Looking forward to 2015, we asked Michael O’Sullivan, the CEO of white label platform Hub People, about what trends companies should be looking out for in the new year.
What trends are you most excited about for 2015?
Payments, payments, payments!
Finally the mobile wallet is coming of age. For the last few years, mobile traffic has been rising dramatically, while the mobile monetisation options have lagged significantly behind. This has forced some operators to run off attempting to find novel micro payment models with little notable success. Those on the venerable subscription model have seen an erosion of conversion over the last two years, but there is light at the end of the tunnel.
In the mature markets, the data entry barrier for credit cards seems to be coming down, with the success of great alternatives such as Stripe and PayPal, which are now available for dating operators. Apple Pay is helping to make consumers comfortable with the mobile as a wallet. I think digital currencies have a great role to play in disrupting the model of the incumbent payment goliaths too. So lots of exciting options to try. I’ve stopped ducking payment providers at conferences!
Where are the biggest possibilities for growth?
For our business as a white label provider, it’s all about serving the right dating niche. Most of the general dating market has moved on to a brand war. A few years ago, the search traffic for dating was 70% non-branded keywords, versus 30% branded keywords. It’s the other way around now. If you want to go global and launch a free dating app like Tinder you need deep pockets, and it remains to be seen if these apps can really take the free customers with them, as they venture down the monetisation road.
But niches work, and work very well. You can provide a tailored solution to a ‘tribe’ in the dating market. The more targeted the tribe, the better the conversion in general – as long as you don’t take it too far. People are happy to pay to be a member with the rest of their self-identified tribe. People are increasingly seeking out similars on the web. Just as news organisations have moved away from journalistic critique increasingly towards opinion and entertainment. Why challenge your prejudices when through the power of the internet they can be catered for?
With a white label, its very easy to target these tribes without making any upfront investment in setup, staffing and technology. What’s more, these niches are big enough to make great returns, but not big enough to attract serious competition.
How will mobile change? Can apps create a sustainable payment strategy without subscriptions?
The dating subscription model is here to stay. Micro billing models do not work for dating and do not provide a sustainable revenue model compared to subscriptions. Micro payments are great in the gaming industry, where you can provide an addictive and predicable stream of conversion events to get the next level, or unlock the next magic item on your digital content endorphin rush.
In order to monetise mobile dating traffic, where micro payments are the only low friction option, some operators have tried to gamify the dating experience to try and deliver the same stream of conversion events. I don’t think you can really do that with real human beings. And in the end, are you offering a dating solution or a game disguised as a dating app. The app just wants you to keep playing and paying.
As mobile payment comes of age in the next two years, I think there will be a return to more subscription-based dating solutions whether they be apps or mobile web, where the long term incentives are better aligned for the operator and consumer.
Visit Hub People’s site here.