Sam Yagan and the folks at OkCupid have been running some interesting experiments on what works and what doesn’t work in online dating. In this interview with DatingAdNetwork Sam (co-founder and CEO of okcupid) sheds some light on those analysis. Listen the interview here.

Q:   How big is your website OkCupid in terms of the customer database and visitors?
A:  OkCupid is one of the largest and fastest growing free dating sites on the web.  We  have about 5 million unique visitors to our website every month.

Q:  That’s pretty large.  How about your other site CrazyBlindDate ?
A: We do run several other sites in our network that offer different dating products but OkCupid is the core site that we run and is definitely the largest.

Q:  In your presentation last month you displayed some metrics about phrases people use in their messages and how dramatically it affects the responses they get.  Those were  very interesting analysis that I have not seen anywhere else.  Which of those metrics came as most surprising when they first look at them?

A:  What we do is we analyze all of the interactions that are happening on our site.  We aggregate the data, we do some statistical analysis to try to find trends and we publish those trends back out on our blog.  One of the studies we did recently was on first messages.  What content in the message does best at drawing responses?  Just like when you go to a bar, that first line that you give, that pick-up line, is really important in determining whether that person is going to talk to you.  In the same way, what we found when you write that first message to someone on OkCupid, the content of the message is very important.  One of the first rules that we found is that grammatical errors are a very big turn-off to recipients.  So it’s very important that your message is grammatically correct and that you don’t use any sort of internet shorthand like the letter ”U” or “UR” and you should be thoughtful in structuring your message just like you would be thoughtful before you go and talk to a girl at the bar.  Another thing that we found was that men should be modest.  Yes you should be confident, but don’t focus too much on how great you are. 

 
Q:  What useful conclusions can be drawn from those metrics?
A:  I think the conclusions are that in many ways online dating is a lot like offline dating in that first impression you make is very important and that you should actually spend time reading the persons profile that you are sending the message to and customizing that message as much as possible so the recipient is really interested in what you bring.

Q:   You are doing a lot of contests and games in your site.  Could you tell us some most recent and most interesting ones that you are doing?

A:  The biggest thing that we do is every couple of weeks we publish a new post on our blog which is basically a study of the activities that are taking place on the site.  The one that we currently have on the site talks about the impact of age on dating.  What we found is that men actually do better as they age up into their twenties, then they taper a little bit more gradually.  A man in his upper twenties or early thirties is actually very desirable across a very large swath of women.  So women in their mid-twenties, women in their mid-thirties, women in their upper-thirties are all interested in men around the age of thirty and in their early thirties.  Women on the other hand peak much earlier.  Twenty-three, twenty-four, twenty-five year old women are the most desirable and once a woman turns thirty or thirty-five, their demand goes way down.

 
Q:  You started your site when there was already a strong competitor on the market and hundreds of other sites are trying to get there.  And yet, you managed to make your site very successful.  Is there any special ingredient to your success that you can share with our listeners?

A:   We have three things that are key to our success.  The first of course is that we are free.  We really believe that women especially don’t want to pay for dating.  The second is that we brought the fun back to dating.  We think that dating should feel more like going to a bar than going to your psychologist.  Third, we use math to make dating more effective.  Ultimately if you use OkCupid, you are more likely to get a date than if you are on one of those other sites.

Q:   Speaking about the free websites, there seems to be a recent trend with paid sites opening free portals and free sites adding paid services.  Do you think that in a few years down the road, there would still be a breakdown by free and paid sites as we know them today?  Or will they evolve in some mixed models?

A:   I think everyone is working on mixed models.  I think the challenge is that the  subscriptions sites that are predominantly paid sites right now have built their entire business around having a certain expertise which is spending a hundred million dollars in marketing and trying to acquire customers that they have monetized at very high levels.  I think it’s going to be very hard for a site like e-Harmony or Match.com to change the model very much.  They do not have the right DNA, they don’t have the right expertise to build a free site because a free site has very different dynamics.  Ultimately, what we have seen in the last three years is that Match.com has stopped growing.  They have about 25% fewer subscribers today than they had three years ago, so I think that shows the market leader on the subscription side is not doing well.  What you are going to see is the free sites already out there are going to continue to grow and they are going to keep becoming the dominate players in the space. 

I just got back from iDate Miami and want to share a few thoughts with you:

There are some very interesting changes occurring in the Dating industry right now. It’s almost like the ground is shifting, with many people able to sense the shift, but few understanding where it is going or how to handle it. Look for yourself:

- Paid websites open Free portals;
- Free websites add Paid services;
- Payment gateway companies, which avoided working with dating sites before - now actively look for them;
- Established dating companies are more open to new marketing opportunities, JVs and partnerships which they didn’t consider before;
- Great potential and opportunities are opening for new dating projects.

In another words: while some established sites may see challenges, new sites see opportunities.

In fact, many new dating projects already successfully use the situation in their favor:
- There is a new site which recognizes psychological differences between men’ and women’s approach to dating, - and presents them with different interfaces;
- A dating site which leverages existing profiles from social sites - instead of asking you to create new profiles from scratch;
- A project which matches people by DNA samples;
- Niche projects: sites for pet lovers, for people who love tattoos, etc.

