Leveraging your data is not a tech problem, it’s about your internal coordination, team, and resources. By JD Engelbrecht, MD: Everlytic As businesses and…
When the internet arrived, people screamed let’s make lots of money. This new, interactive medium had the ability to deliver content to audiences in innovative ways and make money at the same time. Content would suck readers in, went the theory, and communities would form around these content genres. E-commerce areas would then be built around relevant content and wham bam thank you Ram, your community interacts and you have dotcom dollars.
The theory seemed perfect. The internet really seemed to have an edge over more established mediums such as television, print and radio. It was hailed as a “transactive” medium: users can transact and buy direct. Add content to this formula — not just any old content, but interactive content — and there was the formula for geeks to take over the world.
But now the geeks are suffering as much from a cash crisis as a credibility crisis. More than ten years on(?), the theory hasn’t quite cracked it as many dotcom casualties and survivors have discovered. Readers have flocked to these websites in their droves for free content, but rarely have they parted with their cash.
This is not to say the theory won’t eventually bear fruit: the prevailing wisdom is that the industry just got ahead of itself and lost in the wild west web of predictions and projections — predicting and projecting too much, too soon. Quite simply, the industry expanded too quickly for the actual potential out there.
But here is a company that has managed to turn the theory into revenue: an actual, real live, non-virtual, non-hyped, non-Nasdaq-listed example of the internet working as a cutting-edge interactive content and e-commerce platform. Enter online dating and one of South Africa’s few and probably most inconspicuous dotcom success stories.
“I think it has been said many times… but businesses on the net lost the basics, the simple basics of business… there was a lot of hype that went in the dotcom phase and savvy investors lost sight of investing and the need to generate revenue,” says David Burstein of DatingBuzz.com.
Very level-headed advice indeed from the man who admits coming up with the motivation to create an online dating site in South Africa more out of “boredom” than running down the streets of Cape Town’s southern suburbs with flapping bath towel in hand shouting “Eureka!”
Once considered the last resort for the desperately single, online dating has fast become one of the trendier and hipper things to do on the web these days. It has proved to be one of the internet’s big money-spinners, one of the few areas on the internet that is actually making cash – and lots of it.
Nua Internet surveys, an authoritative online source on internet trends and statistics, reported in March 2003 that research by the powerful US-based Online Publishers’ Association (OPA) found that the Personals/Dating category surpassed both Business/Investments and Entertainment/Lifestyles to become the largest paid content category in 2002 with $302-million in revenues, up from $72-million in 2001.
Nua also quotes 2002 research that found that around 44% of Americans believe that individuals have a better chance of meeting a partner online than in a single’s bar. More than thirty percent of Americans think that a relationship initiated online has a better chance of success than one initiated in a bar. (http://www.nua.ie)
With these figures in mind, South African content sites have stepped up to grab a piece of the lucrative online dating pie. In late 2002, ISP and content portal M-Web, local search engine Ananzi, news publishers Independent Online (IOL) and Mail&Guardian Online joined the scramble to add online dating services to their content. News24, iafrica.com and Sunday Times were next in line, adding dating to their sites near the beginning of this year.
Says Burstein: “We have a service that people are prepared to pay for… there is a very strong culture of non-payment on the net – this is what makes it so difficult because people expect content for free. And when you charge for content, invariably people will go somewhere else.”
Burstein and his two partners Duncan Forrest, the Cape Town tech guru, and Antony Soicher, the business developer and business school lecturer in Johannesburg, took the view that if they were going to succeed they were going to have to bite the bullet and simply just do it themselves rather than go the arduous venture capital route.
“We took the view that if we were going to succeed we would need to do it ourselves rather than raise the funding… raising funding for internet ventures is very difficult these days… if we had done this, we would probably still be talking about it now. We had been burnt trying to look for VC before on another project for a soul-destroying 18 long months… we are very fortunate to have been able to do everything ourselves,” says Burstein.
And for a small team of three they have achieved quite a bit. After development costs, Burstein claims DatingBuzz started generating revenue from day one and from a business perspective the business has “always been positive”. The business started off with a low base cost: the only real costs have been staff, technology and bandwith – very manageable for a small three’s company.
