A Great Time to Be In the Love Business, Says Match Group CEO

Feb 07

It’s a great time to be in the love business, says Match Group CEO Mandy Ginsberg. She says that the primary driver of their growth has been the introduction of their paid subscription feature, Tinder Gold, which allows users to see who liked them.

“Tinder remains the centerpiece of our growth story,” said Ginsberg during the earnings call. “Direct revenue at Tinder was up nearly 100% in the third quarter compared to last year and subscribers grew 61% and ARPU rose 24%. Even though we launched Tinder Gold over a year ago, it continues to have a meaningful impact on the business. More than 60% of the 4.1 million subscribers on Tinder are now Gold subscribers, up from 50% plus in the second quarter.”

Ginsberg says that their strategy to increase Gold subscriber penetration is to add more features to the Gold subscription package, making it even more compelling to their users.

Mandy Ginsberg, CEO of Match Group, discussed the massive growth of online dating throughout the world following their very strong earnings announcement in an interview on CNBC:

A Great Time to Be In the Love Business

This is a great great time to be in the love business for many reasons. We really are seeing tremendous growth from Tinder. Then as we have talked about we have some other exciting bets brewing. So not only is Tinder seeing momentum but we’ve got a whole host of other products across the globe that we leverage as well. We’re feeling pretty good about the upcoming year.

We are seeing that now more people are using multiple apps at one time, between three and four apps when they’re dating. We want to be able to service all their needs. We also see that people use different dating apps based on their age and life stage, whether you’re a 50-year-old divorcee or a 21-year-old who is a college senior. We feel like across the board both domestically and internationally we’ve got an opportunity to serve a lot of people.

What’s shocking is that over ten years ago three percent of relationships started online and now it’s 30 percent in this country. The world really has changed and this is the number one way that people meet. We think the numbers I just quoted are similar outside the US, but we think there’s going to be real growth opportunity.

Tinder Likes View Feature is Driving Growth

In terms of our business model, it’s simple. You can go on Tinder and you can get a great free experience, but we offer features that you don’t mind paying for. We had Plus, which was a subscription feature that enabled you to access a number of our premium features. Then about a year and a half ago, we introduced something called Gold, which essentially gives you the ability to see who’s liked you.

If someone says to you, do you want to see all the women who’ve liked you or all the men you’ve liked you, it’s very hard to say no. We saw that the take rate on that Gold or that likes view feature was really high and that was priced at an even higher premium, another subscription tier. What we saw is that not only were people happy to pay more for this feature, but we just saw more people taking the feature, and that’s what’s really driven a lot of the growth.

Facebook Helping Online Dating Become More Pervasive

Over time I think we’ll see a much more adoption (of dating apps). In 2012 only 16 percent of people in their young twenty’s, 18 to 25, used dating apps. Tinder really changed that. It brought a whole new generation to the category. We believe that a lot of what’s actually keeping that number down, especially internationally, is stigma. A market like Japan, we’ve been in for a long time, but there’s been a real sort of cultural stigma around dating. That’s changing and that’s changing fast.

Facebook entered the dating category and because of their reach, I’ve said there is a possibility that Facebook could open up in areas where they have real strong strength, where people who hadn’t thought about dating might try dating. We have not seen any impact since Facebook has launched in the three markets that they’ve tested in. I do think over time people are going to feel much more comfortable and that the normalization of dating and meeting strangers to go for a cup of coffee is going to really become much more pervasive everywhere.

The Scale That Tinder Has is In a League of Its Own

If you think about the Match Group products, the one that stands out is Tinder. The scale that Tinder has is in a league of its own. It went viral with very little marketing spend in 190 countries and millions of users across the globe. We haven’t seen anything quite like it. There have been competitors that have come in the market, a lot of them being local players, but really that has not driven market growth.

What’s really driven market growth are things like the introduction of mobile. Also, a few years ago we saw when 50-plus audiences when they started getting much more comfortable using social and just socializing with people online, that category grew. The more people feel comfortable the higher propensity. We feel like we’re in a great position to be able to address needs for everyone.

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