So, what allows these new projects to grow right next to the old and established sites? What keeps the bigger sites from holding the ground better?

Several reasons:

- smaller sites usually can move faster due to their light infrastructure. So, when a market situation changes they can act faster. Larger corporate projects need to go through their routines and boardroom meetings, etc. Their larger size and complex internal connections can significantly slow down the response time;

- For established projects it is harder to tweak their old business models because it means a greater risk. It takes guts to change something what worked well for you for years. The result might not be as expected. Start-ups are free from this predicament because they don’t have any old business models to cling to;

- small start-up projects are often run by enthusiasts, people who really love and believe in what they do, to the point where they are literally ready to get to work without anyone guaranteeing their pay… This alone amounts to something. Such level of dedication is not always found in larger projects.

It is exciting to see new projects emerging, and I believe we’ll see more new sites in the near future.

Andrey Malygin - Founder, DatingAdNetwork

P.S. Stay tuned for more interviews with leading Dating companies!

Vindicia provides on-demand billing and fraud management solutions. Among its customers are Online Buddies, SpeedDate, Avid Life (Ashley Madison) and other large dating sites.  Chairman and CEO of Vindicia - Gene Hoffman answers our questions in today’s exclusive interview for the readers of DatingAdNetwork blog:

Q: How can dating sites benefit from Vindicia CashBox?

A: Vindicia CashBox is an on-demand billing solution that enables dating sites, big and small, to continually acquire and retain customers.  From the acquisition perspective, CashBox supports multiple payment methods and payment processors; handles numerous business models, including subscriptions, one-time payments, and hybrids; calculates the applicable taxes (sales tax, GST, VAT) through a built-in engine; and automates the process of managing and disputing chargebacks.  On the retention side, in particular, CashBox features automatic payment-retry logic, which helps subscription clients consistently raise their successful transaction rate every month by 1-2 percent.  In addition, with CashBox, dating sites can communicate with customers in multiple languages, a win-win for global outreach.

In short, CashBox manages the entire billing process for dating sites so that they can focus on their business of helping people find that special someone.

Q: How does CashBox differ from other billing solutions?

A: CashBox delivers many distinct advantages besides automation of the order-to-cash process. Most of all, CashBox helps clients optimize their customer acquisition and retention capabilities, resulting in boosts to customer lifetime values north of 10 percent annually.  No other billing solution manages chargebacks as effectively as CashBox, which tackles the friendly-fraud challenge that all dating sites face and rightfully returns revenue due them.

Typically, Vindicia wins 60-70 percent of the chargebacks that we dispute on clients’ behalf.  CashBox also provides our clients with a great deal of flexibility and versatility with its support for multiple business models, global payment methods, languages, and currencies. With CashBox, dating sites can quickly respond to evolving business conditions without having to wait for their billing infrastructure to catch up.

Q: Many payment processors are averse to dating sites and consider them a high risk. Why are you interested in working with them?

A: We’ve found that dating sites that take appropriate risk-mitigation measures for fraud are, in fact, high-margin businesses and ideal for the services offered by CashBox. Since many sites have as a goal notto retain customers for too long (after all, their success is defined as /not /needing a dating site), a simple, transparent, robust, and logical billing and payment service is a key facet of a satisfactory customer experience.  Bottom line: We believe that we can help dating sites grow their business and stay successful through our unique approach of building online revenue.

Q: Tell us more about your fraud-screening and chargeback management capabilities.

A: CashBox’s fraud-screening capability generates a risk score for each sales transaction so that dating sites can identify obvious fraudsters before the transaction is complete.  Many variables are factored into the risk score, including the geographical location of the customer’s IP address, validation of the billing address and BIN, detection of the related proxy, and card velocity.  Unique to the fraud-screening score is a database of chargebacks that we’ve created across a broad client base on the basis of hundreds of millions of past transactions.  As soon as CashBox detects that a credit card has been associated with a prior chargeback in our system, CashBox raises the risk score of the related transaction–essentially a red flag.

Chargeback management with CashBox comes into play post-transaction.  Oftentimes, chargebacks do not result from stolen credit cards or “true fraud,” but from people who make purchases but decide not to pay for them.  We call this behavior “friendly fraud” though it certainly isn’t.  For those cases, CashBox takes the chargeback data from the payment processor and maps it to usage and other pertinent information from the client site.  CashBox then creates a documentation package and a letter tailored for the customer’s issuing bank and “re-presents” the charge.  Aside from the positive impact of reversed revenue, our experience has shown that fighting chargebacks also provides our clients with valuable insight into their marketing efforts.

Q: Which dating sites are using CashBox?

A: There are quite a few, including Online Buddies, SpeedDate, iChurch, Avid Life, and others. They are either using or in the process of implementing CashBox.

We’ve received a lot of feedback on the previous post and would like to give Robert Fathers another opportunity to speak on our blog. Below you can find his thoughts on the dating industry, as it moves and changes in the current economic climate.