So you have built a dating site. Now what? Will they come? Will users trust a new brand and player with a very personal and sacred part of their lives?
Rather than throw vast amounts of money at marketing and promotion, Burstein and his partners took the decision early on to team up with the big web players who not only had trusted and established online brands in South Africa, but — most importantly — the traffic volumes.
“From a business perspective we took an early decision to create a variance of our technology to service different markets and allow for easy rebranding, cobranding or reskinning of the product. The business reason for that is quite straightforward — to succeed in this game one needs traffic. Either create the market or go to the market – this has been a large contributor to our success,” says Burstein.
So far, DatingBuzz exists as a network of rebranded dating websites across 16 websites throughout South Africa. Some of the major players using the service include M-Web, Media24, Ananzi, Endemol (via SABC TV show “All you need is love”), iafrica.com, Sunday Times and Mail&Guardian Online. (IOL’s dating service is served via a separate UK-based company called uDate.com)
These 16 sites all use the same DatingBuzz engine and a combined force of about 27 000 registered users, spread across these sites, seamlessly and unknowingly interact with each other across the different brands. The websites bring the traffic and a stamp of credibility and DatingBuzz provides the technology, maintenance and day-to-day servicing. It is a perfect synergy.
A major part of DatingBuzz’s success has been harnessing the internet’s ability to project different designs and brands, white-labelled at a front-end level, yet network at a deeper technology level using a centralised technology backbone – remarkably cost efficient. To put it in simpler terms: everyone has a different shop window, but the products come from the same factory. It’s an example where that wonderful internet theory actually delivers in practice.
Partner sites like M-Web and Media24 find the service attractive because it appears as if it is their own. As far as the jittery consumer is concerned, they have never left the partner’s trusted website environment. Adds Burstein: “The branding option has a strong appeal to partners because they can build their own brand on to it, and not simply build our brand.”
Another area where DatingBuzz harnesses the internet’s strength is making users develop the content themselves. Dot.com theory here says why spend money developing and creating content for your website when in fact your users can develop it for you – for free.
It’s quite an irony that on DatingBuzz, a content-driven site, there is relatively little content that needs to be created and maintained by the DatingBuzz team: “Another massive cost saving is that we don’t have to develop content continuously… it’s a huge amount of work. In an online dating environment, users create that content themselves… while you sleep,” says Burstein
Then there is the fact that there is no real-world product to manage. A real-world product means purchasing, mark-up, delivery and this means costs and administration.
“We don’t have to supply a physical product. There is no cost or something we need to mark-up or ship… but most importantly we have got something which a large amount of people are prepared to pay for. Our business model is that you can join the dating site for free and do everything for free, except when they contact another person. That’s when they pay,” says Burstein.
The DatingBuzz team are hoping to take their model beyond South Africa’s borders. They say they are locked in discussions with “the M-Web of overseas” in London and have an agent in Germany who is currently doing business. They are also looking into “niche variants” of their offering, such as targeting specific cultural or religious groupings.
Burstein notes that dating sites tend to attract a wider variety users from the “mainstream” than your average personals column in newspapers. Internet users also sit in the higher LSM brackets. As Burstein puts it, you are less likely to find a “bunch of weirdos, computer geeks and desperados… but just normal people”.
The site has also been a success for the DatingBuzz team in more way than purely financial, with Burstein’s business partner, Forrest, even meeting his wife via the very service they set up.
“Online dating works because within human society it the most natural instincts to find a partner. You have a high degree of privacy and safety upfront. Fear of rejection is low… it is easier to be rejected on an email than face-to-face. There is less hit and miss. You are also less likely to make mistakes and see the person you want to see because you see a person’s detailed profile and face before you go on a date with them.”
“I think the success of online dating is a reflection of the individualistic society we live in today where, for many people, it is just very hard to meet others. Online dating fills this gap very nicely,” says Burstein.
Matthew Buckland is the editor of Mail&Guardian Online. DatingBuzz has a presence on the Mail&Guardian Online.