Comments on: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

By: anthonyblake

anthonyblake — Tue, 13 Apr 2010 18:55:09 +0000

Great post Andrew, a one stop shop/master class. Genius

By: anthonyblake

anthonyblake — Tue, 13 Apr 2010 11:55:09 +0000

Great post Andrew, a one stop shop/master class. Genius

By: julia

julia — Thu, 04 Mar 2010 09:19:50 +0000

that was very interesting, thanks for the info

By: Micky

Micky — Fri, 22 Jan 2010 23:19:51 +0000

Hard to see them as a real player claiming global dominance of the singles market without Japanese Friend Finder.com ..That's a Major domain that they missed out on. It seems that they locked up several Major Ethnic groups but come on.. Japan.. ha ha ha I think that the adult friend finder corp they should try to acquire Japanese Friend Finder.com before even thinking about IPO.. Just my 2 cents..

By: mmacneil007

mmacneil007 — Sun, 13 Dec 2009 20:57:19 +0000

Freemium can only truly work if the service is scaled to remove all overhead so the operation can profit without requiring extra revenue from memberships.

Mark

By: Bloumoune

Bloumoune — Mon, 06 Apr 2009 19:47:18 +0000

Andrew, if AFF registers 4M new members and 200K new sub per month then the conversion rate should be 5%. and the CPA $40 as Jason says

By: Daniel

Daniel — Mon, 09 Feb 2009 13:37:58 +0000

How are they going to compete with places like AdultSpace.com which offer basically the same thing but for free? And with more social networking tools....

By: surfer

surfer — Fri, 16 Jan 2009 16:53:59 +0000

The geo-targeted banners may be using real people, but a lot of the real people aren't using their own pictures. Just about every time I see an AFF ad, one of the photos is of some attractive woman who was long ago plastered all over dozens of myspace profiles.

I've no doubt that there is a legit business among swinging couples. Monogamy is by no means the only reproductive and social strategy pursued by the human race.

By: Andrew Chen

Andrew Chen — Tue, 13 Jan 2009 17:07:05 +0000

You can roughly guestimate this – their S-1 says that they acquire 4 million new members per month. So that means they go through 48 million new members per year (I imagine these are often people reactivating, or duplicates).

If they are spending about $100MM in SEM and affiliate costs, then you end up at about $2 per member.

Since the conversion from member to sub is about 10-20%, that means their cost per subscriber is roughly $10-$20.

By: Jason

Jason — Tue, 13 Jan 2009 16:49:31 +0000

Was anybody able to get a good idea of what their marketing cost was per new subscriber?

I'm in the process of starting up a new service oriented subscriber site and one of the hardest pieces of competitive information to find is how much does it generally cost in marketing to sign up a subscriber?

I imagine it varies massively between business types. It would be really interesting to find some kind of comparative breakdown.

The article mentions that they must receive somewhere around 200K new subscribers/month and that they spend roughly $100M/year on marketing so perhaps it's somewhat accurate to say that their marketing cost per subscriber is roughly $42?

Thanks,

By: guicookie

guicookie — Mon, 12 Jan 2009 03:24:38 +0000

Andrew, thankyou for a superb analysis and post. Can you clarify whether there is a standard definition of “active members” that the dating industry has adopted? I'm currently basing this metric on number of members logged-in within the past six months.

By: Peter

Peter — Fri, 09 Jan 2009 18:20:44 +0000

It's a great overview of the numbers, thanks for doing the homework.

I signed up for a free account to see how much was free. As a free member you are able to create a profile, and you can search for other members. Yet you can only an index of the different members with their username and picture. You can not read details or contact them. Since the object of the site is to create contact, i would say that the free membership is not a free product. It is rather a way for people to get a look at the people they could contact if you pay.

As I understand freemium it is based on giving away a free product that people can actually use. Some of the most mentioned examples illustrate this, you can have great use of sites like linkedIn og flickr without paying. Since the features available for free members does not amount to a service of any use what so ever, I have to agree with Markus. AFF does not use a freemium model. Rather a “get a look at partially naked people before you pay” model.

By: X

Fri, 09 Jan 2009 16:20:03 +0000

i think it is less than 1% of registered members who upgrade to subscribers, not 1% of visitors.

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By: christianbusch

christianbusch — Sun, 04 Jan 2009 03:30:13 +0000

Hey Andrew, happy 2009!

Nice digging here, it's actually surprising to me that they seem to be spending less than 50% of revenue on customer acquisition; i've heard from a few people who know the very large dating sites in and out that it's closer to 75% for mature sites (which AFF definitely is). So regarding profitability – this is one crazy profitable business, unless things like fraud and chargebacks are huge. What's so interesting about AFF etc is that they satisfy a basic need for a lot of people – and therefore enjoy very good lifetimes.