The Big Dating Sites

Dating is divided into several markets. Let’s say, the Big guns, like Match, Lavalife, Meetic etc; they are totally focused on their brand and very little else, they mainly rely on mass media advertising which is expensive and, more often than not, ineffective. They are purely working on a Business to consumer basis and miraculously many of them don’t have an affiliate system, mostly rely on expensive alternatives, such as Commission Junction and other larger services for affiliates, but of course CJ takes most of the money and the end result is very little profit and high advertising costs. This year highlighted many of these companies as losing money; my own belief is they will survive by their sheer size and backers, like Microsoft behind Match, but never to be that successful in their own right; their sites are also so basic, that most dating scripts even have more to offer.

Small General Dating sites

A very hard time for them: most are joining systems like our own, as they cannot get good deals with merchant accounts and overheads are difficult to cover in a market that is already flooded. However, the light at the end of the tunnel for them is by joining our system; this will help them to clear all operating costs and expand their brand with other languages, currencies and niches. This is a real solution for sites in hard times to expand and make money in an otherwise difficult market.

One off Niches

Each site should have their own unique quality, whether it’s a concept like eHarmony or a niche like JDate.com. These are, of course, more successful, but, of course, limited to a smaller segment of the market. Many of these sites cannot cope with ethnic sites. For example, try Chinese dating in the USA, or Indian dating in the UK. If jDate could cover all languages and countries then their niche becomes larger and, of course, more profitable.

Multiple Niches

The smaller the Niche the higher the profits, any Google AdWords specialist will tell you that this is the answer to real success. Building through 100 of these is no mean task.

Some ideas to dating webmasters and site owners

• How about starting your own dating empire? Where would you begin?
• A good name, a good Domain. Create your brand and design - and you have the beginning of your supersite.
• Build your site outwards, let’s call it superdaters.com
• Clone your site for each country, using the relevant language and currency for each site, link them all together.
• Create Niches around the same brand that cross sale well, like Gay dating or Adult Dating, and you are already making your own advertising for your other sites.
• Expanding on the above, you could create your own free dating site; why not add it to your social network? It’s a great fit and suits the free concept. Use the free dating site to make advertising revenue and then cross sell your free dating sites to your paid dating sites.
• The combinations of ways you can do this are endless; we estimate that you can create up to 13 million niches in our system. The beauty of it all is that anyone can do it from professional to amateur.
• This is a long lasting strong model that can last a lifetime and, I can say this honestly, completely addictive.

Robert Fathers, CEO, Datech Limited

Q: What is Datech Ltd., and what do you do in online dating business?

A: Datech Limited is technology partner to anyone online; whether they are large brands, want a community dating site or affiliates whose only target is to make money through a system that will earn a good return in revenue. Datech offers a full range of solutions, from white labeled sites, template sites, affiliates marketing tools and – later this month – free dating sites as well. Our unique position in the marketplace is that we are the only provider worldwide that offer true white labeling and not simulated sites with just header and footer. There is also an outstanding ability to allow partners to filter data from our database of 17 million members, into any possible niche they could imagine, in over 14 languages (‘Add your own language’ is just part of the service too) and any currency at prices that suit the targeted market. It is all operated under World Dating Partners brand and covers all the headaches of running a dating site, like Merchant accounts, customer support, anti fraud scrubbing, partner support, a server system with 100% uptime and unlimited capacity for traffic. Our system is used by major dating sites like dating.com who find that our model cuts running expenses and leaves them with what they do best – marketing. Best of all of course, everything is FREE and we run as a true partnership on shared revenue with recurring payments AND re-bills, something that other sites don’t pay out on. As a partner you can also sell to other sites if you prefer Business to Business and get a generous override/commission over total revenue for every site you bring in.

Q: Your software development office is situated in Ukraine. What’s the best about it and what’s the worst?

A: We have worked in the Ukraine for over 10 years, an outstanding achievement as our own outsourcing company, where most companies fail in their first year. We believe that our key to success is our ability to understand and sympathize with a different culture, to pay fair wages and treat our team of developers and other staff like a family and part of our UK office, instead of looking on them as a resource to exploit. Our team in the Ukraine is just as much involved in the running of the company as any in our UK team, if not more. I am very proud of them all and they give all they can. This can all be achieved with very good communication and the right person in the Ukraine as a team leader. For the future we will add more and more responsibility to our Ukraine office, as the country becomes more aware of marketing techniques, we find that these skills are something to look out for in the future.

Q: Do you work with big name companies only or also with individual web entrepreneurs as well?

A: Datech has over 21,000 partners, from small to major, and running business across different industries shows the flexibility of who we work with: we work alongside over 47 TV networks worldwide, over 250 radio stations, over 120 affiliate networks, have many celebrities who work with us. Some of our bigger names are Cellcast, Bauer media, Perfspot, Sky TV; quite honestly, really too many to mark down on one page. In 2007 World Dating Partners took over and ran Relationship Exchange, the forerunner and previous leader of this industry.

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