PlentyOfFish (POF) is a free online dating site. Its revenue is estimated to be around USD 30 million per year, mostly by advertising (almost all provided by Google AdSense). Over 90% of the ads displayed at POF are from paid online dating sites, like Match / Chemistry, eHarmony, etc.
POF has 30,000,000,000 pageviews per year and approximately 6,000,000 active users.
Operating costs seem to be in the range of USD 27 million a year because POF permanently needs to advertise itself on Facebook, Yahoo and even Google via AdWords. Also in Canada's national television and in music videos like "Telephone" Lady Gaga.
POF has to be constantly buying traffic.
To remain profitable, POF not only needs to show ads for paid dating sites (an average 4 ads provided by Adsense, each one paid USD 0.20 CPM, or USD 0.80 on average for the whole ads displayed in 1,000 pageviews) but at least these ads have to get 3 clicks every 10,000 pageviews, they must be opened and viewed, people have to click those ads and become visitors of those paid online dating sites. But that is not enough, 1 of 10 visitors should load its profile in the paid online dating site, becoming a basic user; but that is not enough again; 1 of those 3 basic users referred by POF must become a premium user, subscribing a 3 months paid membership and paying USD 90 (on average using a credit card, to allow automatic rebilling).
Thanks to that, POF receives an average commission of USD 20.
If POF has 6,000,000 active users and can convert 1 user to a premium member every 100,000 pageviews, it sends 300,000 annual customers to paid online dating sites.
The paid online dating site that placed an ad in POF using Google AdWords, pay an average USD 0.40 CPM, i.e acquiring a new customer costs USD 40 plus a commission paid to POF (in the range of USD 20), USD 60 is the total cost to acquire a customer (using POF as a marketing tool).
If POF refers 300,000 clients to paid online dating sites, it has an income of approximately USD 6,000,000 for commissions. That explains its successful business model.
POF needs to show ads from paid online dating sites and convert visitors sent from POF into customers of those paid online dating sites; so POF will also collect payments: the commissions for subscribers memberships.
That is the main explanation of why it works so well in the anglophone countries Canada, United States, United Kingdom of Great Britain and Northern Ireland, Ireland and Australia, and not in other countries.
POF database is compartmentalized in a special way, so its users only see what interest them, most likely through a recommendation engine based on the user's previous behavior (Behavioural recommender system).
In online dating, if the database doubles its size, it possibly doubles income, but operating costs are multiplied by 3 or 4, they exponentially grow. That explains why POF must have a simple (and insecure) design.
If a new user, a man says he likes slim tall blonde with blue eyes and unmarried women, but he searches profiles of fat short brunettes women and of that group only sends messages to smokers and divorced, the recommendation algorithm remains showing him those similar profiles.
If a new user, a woman says she likes athletic tall blond with blue eyes and single men, but respond to messages of fat short black smokers and divorced men; the recommendation algorithm shows similar profiles.
The main threat for POF is future legislation to regulate Online Dating Sites.
During last September 2010, the owners of POF had launched a paid online dating site, named eVow, unsuccessful until now.
Source: personal estimation from Fernando Ardenghi
POF in numbers
30,000,000,000 annual pageviews
USD 30 million revenue (USD 24 million by ads, USD 6 million by comissions paid by other dating sites)
USD 27 million operating costs.
6,000,000 active users
4 AdSense ads displayed on average per pageview (USD 0.80 CPM per 4 ads, USD 0.20 each one)
[You do not see ads if you use Firefox/Opera explorer with adblock plus addon]
3 clicks on average per 10,000 pageviews; visitors to paid online dating sites.
1 basic member referred per 33,333 pageviews (a person who visits the paid online dating site who showed the ad at POF and he/she creates a profile there becoming a basic member)
1 paid member referred per 100,000 pageviews (a basic member who upgrades to premium paying at least USD 90 with his/her credit card. The cost to acquire that client is USD 60 = USD 20 comission paid to POF + USD cost of the ad showed using AdWords at USD 0.40 CPM)
300,000 annual paid clients sent to paid dating sites like Match/Chemistry, eHarmony, etc.
POF is seen as a place for casual/short-term relationships.
More info at "A 52 page report from ComScore"
* The daters who pay for Match/Chemistry (revenue: USD 430 million) and eHarmony (revenue: 280 million) are nearly the same ones who want to use PlentyOfFish for free.
Slide # 9.