople – US,” www.Match.com, http://corp.match.com/index/newscenter_press_spokesppl.asp, retrieved on January 23, 2006. 18. Op. cit. Match.com Corporate Information 19. PRNewswire (2004), “Match.com Named as World‟s Biggest Dating Site,” www.Findarticles.com, March 2, http://findarticles.com/p/articles/mi_m4PRN/is_2004_March_2/ai_113802553/print, retrieved on February 18, 2005. 20. Ibid. 21. Match.com Press Release (2004), “Match.com Launches Online SpeedMatching,” www.Match.com, January 8, http://corp.match.com/index/newscenter_release_detail.asp?auto_index=28, retrieved on January 23, 2006. 22. Match.com Press Release (2002), “Match.com Launches MatchLive.com,” www.Match.com, July 8, http://corp.match.com/index/newscenter_release_detail.asp?auto_index=62, retrieved on January 23, 2006. 23. Match.com Press Release (2003), “Match.com Introduces Friends Feature, Allowing Members to Find Friends in Addition to Romantic Relationships 48% of Match.com Subscribers Surveyed Stated They Had Formed Friendships with People They Met on the Site,” www.Match.com, December 18, http://corp.match.com/index/newscenter_release_detail.asp?auto_index=32, retrieved on January 23, 2006. 24. Ibid. 25. Match.com Press Release (2004), “Match.com Adds Video to Its Match.com Messenger,” www.Match.com, April 26, http://corp.match.com/index/newscenter_release_detail.asp?auto_index=17, retrieved on January 23, 2006. 26. Match.com Press Release (2004), “Match.com‟s SpeedMatching Now Offered in 50 Cities,” www.Match.com, May 18, http://corp.match.com/index/newscenter_release_detail.asp?auto_index=5, retrieved on January 23, 2006. 27. Op. cit. Gragam Match 19 28. Newcomb, Kevin (2005), “Match.com Touts Success Stories,” www.Clickz.com, February 9, http://www.clickz.com/news/print.php/3481861, retrieved January 23, 2006. 29. Match.com Press Release (2004), “Sadie Hawkins Day may be Unnecessary,” www.Match.com, February 25, http://corp.match.com/index/newscenter_release_detail.asp?auto_index=20, retrieved on January 23, 2006. 30. Match.com Press Release (2004), “Match.com‟s VP of Romance to Provide Toll-Free Last- Minute Valentine‟s Dating Advice,” www.Match.com, January 27, http://corp.match.com/index/newscenter_release_detail.asp?auto_index=27, retrieved on January 23, 2006. 31. Match.com Press Release (2005), “In the Mood Singles Party at DVF Studio in New York Hosted by DVF and Match.com January 15,” www.Match.com, January 7, http://corp.match.com/index/newscenter_release_detail.asp?auto_index=29, retrieved on January 23, 2006. 32. Op. cit. Gragam 33. Wyss, Jim (2005), “Online Dating Industry Blossoms,” The Providence Journal Online, February 7, http://www.projo.com/cgi-bin/bi/gold_print.cgi, retrieved February 27, 2005. 34. Metz, Cade (2004), “Lucky in Love,” PC Magazine, October 5, Vol. 23, No. 17, p. 92. 35. eHarmony Corporate Information (2005), “Community Facts,” www.eHarmony.com, http://www.eharmony.com/core/eharmony?cmd=community-facts, retrieved on January 23, 2006. 36. Mangis, Carol A. (2003), “Love at First Site,” PC Magazine, February 25, Vol. 22, No. 3, p. 124. 37. Op. cit. eHarmony Corporate Information 38. ThirdAge Press Release (2005), “eHarmony and ThirdAge Partner to Help 40+-Year-Olds Find Lasting, Loving Relationships,” www.Thirdage.com, April 15, http://www.thirdage.com/about/eharmony.html, retrieved on January 23, 2006. 39. Anonymous (2003), “Calculate ‟N‟ Mate,” Psychology Today, August, Vol. 26, No. 4, p. 78. 40. Singlesonthego.com (2005), “Yahoo! Personals Dating Review,” www.Singlesonthego.com, http://www.singlesonthego.com/personals/yahoo/, retrieved on January 23, 2006. Match 20 41. Hansell, Saul (2004), “Getting to Know Me, Getting to Know All About Me: Web Personality Tests,” www.NYTimes.com, March 8, http://web.tickle.com/press/newshighlight001-2004-03-08.jsp, retrieved on January 23, 2006. 42. Ibid. 43. Canadian Broadcasting Corporation News Wire (2004), “Lavalife Turns Romance into Money,” CBA.CA News Online, http://www.cba.ca/stories/print/2004/03/04/business/lavalife040304, retrieved on February 18, 2005. 44. Ibid. 45. Tudor, Jason (2005), “Lavalife Personals Review,” www.Dateseeker.net, http://dateseeker.net/reviews/lavalife-personals.html, retrieved on January 23, 2006. 46. Ibid. 47. Goel, Natalie (2005), “Getting More Personal,” PC Magazine, January, Vol. 24, No. 1, p. 26. 48. Gagne, Claire (2004), “Wooing Cheaters,” Marketing Magazine, September 13, Vol. 109, No. 29, p. 6 49. Op cit. Evans and Clifford 50. Sohn, Amy (2005), “Mating Network Rivalry: With Technology, Meeting People is a lot Easier than Getting Rid of Them,” New York Magazine, March 28, http://newyorkmetro.com/nymetro/nightlife/sex/columns/mating/11515/, retrieved on January 23, 2006. 51. Kharif, Olga (2004), “Online Dating Faces Rejection,” Business Week Online, October 11, http://www.businessweek.com/bwdaily/dnflash/oct2004/nf20041011_7269_db016.htm, retrieved on January 23, 2006. 52. Marshall, Matt and Anna Tong (2006), “Face to Facebook: Social Networking Web Site is Making a Strong Connection with College Students,” San Jose Mercury News, January 16, http://www.buffalonews.com/editorial/20060116/1005319.asp, retrieved January 23, 2006. 53. Francisco, Bambi (2003), “Friendster Gets Close to Benchmark: The New Thing in Silicon Valley is Social Networking,” CBS.MarketWatch.com, September 13, http://www.marketwatch.com/news/story.asp?dist=ArchiveSplash¶m=archive&siteid=mkt w&guid=%7B6931E0FF%2DBA12%2D423D%2DAC28%2DDA40DE825989%7D&garden=& minisite=, retrieved on January 23, 2006. 54. Op. cit. Kharif Match 21 55. Musgrove, Mike and Frank Ahrens (2005) “Online Dating Losing Steam,” The Washington Post, February 12, http://www.msnbc.msn.com/id/6956587/, retrieved on January 23, 2006. Fighting off the Competition: Match.com and the Online Dating Industry Case Questions: 1. What consumer trends existed that suggest potential growth for online dating industry? 2. What potentially negative consumer trends could impede the expansion of the online dating industry? 3. Identify the primary and secondary competitors facing Match.com. 4. Describe briefly each primary competitor’s positioning strategy 5. What is Match.com’s positioning strategy?
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