ANOTHERFRIEND.COM’S CHALLENGES
Grow membership in Ireland and abroad
Develop alternative revenue streams from the site
Find extra funding in order to move to the next phase of growth
A VICTIM of the tech downturn four years ago, Kevin Greene has turned his web development
skills into a profitable business with turnover set to break the €1m
mark shortly.
A former contractor with Ericsson, Greene was one of many to lose their jobs in
a series of redundancy programmes at the Swedish multinational. Having returned
home to Limerick with enough savings to last him for a year, Greene turned
his thoughts to the areas of the web that were generating cash internationally
and figured that internet dating was one of the few profitable niches. Now
in its fourth year, Anotherfriend.com has 55,000 registered members and is
making money.
Getting the site up and running involved the modest outlay of €1,000,
with Greene eking out his spare cash to keep him going. The initial
development work took place in a dingy apartment with no natural lighting.
“My desk was a chest of drawers and my keyboard rested on my sock
drawer. It certainly wasn’t glamorous,” he said.
Nor was it an attractive proposition for financial institutions. It took Greene
12 months to secure the €25,000 he needed to market the site, with his own
bank manager eventually agreeing to support the venture once subscriptions started
to roll in.
By this stage, Greene had been joined by a friend, Grainne Barry, who became business
development manager. Barry set about redesigning the site, making it more
female friendly and developing partner relationships to help drive traffic
to the site.
The model is one where visitors can sample the attractions without having to pay
anything initially. A standard member can use the site to contact and reply
to other members for free and has access to some of the basic services of
Anotherfriend. To exchange contact information such as telephone numbers they
need to upgrade to premium membership. A premium member can contact and reply
to any member and can send contact information to any other premium member.
They also have access to several features which are not available to standard
members. This costs €14.50 a month or €99.95 for a year.
“Free membership acts as a great hook to get people to sample the
service and get comfortable with internet dating,” said Greene. “Most
other sites don’t allow people the same facilities as we do and that’s
been one of our key points of difference.”
Greene and Barry believe that demographics and changing social habits will continue
to ensure a growing stream of new clients to their business. Singles are a
rapidly growing demographic group while rates of separation and divorce are
on the increase, they point out.
“People are increasingly using specialists to assist in all aspects of
their lives and are fed up with the bar scene as the main route to finding a partner,”
Barry said. “Web usage is on the rise and internet dating is growing at
a phenomenal rate in America. We’re seeing the same trend here now.”
About 56% of Anotherfriend members are male and 44% of members are in their thirties.
Typically they are urban dwellers with above average incomes. More than 250
people are online at any time with a peak of about 400 late at night. Average
membership lasts about six months with some reactivating their memberships
after a break.
According to Barry, women tend to be more up front in public about their membership
than men and because of the gender imbalance, new female members tend to
attract more e-mails than men as well.
Online advertising with the search engine Google is the main channel used to drive
traffic to the site. This costs an average of €7,000 a month and Barry maintains
that it is money well spent as this link is the entry point for more than
two-thirds of new members.
The key to the success of the site is converting members from standard to premium
membership. At the moment the conversion rate is running at between 25% to
30%. The partners have moved the business into profit by keeping the overheads
as tight as possible.
Headcount is low, with just two other full-time employees and several contractors.
The business has a modest base in Limerick.
The site is hosted in America. Initially this was for reasons of cost but Greene
says that while it is now slightly cheaper to host the site in Ireland, he
is reluctant to move it because of the excellent levels of service and security
he is enjoying from the provider.
With a young, affluent and urban demographic, the possibility of finding other revenue
streams from the membership base of Anotherfriend is a possibility. Banner
advertising seems an obvious case in point but one that the partners have
not been able to crack.
“Advertisers are still very nervous about online dating sites. Their
view is that if people went out on a date and something sinister happened,
it would reflect very badly on them,” said Barry.
Online dating is a safer way of meeting people than in a nightclub if normal precautions
are followed, such as meeting in a public place and telling friends,
maintains Greene. There is a code of etiquette for members using the site
and there have been no significant problems to date, adds Greene.
While banner advertising remains a possibility if clients become more comfortable
with internet dating, leveraging the membership base into other fee-paying
activities is the current focus for new revenues. Last month, the partners
launched a singles club on the back of the site. This hosts social events
and organises singles holidays.
They also believe there is potential to grow the site outside of Ireland, specifically
by targeting the “diaspora”. “Our market is Irish people
who want to meet other Irish people. Where they are based is not necessarily
a limitation,” said Barry. “This gives us a unique angle and we
don’t want to dilute that.”
With two main competitors in the Irish market that have access to deep pockets through
their large parent companies, Greene and Barry feel that they have done well
to get this far with limited finance. While organic growth is doubling the
size of the business annually, moving to the next phase at the rate the
partners would like will require access to funding.
“Despite the fact that our turn-over has almost doubled this year and
our cash flow is strong, banks are still reluctant to lend to us because of
the nature of what we do. Concern about internet dating and the lack of
physical assets seems to be a problem,” said Greene.
Greene and Barry say they are open to joint ventures with other parties and sharing
equity in new structures and that they are committed to the long-term future
of the business. They have no exit strategy in mind for the foreseeable future.
Becoming victims of their own success is something the partners are happy to live
with. Since the launch of the site, there have been seven engagements and five
marriages. They are more than satisfied to say goodbye to these happy customers.
- To discuss these challenges and offer your own advice, go to the Forum
section of www.enterprisenetwork.ie
