Match's big challenge: Breaking down data, tech silos to drive revenue
Whether Match.com, which filed for an initial public offering, can continue to grow largely depends on whether it can break down the technology and data silos.
The company has a bevy of dating brands including OKCupid, Tinder and PlentyOfFish, but many of these were acquisitions or separate efforts away from the Match brand. As a result, Match is really a series of sites with different approaches, technology and databases.
Simply put, Match has a legacy technology issue and data silos abound.
Match is a dating juggernaut, but its strategy may be tricky to pull off. A big part of Match's strategy revolves around data and leveraging it across its brands for cross promotion. The company's information technology mission is to modernize and at least create base infrastructure that applies to its various brands.
The company's other big problem: The growth is with its free brands, but the profit comes from older users and premium accounts. Match will have to bridge those gaps to drive better conversions. "While user growth has continued in our higher monetizing brands, the mix of users has shifted more heavily in favor of our lower monetizing brands as they have grown more rapidly, leading to both a lower average conversion rate and a lower average revenue per paid user across the portfolio," said Match in its IPO filing.
Match's average revenue per paid user was 59 cents for the six months ending June 30, down 7 percent from the same period year ago.
In its filing with the Securities and Exchange Commission, Match said:
We are currently working to modernize the software and technology supporting certain of our North American brands and to consolidate their back-end services such as billing and payments, online marketing, chat and photos, as well as reusable API services that will be leveraged by an adaptive desktop and mobile web front end unique to each brand. We will continue to support brand-specific native mobile applications that will integrate to the common back-end and API services layer.
As for the higher level strategy, Match said its plan is to share data to "leverage product and marketing successes across our businesses rapidly for competitive advantage."
So far, Match has shown some success cross marketing. Match said:
Our multi-brand approach allows us to provide dating products that appeal to a wide spectrum of users. By positioning what we believe to be the most relevant brand to each user segment, we are able to achieve greater reach at lower overall customer acquisition costs. Additionally, we are increasingly placing advertisements for our products within our other products. When such an advertisement is successful and a user of one of our products becomes a user of another of our products, the second product has acquired a new customer for no incremental cost. Because the second product would otherwise have had to engage in its own marketing efforts to acquire the customer, we are able to decrease the average cost of customer acquisition across our entire portfolio. During the six months ended June 30, 2015, our Match brand and affinity brands in North America generated approximately 11% of new registrations via this type of cross-promotion.
Match boasts that it has monetization expertise due to its multiple brands. The aim is to share best practices across brands and develop revenue and user growth for each entity.
Bottom line: Match will definitely have scale with 59 million active users across its brands. What remains to be seen is whether the company can take a bevy of dating brands to act as one data juggernaut.