Spark Loses $164k On $13.2 million

OPW -- Apr 2 -- Just a few weeks ago the likes of NPR were reporting that while the economy is hurting, online dating seems to be booming as people seek companionship and understanding during hard times. However, Spark Networks, who are responsible for such sites as JDate.com, ChristianMingle.com and BlackSingles.com, showed down numbers in their Q4 results. Paid memberships were down 11% from Q4 2007, and down 12% for the full year. Revenue followed the same trend, showing an 18% decrease to $13.2 million for the quarter compared to $16 million for Q4 2007. Spark Networks were down 12% ($57.3m) for the full year compared.

During Q1 2007, the Chairman and CEO of Spark Networks, Adam Berger, reported that “JDate.com grew for the third straight quarter following last year’s price increase” and they launched an additional website, JDate.co.uk, for the U.K. Spark Networks did not report separately on JDate.com, but lumped it in with its other Jewish Networks. 

By the end of 2008, numbers for Jewish Networks were no longer growing, noting a 5% decrease in revenue for Q4 and up by a mere $100,000 from the prior year. Considering they added a whole new site to this category, you would expect to see a more significant revenue increase for the year. Paying subscribers were also down by 5% over the previous quarter, down 7% compared to Q4 2007, and down 4% for the year. Berger did note his disappointment with second half trends and the fourth quarter in particular, “as revenue and subscribers decreased sequentially in each online segment”. It should also be noted, however, that JDate experienced an “overhaul” in Q4 and began a re-launch in early 2009 for what Spark Networks clearly hopes will be a better financial year for online dating.

Interestingly, it is reported on Compete.com that JDate is actually up by 8.6% for the year, though this is not reflected in Spark’s report because of the aforementioned Jewish Networks lumping. After JDate.com, the next 3 largest Jewish dating sites are Frumster.com, which was down by 12.6% for the year, JewishFriendFinder.com, which was up 1.8%, and JewishCafe.com, which was up by 12.9% according to Compete.com. Based on this outside information, it begs the question of Spark Networks as to which of its Jewish Networks sites are dragging down the numbers for the year, since JDate seems to be doing rather well.

As Berger noted, revenue was mostly down across the board for Q4, as well as for the year as a whole. 'General Market Networks' (AmericanSingles.com) posted a 25% decrease for the quarter and 51% for the year, though Spark Networks is attributing this largely to a 59% decrease in the marketing expenditure. Spark has been winding down the once category leading AmericanSingles since it decided to go the niche route and buy MingleMatch back in 2005.  'Other Affinity Networks' came out about even with the prior quarter at $3.5 million, and was even up 3% compared to the previous year. Offline & Other Businesses was down 54% compared to Q4 2007, although it was up 18% from the prior quarter, it was still down 22% for the year.

To increase their bottom line Spark Networks also decreased operating and direct marketing expenses for 2008. Operating expenses, which include customer service, sales and marketing, and technical operations, were reported to be down 12% from the previous quarter, and down 19% from 2007 end of year. Direct marketing expenses were down 27% from the previous quarter, and down 29% for the year. Perhaps they should be increasing this, instead?

Sure, Spark is down, but how about the rest of the dating industry.  How is YOUR dating site doing year-over-year now compared to last year, now that Valentines is over?  Your comments please. 

See all posts on SparkNetworks       See all posts on BlackSingles
See all posts on JDate                      See all posts on ChristianMingle
See all posts on AmericanSingles     See all posts on Frumster

Comments

[Ryan]

We just launched a new dating site focused on long term compatibility. We expected the first month to be tough but we are pretty surprised to see such a positive response primarily from Los Angeles singles.

[Mark Brooks]

btw, you've got a profile photo of a gun toting woman on your home page http://hintcafe.com/user/gothamgoddess

[Ross Williams - WhiteLabelDating.com]

This is a good example to illustrate that traffic doesn't equal revenues and certainly doesn't equal profit.

How can a dating site lose money?

When was the last time their CEO used the site? What about the senior management, how often do they use the site to find a date?

Dating companies which have to develop their own software, run their own customer support, manage their own hosting etc just won't be able to compete with the smarter, more agile dating businesses that have developed over recent years who only incur the cost of marketing for their site and use a platform partner.

(crickey, that was aggressive, I'm sounding like the dark sith lord now!!) :)

R

[Sam Moorcroft, ChristianCafe.com]

Let's see, we:
1. develop our own software
2. run our own customer support
3. manage our own hosting

Man, what have we been doing, wasting our time for all these years?

We'd better sign up ASAP with WhiteLabelDating.com or we're doomed!;-)

[Mark Brooks]

I paid a visit to the President of Spark Networks the week that Adam Berger started and was quite impressed to learn that he was spending his first week as a customer service person, on the phones talking to customers.

[Ross Williams]

Aaah, Sam you're different and you know your audience :) You've got a great niche and a very solid business - it's some of the larger player I see suffering as a result of smaller, more nimble players like yourself.

Being on the phones talking to customers is a great move - it's obviously not enough for Spark judging by their results but that's more than many do.

R

[Sam Moorcroft, ChristianCafe.com]

Yeah, just foolin' with ya, Ross - I got your point:) Those of us who have been around for a while, are in a good niche, and have remained nimble, will be around for a whole lot longer. It is all these newbies trying to copy us (and others) that don't stand a chance.

A lot of this is the downside of all the media hype recently about dating and the recession. Everyone thinks online dating is the panacea and they jump right in, ready to get rich quick.

Let's re-visit this a year from now and see how many of them are still around:)

Wasn't it Ray Croc who said, "When you see your
competitor drowning, put a hose down his throat"?

What, me, aggressively competitive? No!

[max]

Ross we doing technology and support also in house.
If you do it smart/effective it costs you 5-7% of revenue...
Why I shall give 50% or OK ( if I am big) 30% of MY revenue to Mr. Ross ? :-)
Or I have old info and now your revenue share 90/10 in favor of your partners.

Max

[Vout]

These guys have been trying to find someone capable to run the company for many years. The problem is that none of the people at the helm are hungry enough to turn the ship around. They've added new sites to their network, but the core offering hasn't changed and their products haven't kept up with the times.

Broadly, online dating is still essentially the same product offered since the late 90s. It's time someone launched a dating site that offers something new and not the same old bullsh*t.

[Greg G$ Kim]

Spark performance is not indicative of industry trends nor niche trends. Maybe companies are eating their lunch due to better marketing prowess or larger communities or metrics paradigm. Spark has lowered their subscription price on some of their niche sites like Black singles.com which was $29.99 for a 1 mth subscription and now $9.99. Not only have they copied BlackPeopleMeet.com in many respects from our product development to marketing creatives and marketing messaging but now to lower pricing to build scale. But as any expert in the paid dating space knows, going up in price will improve your economics (a price/LTV increase will typically outweigh any loss in conversion) but going down is a double edged sword even if they are able to drive more subscribers. Can't wait to see Q1'09 results.

[Idate2009]

I have to say I'm not surprised. I've had a few go-rounds with the customer service for JDate and I was never very impressed. Recently I found a site called People2People.com through an advertisement in the Jewish Journal, and so far so good.