e-Finding Your Valentine

In a world where digitization is increasingly pervasive, should you trust a technology-driven platform for something as important as finding your soulmate?

Traditionally, nearly all romantic partners met through mutual connections or by physically and coincidentally crossing paths[1]. Although this “worked” for decades, online dating revolutionized the process. Suddenly, singles can effortlessly connect with several suitors in mere minutes without even leaving home. In fact, more than 1/3 of U.S. couples who married between 2005 and 2012 met online[1].

Exhibit 1: How Partners Traditionally Met

What Wasn’t Working?

Let’s be honest: it takes considerable time, effort, and serendipity to meet new people. Historically, singletons had no way to discover the interests and personalities of potential partners before spending significant time together. The fears of rejection, embarrassment, or awkwardness created additional barriers to finding love. In response, dating websites and mobile applications have attempted to mitigate these everyday problems.

Helping Singles Meet Their Match

Widely considered the premiere online dating provider, Match Group, Inc.’s (“Match”) mission is to “increase users’ likelihood of finding a romantic connection”[2]. Interestingly, the company owns several online dating brands (including Match.com, Tinder, and OkCupid) in an effort to reach a broad audience with varying consumer preferences[2].

Exhibit 2: Match’s Online Dating Platforms

The business model hinges on the idea of “matching markets,” a principle that Nobel prize winner Alvin Roth spent his career studying. Dating sites converge supply and demand, and transactions occur based on information sharing and reciprocated enthusiasm[3]. Match’s capital-light operations utilize both the Internet and smartphone-enabled software to connect singles to one another via formulaically-calculated compatibility and subsequently provide a means of communication between the two parties via online messaging platforms[4]. Match provides value to consumers through:

More Options: Match’s software provides visibility to a much larger pool of potential partners than consumers would otherwise encounter. Maintaining a wide user base (a “thick market”) is critical for success in the match-based model[5]. At its IPO in November 2015, Match boasted 59 million monthly active users[6].

Efficiency: The company’s platforms allow users to more efficiently spend time searching for love. By quickly filtering through large amounts of data (i.e. interests, geographies, and backgrounds), consumers can limit connections to those who share their romantic preferences, reducing both up-front time invested and outcome variability[7].

Comfort: Online dating generally reduces the emotional cost of rejection because the platform only reveals the user’s interest when the feeling is mutual[3], which makes “wooing” strangers not only risk-free, but actually expected.

Convenience: Smartphones’ increasing omnipresence allows users to look for love anytime, anywhere – in short, dating has become a “hand-held activity”[8].

Exhibit 3: Match.com Smartphone Application Interface

Spreading Cheer Proves Valuable

If we measure value to the user in happiness, Match has been fulfilling its customer promise. Success stories in the form of engagements and weddings are becoming increasingly prevalent as the applications gain popularity[9].

Beyond advertising revenues, Match captures value by converting free users to paid services as consumers perceive the app can provide real potential for finding love, recognizing a 31% increase in paid users year-on-year as of November 2016[10]. The 2016 Sixth Annual Singles in America study further suggests that online dating increases the chances of going on a first and second date by 150%[11].

Exhibit 4: Tinder-Inspired Wedding Cake

So Why Hasn’t Everyone Found Love?

Some critics of online dating suggest the matchmaking approach is a market failure[12]. Users limit matches based on standard characteristics that they believe they desire; however, these qualities cannot capture “chemistry,” a critical factor in finding Mr. Right[12]. Moreover, people may not actually know what they are looking for in a partner, even if they think they do[1]. Consequently, Match’s vast collection of user data may be better equipped than its consumer in identifying true compatibility. The company could therefore provide two sets of matches: one specified by the user (status quo), and another created by data-driven algorithms based on that user’s behaviors and preferences.

Additionally, given that these platforms’ effectiveness hinges on the provider’s ability to properly match supply and demand, subscriber quality and quantity is crucial. It would be quite a pity if Cinderella was on Tinder, and you were using OkCupid. Match may want to consider aggregating users across its platforms through a universal application to grow the pool of potential mates.

