Apparently, there’s money to be made in matchmaking — not to mention sending out millions of notifications to your user base.
Online dating website Zoosk filed its documentation to become a public company on Wednesday, boasting financials that are nothing to sniff at. Though Zoosk has yet to make a profit, the company’s total revenue grew by 63 percent from 2012 to 2013, up from $109.1 million to $178.2 million.
The company makes its money via subscriptions (86 percent of overall revenue last year) as well as virtual currency (the remaining 14 percent). About half of its user base is in the United States.
Here’s the thing: Zoosk has a bad reputation for sending out way too many messages to its users, from email to SMS to Facebook alerts — you name it. Users have also complained about being aggressively matched up with potential dating partners with few relevant interests in common. In other words, it’s about throwing a lot of choices your way, whether those choices are good or not.
That may be a good way to get the company’s 26 million global members — 650,000 of which are active subscribers — to continue returning to the site regularly. But after enough bad notices, even the most desperate of singles may want to move on to other dating pastures. (The potential decline in quality of Zoosk’s “Behavioral Matchmaking engine” is listed in the company’s “Risk Factors” section in the S-1 prospectus.)
To be sure, email and notifications are certainly commonplace for companies luring users back regularly — just look at your inbox after you wake up in the morning. Match.com and Tinder user their own sets of notifications by phone or email as well. And of course, like most sites and apps, there are ways of turning off the multiple notifications you receive.
And moreover, Zoosk’s repeat subscriber base is increasing year over year; nearly half of the company’s 2012 cohort of subscribers came back again to pay for service in 2013. That means spammy or no, a significant amount of people actively want to use this service.
But user complaints against the company’s notification and matching practices suggest that Zoosk is overdoing it, which may be harmful in the long run.
Zoosk recognizes as much. Inside the company’s S-1 is an admission that outside email services like Gmail may register Zoosk’s many, many notifications as spam, which could damage the company’s ability to keep users coming back.
The company is also the target of a class-action lawsuit for allegedly violating California’s Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (known colloquially as the “CAN-SPAM act”), which the company also acknowledges could be a bad thing for its email marketing efforts if it loses the case.
“Due to the importance of email and text messages to our business, any disruptions or restrictions on the distribution or receipt of emails or text messages … could have a material adverse effect on our business,” the company said.
The company plans to raise $100 million in its initial public offering to come later this year. For Zoosk’s sake, let’s hope Wall Street finds it a good match.
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