Online-Dating Sites Get Stood Up by Consumers

Singles Flock to Myspace, Leaving and Others Looking for Love

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The honeymoon's over for online dating.

After years of torrid double-digit growth, the $516 million market has cooled to about a 9% pace, just as social-networking behemoths like and risque hookup sites like flourish.

To combat their shrinking market share, traditional online-dating sites are responding with fresh features: ongoing couples counseling, group-dating programs, new advertising campaigns and offshoot sites serving specific segments of singles.

It's only been about six years since the phenomenon of online dating caught fire with U.S. singles, a group that's estimated to be 89 million strong. Their quest for love has proven profitable for companies like and Yahoo Personals: The market leaders each have nearly 15 million members. The revenue from online dating was $516 million last year, one of the largest categories of paid content online, according to Jupiter Research.

During peak years-2002 and 2003-the market grew by more than 70%, but for the first time last year, online dating sites started losing more users than they were attracting, Jupiter Research said.

Why the sudden decrease in popularity? The novelty has worn off, some industry watchers say, and sites like News Corp.'s MySpace have siphoned off some of the younger demographic whose main interest is fun, hanging out and hooking up.

Time and price are also factors. Sites like eHarmony and PerfectMatch ask hundreds of questions to build a personality profile and charge about $50 a month, while the fast-growing Craigslist has no such barrier to entry and is free.

instant gratification

"[On Craigslist] you don't have to go through some approval process-it's instant gratification," said Lisa Skriloff, president of Multicultural Marketing Resources and author of "Men are from Cyberspace," a book on online dating. "It's quick and easy, and it's drawing traffic away from the more traditional sites."

Ray Doustdar, president of a six-month-old site called, said people have become disillusioned with traditional dating sites that promise matches based on compatibility tests and other mathematical algorithms. "People realize that love is not formulaic," Mr. Doustdar said. "They've spent inordinate amounts of time on these sites, and they feel misled."

Marketing that says a site can find a person's soul mate without actually delivering has caused "frustration and disenchantment," he said. Jupiter Research backs that opinion, saying that barely one-third of users reported being very satisfied or satisfied with online personals sites.

Mr. Doustdar's site aims to address the wasted-time issue, along with safety concerns, by matching up groups of friends with other groups of friends. Even if there's no love connection between any of the friends, at least the night won't be wasted because there's built-in fun with your own social circle, he said.

"We're trying to mimic people's social lives," Mr. Doustdar said. "We're trying to be the anti-scientific approach."

One of the few traditional sites to see growth has been three-year-old, which has relied heavily on product integration and cross-promotions with Hollywood entertainment to build awareness and membership. It attracts a 27-to-65-year-old demographic, with the core being in their mid-30s.

Market Range's PerfectMatch also drafts off the millions spent by its much larger competitors-Interactive Corp.'s spent $54.2 million on ads last year, while eHarmony spent $61.6 million, according to TNS Media Intelligence. Duane Dahl, PerfectMatch CEO, said online daters churn through some of the massive casual dating sites and eventually graduate to a more specialized site like his as they age and become more dedicated to finding a long-term relationship.

"They want to drill down faster and find people like themselves," Mr. Dahl said. "They want a more qualified group."

In response to the flattening market, some sites have created specialized offshoots to attract new members. Yahoo now has Yahoo Personals Premiere, which has shown solid early growth over the past 18 months. recently launched a new service called, with Rutgers University anthropologist Helen Fisher as its chief scientific adviser.

The site grew out of studies launched in late 2004. Jim Safka had recently become CEO at and was looking to get the company back on track (profits had dropped 37% and 10% of the workers had been laid off). Mr. Safka told analysts early this year, shortly after the site launched, that is intended to draw in affluent individuals who haven't online dated before.

Dr. phil

Also this year, the flagship site,, kicked off a new ad campaign from Hanft Raboy & Partners, New York, featuring Dr. Phil. The popular TV personality created a self-evaluation and advice service, dubbed MindBindFind, that has been selling well as an add-on to existing Match memberships, the site's spokeswoman said.

As some of the first online marriages are beginning to dissolve, a number of sites like, and others are launching services that aim to keep couples together. Those products will serve dual purposes-they'll keep the members active (read: paying) even after they're in a relationship, and they could boost the success testimonials that the sites use in their marketing. EHarmony, for one, has built entire ad campaigns around those couples.

Industry executives have noted that there's no evidence that online marriages end in divorce more frequently than the general population, but sites are responding to the issue as a way of creating a more attractive picture for online matching.
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