Finally, studies show that people tend to ask safe, high-level questions on first dates that don’t lead to any substantive discovery about one another, much less whether or not he or she may be viable for partnership[13]. To combat this, Match may best serve its users by suggesting “deep” questions to discuss, in hopes of limiting wasted time.

However, people tend to eschew dates they feel “aren’t their type,” and there may be self-selection value in the platforms people use. Would these changes allow more people to find love, or just magnify the number of profiles to sift through while simultaneously diluting the current platforms?

(Word Count: 799)

 

Endnotes:

[1] Ansari, Aziz, and Eric Klinenberg. “How to Make Online Dating Work.” The New York Times, SundayReview ed., Opinion sec. 13 June 2015. http://www.nytimes.com/2015/06/14/opinion/sunday/how-to-make-online-dating-work.html, accessed November 2016.

[2] Match Group, Inc. December 31, 2015 Form 10-K, https://www.sec.gov/Archives/edgar/data/1575189/000157518916000006/mtch-20151231x10k.htm, accessed November 2016.

[3] “Optimising Romance.” The Economist. 13 Feb. 2016. http://www.economist.com/news/finance-and-economics/21692926-find-true-love-it-helps-understand-economic-principles-underpinning, accessed November 2016.

[4] Match Group, Inc. “How It Works.” http://www.match.com/howitworks/index.aspx?lid=4, accessed November 2016.

[5] Mims, Christopher. “How Economists Would Fix Online Dating.” Wall Street Journal. 08 Feb. 2016. http://www.wsj.com/articles/how-economists-would-fix-online-dating-1454907660, accessed November 2016.

[6] Reader, Ruth. “Parent Company for Match.com, Tinder, and OkCupid to Go Public, Seeks $100M In IPO.” VentureBeat. 16 Oct. 2015. http://venturebeat.com/2015/10/16/parent-company-for-match-com-tinder-and-okcupid-to-go-public-seeks-100m-in-ipo/, accessed November 2016.

[7] Oyer, Paul. “The Economics of Online Dating.” Harvard Business Review. 30 Mar. 2015. https://hbr.org/2013/12/the-economics-of-online-dating, accessed November 2016.

[8] Wood, Molly. “Led by Tinder, a Surge in Mobile Dating Apps.” New York Times. 4 Feb. 2015. http://www.nytimes.com/2015/02/05/technology/personaltech/led-by-tinder-the-mobile-dating-game-surges.html, accessed November 2016.

[9] Renfro, Kim. “This Couple Got Married after Swiping Right on Tinder: The App Isn’t ‘just about Hooking Up’.” Business Insider. 20 Aug. 2015. http://www.businessinsider.com/married-after-meeting-on-tinder-2015-8, accessed November 2016.

[10] Wells, Georgia. “Match Group’s Profit Jumps as More Singles Pay for Online Dating.” Wall Street Journal. Nov. 2016. http://www.wsj.com/articles/match-groups-profit-jumps-as-more-singles-pay-for-online-dating-1478032691?mg=id-wsj, accessed November 2016.

[11] “Singles in America: Match Releases Its Sixth Annual Comprehensive Study on the Single Population.” Match.com MediaRoom, PR Newswire. 1 Feb. 2016. http://match.mediaroom.com/2016-02-01-Singles-in-America-Match-Releases-Its-Sixth-Annual-Comprehensive-Study-on-the-Single-Population, accessed November 2016.

[12] “Love at First Byte.” The Economist. 01 Jan. 2011. http://www.economist.com/node/17797424, accessed November 2016.

[13] Ariely, Dan. “Where the Free Market Fails: Online Dating.” Harvard Business Review. 23 July 2014. https://hbr.org/2010/09/where-the-free-market-fails-on, accessed November 2016.

Photo Credit:

Cover Photo: “Optimising Romance.” The Economist. 13 Feb. 2016. http://www.economist.com/news/finance-and-economics/21692926-find-true-love-it-helps-understand-economic-principles-underpinning, accessed November 2016.

