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Yes — paid acquisition channels are still expensive, (more expensive than it used to be when Tinder was launched) but in comparison to other industries suggested by Andrew Chen, they are also almost the only incurred costs (you don’t need any content or sales team).
But yes, it hurts to spend money on paid acquisition instead of content, both in your mind and in your balance sheet.
I was carefully reading Andrew Chen’s article “Why investors don’t fund dating” while screening different industries including the dating business to start my own company.
I have worked over the past 6 years in strategy consulting for Arthur D.
Little to review some marketplaces for a private equity fund.
I was also in charge of the transaction competence center globally.
Unlike other industries, churn is a formidable asset in the dating business:(1) It can be positive thus attract new people: a customer that will delete your dating app (because it has done its job) will talk about it and spread the word positively which increases your NPS.(2) A high natural churn (people go on and off dating apps before settling in a long-term relationship) is a great asset for new comers.
If 40% of the market you are targeting is churning every month (which is an estimated number of the actual churn for dating apps), this simply means that 40% of the market is reachable for you from day 1.
For the existing competition to Tinder or Match (in the case of Tinder, competitors like Happn, Bumble, Once, etc.) paid acquisition channels will become more and more expensive as their product is at the end not necessarily well differentiated (all using the same UX innovation introduced by Tinder) and users tend to end up going back to Tinder.
I have recently had the opportunity on an assignment with Arthur D.