In its first year as a public company, Facebook
) hasn't done much to soothe investors' concerns about its principal driver of revenue -- its ads. Its Facebook Home offering hasn't taken off in a big way for a company that keeps investors grim as they call for it to do better on mobile. But according to new data from Snap Interactive, Facebook is at least helping drive business for one group of advertisers -- dating apps.
Snap Interactive owns and operates Are You Interested, or AYI, a dating app that most users integrate through their Facebook accounts. AYI is one of the dinosaurs of the social network, a six-year-old service that has been downloaded 70 million times in its history. AYI is a freemium app, which means that after a trial period, you have to pay an upgrade to send or read messages.
But dating apps are a very crowded field in mobile today, and AYI is not at the center of the conversation with newer apps like Tinder, all of whom offer to match people by the interests they give and their networks of friends. AYI monthly users have dropped in recent years from 7.3 million in Nov. 2011 to 3 million today. The company says that's in large part due to a pivot away from unpaid users that has seen it increase revenue from about $7 million to $19 million from 2010 to 2011.
But only 80,000 people have come on board for AYI subscriptions so far, and revenue was flat for 2012. That means AYI has a lot of work to do to modernize its offering and leverage the 20 million Facebook users in its database who have synced their profiles to the app at some point. AYI is also operating in an extremely crowded market: As of June 19, the top 20 grossing iPhone apps in social networking had at least 13 dating apps led by Zoosk and with AYI down at fifteenth.
The U.S. market still remains 40% of AYI traffic, but cofounder and CEO Cliff Lerner says it's strong with an older audience and will hopefully appeal to young users again with a recent redesign.
To get itself back out there, AYI turned to Facebook -- specifically its mobile app install ads. Marketing heavily on Facebook's mobile offering, AYI earned 200% more downloads in May than it had in the previous month. Because advertising over Facebook's mobile offering is fairly cheap, the company was able to test different demographics and find some sweet spots: Canadian males and Brazilians of both genders of age 26 to 36 (167% and 83% returns), as well as two older audiences -- Finns over 36 years old and Americans over 30 (49% and 29% returns).
Such ads also take you straight out of the Facebook app and into the application store to download, which can be irritating for users who pressed the ad accidentally but has helped up AYI's users on iOS and Android by 91% and 147% respectively. Now 15% of the dating app's traffic comes from users on cell phones.
Facebook also provides the introduction for many users. Women are 40% more likely to message someone when they see friends in common according to Snap, which says 1,000 people message Facebook friends each day from AYI to try to vet a mutual friend as a possible match.
Lerner says that his company's stats demonstrate that advertising over Facebook's mobile offering can work, especially if your app operates in a bunch of countries, meaning you can test for more demographics that will respond well. It's also easy to target friends of people who have installed such app and show that connection if a user allows it in their privacy settings.
The tactic is taking off among app makers, as Facebook product manager Deb Liu says that about 40% of the top 100 grossing apps in Apple's
) and Android's app stores have used mobile app install ads since Facebook launched them in October. That's led to 25 million app downloads across 3,800 developers.
"Users don't behave differently on mobile but there's less competition for traffic right now and it's cheaper to acquire a user," Lerner says. "It's very powerful when we can say, 'we want that one group of women.'"
So if downloads is critical to your business, it appears that Facebook’s mobile offering might be a better place to spend your marketing dollars than you might expect, allowing easy conversions for AYI and any competitor who operates a similar simple targeting strategy. On face, that's also good news for Facebook's mobile revenue prospects. But whether investors are looking for more from the company than success with cheaply-sold ads for apps like dating services is a separate question.
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