Exhibit 1: Kerley, Paul. “The Graphs That Show the Search for Love Has Changed.” BBC News. 13 Feb. 2016. http://www.bbc.com/news/magazine-35535424, accessed November 2016.

Exhibit 2: Tenebruso, Joe. “Tinder Ignites Match Group Inc.’s Earnings.” The Motley Fool. 10 May 2016. http://www.fool.com/investing/general/2016/05/10/tinder-ignites-match-group-inc-earnings.aspx, accessed November 2016.

Exhibit 3: Match Group, Inc. “Up To Date: The Official Blog of Match.” http://blog.match.com/2014/04/24/match-launches-brand-new-app-for-iphone-and-ipod-touch-dating-never-looked-so-good/, accessed November 2016.

Exhibit 4: Foster, Brooke Lea. “The Tinder Dating Pool Isn’t Completely Shallow.” The New York Times. 26 Mar. 2016. http://www.nytimes.com/2016/03/27/style/tinder-dating-relationships.html, accessed November 2016.

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7 thoughts on “e-Finding Your Valentine

  1. What a great article! As we think about this, it is interesting to think about the long term effects. The US divorce rate is at all time lows and I wonder if there is a correlation between the use of dating apps to source your wife/husband and divorces.

  2. Great post! My concern is that while the number of people who are joining online dating platforms is growing, so are the number of dating apps and services. Do you have a sense for whether we’re beginning to reach market saturation? If so, what steps are these platforms taking to maintain their competitive edge, if any?

  3. Fantastic post about a topic that is so frequently discussed but rarely backed up with facts and figures. The first graph that you posted is so eye-opening and interesting. The fact that all other forms of meeting potential partners besides online or at a bar/restaurant have been declining is something I have anecdotally noticed but have never had the figures to support. With the proliferation of so many new applications and websites in this space it will be interesting to see which ones stick around and which ones will disappear. If I had to bet it would be the ones that focus on meaningful relationship matching and less on “hook-ups”!

  4. I am on the same page as Ybouks – that first chart is truly fascinating. It is ironic that the place you go (most of the time) to get married, is the least likely channel to meet your romantic partner. I am surprised there has not been more ‘marriage’ in the industry to reduce the numbers of players but I can understand why that is the case. If Match bought Tinder, for example, there would be few synergies – the deal would be to acquire customers. That said, having different platforms with different niches could help consumers have a more efficient process.

  5. Doing a quick search on online dating services returns a countless number of apps and websites that have penetrated the industry. The one thing I am curious about is their ability to combine systems for their apps in the future. Just by looking at exhibit 2, there are 30 different services that Match owns with the same end goal. Is there a way to have one user profile and maybe “opt in” to different types of services if the functionality of the app or website appeals to you? There are so many articles written online these days about “Choosing the right online dating service.” What if users didn’t have to choose and instead Match became all one platform? I find it so curious how different apps also go through waves of popularity and wonder with the barriers to entry so low in this market, if Match does integrate could it possibly raise the bar for competition. Development of new apps is increasingly crowding the market and almost becoming too much to handle!

  6. Really interesting article! Agree that it is fascinating to see the data behind match-making and how online is becoming much more of a norm. What really stood out to me was the severe decline in meeting people through friends. I wonder if there is an opportunity for online or app data to merge these two, and use friends / technology to promote dating connections. Another related piece that you might find interesting, is a Ted Talk from a few years ago (https://www.ted.com/talks/amy_webb_how_i_hacked_online_dating) where one woman hacked online dating through math and strategic analysis. I wonder if this will extend and we will see second-derivative apps that allow users to hack dating apps into achieving better results.

  7. Great article! I agree with Gregor that given the rapid growth of dating platforms, it is probably better to have different platforms targeting different set of customers. I think Match should invest more in differentiating their platforms so that they are attracting their target customers to their intended platforms. I would suggest that Match impose some requirements based on interests/personal values so we can have a more matching efficient process.

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