Pi-Consulting

A parable. (Not a very politically correct parable, admittedly, but you have to take parables as they come).

An old man is walking though the forest when he hears a croaky little voice. He looks down and sees a frog calling out to him. “I am not what I seem. I am really a beautiful princess” says the frog, “sexy and desirable, well-versed in the erotic arts of love. The wicked queen was jealous of my allure, and turned me into a frog. All you have to do is give me a kiss, and I will turn back into a princess. Then you will enjoy all the sensual delights of my voluptuous charms and my passionate nature”. The old man promptly reaches down and puts the frog in his pocket. The little green head sticks out, and croaks indignantly “Hey, aren’t you going to kiss me?”. “Nope”, comes the reply, “at my age you can have a lot more fun with a talking frog than you can with a raving nymphomaniac”.

The modern equivalent of frog-kissing is to be found in online dating services. As Newsweek magazine recently reported, internet dating has become a world-wide phenomenon in the last five years. In Europe it is still growing at over 10% a year, though in the USA it seems to have reached “critical mass”, and the trend is now drifting off its 5-year growth rate of 6% annually.

The American market for online romance already broke through the $500 million mark, and is still growing, albeit at a reduced rate. Half a billion bucks may sound huge, but it is considerably less imposing than the $2 billion spent in America on porn sites last year, and the $10 billion in online gambling bets worldwide. Analysts account for the dating site slowdown by suggesting that the original novelty factor is wearing off, and that there is a natural limit to the number of people who will come into the market. Casual browsers are still plentiful, but big sites like Match.com and eHarmony are finding fewer romance-hungry souls prepared to stump up their monthly membership fees, which can exceed $50.

These sites’ reaction to the slowdown may risk compounding the problem, Newsweek believes. Hitwise UK, an internet research company, says that the effort is being switched to persuading site visitors to sign up as members, rather than keeping traffic high in absolute terms. Other analysts such as Deloitte suggest that the incipient slowdown means that online dating services have not properly understood how to connect with their market. Total revenue at $500 million pales into insignificance beside the $13 billion that Americans just spent on Valentine’s Day gift-giving.

Technology and re-packaging may help to swing the industry back towards growth, with new ideas such as web-cam dates. eHarmony is touting psychological profiling as a way of finding your true soulmate, rather than just someone from the same demographic who shares your enthusiasm for dog-shows. So far these initiatives have not halted the slowdown in growth.

It may be that the market is set to mutate. The Hitwise research team predict that “social networking” will progressively take over from straightforward boy-meets-girl traffic. Meetic, a European dating site, now offers a mobile-phone-based networking service for teens and young twenties. SuperLOL, as it is called, promotes contact built around shared friendships and common interests, with no special emphasis on romance.

Perhaps the market will after all decide that a talking frog is more interesting than True Love and Unbridled Passion.

Gribit, gribit.