Spark Networks’ New Leadership Plots ‘Modernisation’ Of Christian Mingle & JDate

Spark Networks reigned in marketing spend and stopped TV advertising in Q3 of 2016, as its new management team plotted a company turnaround focused on modernising its two main brands, Christian Mingle & JDate.

The news comes as the company posted the first set of financial results since its executive shakeup, following the investment from Chicago firm PEAK6 earlier this year.

In August, investment firm PEAK6 acquired 5m Spark Networks shares for $7.8m, the Chicago firm now owning 16% of the dating company’s outstanding shares.

With the new investment, Spark also underwent a major leadership overhaul, with former CEO Michael Egan being replaced by Danny Rosenthal, PEAK6 Chief Architect David Budworth becoming CTO and PEAK6’s Lisa McLafferty taking the role of CRO.

And in the first set of financials since the change, Spark has continued to see revenue & subscriber totals decrease in the third quarter of 2016.

In terms of revenue, this decreased 8% from the previous quarter to $8.4m, a fall of 28% compared to the year before.

This was driven by a decrease in the number of average paying subscribers, which fell to 173,564 from 189,938 in Q2, and 197,109 the year before.

Despite this, however, the PEAK6 investment meant that Spark ended the quarter with $11.3m in cash, up from $3.3m in the previous quarter, but still down from the $14.4m it had in Q3 of 2015.

Speaking about the third quarter results, Rosenthal said: “One quarter into my tenure at Spark, I wanted to share initial observations and our approach. We have a better understanding of structural problems the business has faced. These have been driven by problems with technology and product that have prevented investment in modernizing our brands. Some of these challenges have been overcome in the short term through marketing spend, but that is not a sustainable approach that will enable the company to thrive and grow.

“Our strategy to improve operations and maximize long term potential is founded in fixing these core issues and doing fewer things in a better way. More specifically, we have made the decision to focus on holistically improving our core JDate and Christian Mingle offerings.”

The new CEO revealed that this direction includes pausing certain Spark initiatives, such as the Church Partnership Program, its Happn-style CrossPaths mobile app and the plan to expand Christian Mingle into Latin America.

The Church Partnership Program, launched in February, aimed to get singles from particular congregations to connect with each other.

First trialling the initiative with two churches in Florida and Mississippi, the company later added a Dallas megachurch and 15 new churches across Mississippi and Georgia in August.

However rather than focusing on such short-term pushes, new products & market expansions, the new PEAK6 team wants to grow the business through “customer communications and interactions that are built upon a deep understanding of customer needs”.

This new direction also saw the company completely stop any television advertising in Q3, as well as “significantly reducing” its paid marketing efforts.

Rosenthal said: “These reductions have helped us identify inefficient marketing channels, and will give us a baseline against which to measure as we ramp our paid marketing efforts in November and continuing through Valentine’s Day.

“Spark’s strong and iconic brands have been hampered by a technology platform that is, at its core, over 15 years old. The Technology and Product teams are now aligned around the development of a single new, scalable, shared platform to support our customer-facing sites and applications.

“It is important to note, that this platform will also serve as the foundation for new internal systems and tools that will drive much-needed efficiencies within our Customer Service and Marketing teams.”

The team said it plans to relaunch new version of JDate and Christian Mingle in Q2 and Q4 of 2017, respectively, as well as working to migrate its other existing brands onto this shared platform by Q1 of 2018.

The changes seem like good common sense, especially focusing the company’s attention on modernising the technology of its main assets – the strength of the ChristianMingle & JDate brands – but the new leadership has a job on its hands if it wants to reverse the downward trajectory Spark has been on over the past few years.

Check out Spark’s full financial report here.