As you have probably noticed and might have experienced first-hand, online dating has gradually become more socially acceptable over the past decade. While it was once considered a last resort for people who struggled to get a date in the real world, that’s no longer the case.

Technology has advanced, enabling nearly all of our interactions and tasks to be done online. We shop, socialize, bank, work, and much more from our devices. It’s now pretty normal to try and find romance online, too.

As more people turn to technology to look for love, dating apps have grown and are trending to continue growing. Like the majority of apps, most are free but use various monetization techniques to bring in revenue. However, many of the popular business models are becoming obsolete.

Let’s take a look at the evolving industry, the revenue of dating apps, and how new and creative advertising techniques can boost revenue while increasing customer satisfaction.

Online dating app usage in the U.S.

First, how many people are using online dating apps?

Dating App Website Design by Brightscout

In 2017, 46% of the people surveyed had used a dating app at some point in their lives. Further, 19% of American internet users were currently using online dating websites or apps (up from 15% in 2015 and 11% in 2013). 

With the increase in use, it’s no surprise that the amount of people who think dating apps are a good way to meet people has increased while the amount of people who think they are for desperate people has decreased.

Why are people using dating apps?

  • 84% of dating app users said they were looking for a romantic relationship
  • 43% were looking for friendly contact
  • 24% were looking for sexual encounters
  • 66% of U.S. singles used online dating to expand their dating pool

There are various motivations for using dating apps, and there seems to be an app that caters to each of them. For instance, Tinder is used more for hookups while is more relationship-oriented. 

Most popular online dating apps

Next, let’s take a look at which apps are bringing in the most users.

According to a December 2017 survey, the most popular dating apps in the U.S. by audience size are:

  • Tinder with 8.2 million users
  • Plenty of Fish with 6.7 million users
  • and OkCupid with 5.1 million users each
  • Grindr with 1.9 million users
  • Bumble with 1.4 million users

And, which apps are popular beyond the borders of the U.S.?

Ogury performed a Dating App Study on a sample of more than 6 million mobile user profiles in the US, UK, France, Italy, and Spain between January and June 2017. The findings included that Tinder is in the top five favorite dating apps for men and women in all five of the countries interviewed.

There’s no question, Tinder is a leader the dating app industry both in the U.S. and abroad. Now, let’s take a closer look at how these apps are making virtual dating profitable.

Revenue generation from online dating apps

Most dating apps (and other apps for that matter) earn revenue in the following three ways:

  • Advertising: Third parties display ads in the app and the app owner earns from clicks, impressions, and transactions.
  • Subscriptions: Users subscribe to a membership plan that unlocks additional features. A fee must usually be paid on a recurring basis to maintain the membership.
  • One-time purchases: Users can buy things within the app such as tokens, virtual gifts, an expanded search radius, etc.

In 2018, worldwide revenue in the online dating segment amounted to $1,383 million, and it’s expected to reach $1,610 million by 2022.

However, there is still room for improvement.

A survey performed in January 2018 found that 53% of U.S. users of dating apps and websites reported having an experience that was neutral, somewhat negative, or very negative.

While the reasons for the lack of satisfaction weren’t listed, there are some other interesting findings. 

For instance, according to Whim, less than 11% of matches on dating apps result in actual dates. 

Further, market research company Forrester found that nearly 60% of U.S. smartphone owners find in-app ads disruptive and 80% say they are usually irrelevant.

Additionally, the upgrade-based subscription model is the most popular app monetization tactic but is also the most hated. It lets users download and use the app for free but pay if they want access to more features and/or benefits. In a 2017 study, only 14% of mobile publishers found the paid subscription model to be the most effective. 

On the other hand, 63% of mobile publishers said in-app purchases were the most effective monetization technique. However, a study in 2016 found that only about 5.2% of mobile app users make in-app purchases.

Is there a better way to monetize dating apps that can also help to improve the user experience?

Maximizing dating app profitability

Traditional marketing methods are waning as consumers tire of disruptive ads and constant upsells. Companies now need to get creative so that advertising is covertly embedded in the experience.

One way to do so within dating apps is by capitalizing on the actual date part of the interaction.

Dating App Brand Concept by Brightscout

There are a few dating apps (Whim, Tonight, First) which move quickly toward setting up a real date once a match is found. Doing so opens up the opportunity for the app to help users plan the outing.

Partner with Businesses

By partnering with businesses and venues, the dating app can suggest locations and enable reservations. The location suggestions can bring in advertising revenue while the reservations can bring in a fee per transaction which is paid by the business or venue.

This is similar to the OpenTable business model where any reservation booked through its software earns the company a commission on a per-diner basis. 

App Concept Design by Brightscout

By going this route in a dating app, the users enjoy an additional service without paying for it, businesses gain more customers, and your revenue gets a boost.

Taking this kind of approach is but one example of how to keep advertising out of an app user’s sight and mind which leads to a better user experience. 

Creatively rethinking how an app functions and makes money can improve user satisfaction while maximizing profitability.

Drive Growth by Geographic Region

Its a fact that if you open a dating app and there is no one around you to make a match with, you will delete the app and not return for a very long time. There could be no more of a frustrating user experience for an app that claims it’s going to find your next “true love”. Therefore, in order for your app to be successful, you’ll need to be very strategic how you role out your app. Make sure not to unlock regions until they are populated with eager users.

Leverage Large Groupings of People

Populating your app with a mass audience is expensive. Therefore it’s important to get the most for your ad dollars. It’s no coincidence that almost every popular dating app has been grown out of college campuses. Not only do you have a willing customer base, you also have a concentrated community of like-minded individuals. By concentrating your efforts to places with a high population density such as colleges and events like large concerts. You can touch and remarket to users at a fraction of the cost.

Build a “Dating” App, not a “Matching” App

Let’s face it, dating apps have failed in their mission. There very good a matching you with another person you’ll most likely hit it off with. However, there actually really horrible at getting you off your couch or your little personal bubble to meet other people. That’s why we’re calling out all dating apps and future dating apps to widen there focus. To fulfill your mission, you need to do more than let people swipe left or right. It’s your duty to make actual meaningful connections between two individuals.

Our bet is, the app that understands the date is the product and not the app or match will win. This will mean focusing on creating the best experiences outside the app; not within.

Hire Brightscout: Unlock your app’s hidden revenue

Online dating is a growing industry with room for innovation. At Brightscout, we see the opportunity in this industry and many others, and we are passionate about creating new, unconventional solutions that improve user satisfaction while driving revenue.

Want to talk about maximizing the earning potential of a dating or other type of app? Reach out to us today. We will help you to break out of the current limiting mold and unlock new revenue streams!

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