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The market is still expanding, albeit to a lower degree than before.
Social networking is, without a doubt, harming the online dating industry, especially among the younger demographic. Among the older demographic, however, social networking is less often used as a dating tool, so its effects on the dating industry are much smaller there.
Also, dating sites are obviously still the tool of choice for those who are actively looking for relationships, rather than just open to the possibility of dates. After all, merely knowing a person is on a dating site makes it quite a bit easier to approach them.
There are three major current trends in dating.
The first is specialization. Perhaps the best example of this is geographic specialization, whether it be "true" specialization (with a site specifically catering to a limited area) or superficial specialization (where national or global dating sites advertise and market to audiences using things such as geo-ip targeting to create the suggestion of relevance to the customer's specific area, both in advertising and on the site). Other examples are specialization with regards to specific age groups, education levels, interests, etc.
The second trend is, unfortunately, for sites to become free. With competition from the free social networking sites, as well as from free dating sites, traditional paid dating sites are facing an uphill struggle. That is why many are resorting to things such as deceptive advertising, the inclusion of fake profiles, and even fake correspondence.
Finally, the third trend is for dating sites to (finally) move to unique selling points. Closely related to the first and second trends, this includes such things as matching personality tests, aiming at very narrow but highly visible groups, and other novelty concepts. Especially paid sites need to display an obvious added value over basic free dating sites and social networking sites.
All in all, expect to see new sites without the benefit of a large, established user base to justify costs either move to business models involving free access, coming up with innovative new advertising and business concepts, or going under.
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