@andrewchen - Latest Comments in Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

anthonyblake — Tue, 13 Apr 2010 09:55:09 -0000

Great post Andrew, a one stop shop/master class. Genius :D

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

julia — Thu, 04 Mar 2010 06:19:50 -0000

that was very interesting, thanks for the info

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Micky — Fri, 22 Jan 2010 20:19:51 -0000

Hard to see them as a real player claiming global dominance of the singles market without Japanese Friend Finder.com ..That's a Major domain that they missed out on. It seems that they locked up several Major Ethnic groups but come on.. Japan.. ha ha ha I think that the adult friend finder corp they should try to acquire Japanese Friend Finder.com before even thinking about IPO.. Just my 2 cents..

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

mmacneil007 — Sun, 13 Dec 2009 17:57:19 -0000

Freemium can only truly work if the service is scaled to remove all overhead so the operation can profit without requiring extra revenue from memberships.

Mark

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Bloumoune — Mon, 06 Apr 2009 17:47:18 -0000

Andrew, if AFF registers 4M new members and 200K new sub per month then the conversion rate should be 5%. and the CPA $40 as Jason says

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

surfer — Fri, 16 Jan 2009 14:53:59 -0000

The geo-targeted banners may be using real people, but a lot of the real people aren't using their own pictures. Just about every time I see an AFF ad, one of the photos is of some attractive woman who was long ago plastered all over dozens of myspace profiles.

I've no doubt that there is a legit business among swinging couples. Monogamy is by no means the only reproductive and social strategy pursued by the human race.

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Andrew Chen — Tue, 13 Jan 2009 15:07:05 -0000

You can roughly guestimate this - their S-1 says that they acquire 4 million new members per month. So that means they go through 48 million new members per year (I imagine these are often people reactivating, or duplicates).

If they are spending about $100MM in SEM and affiliate costs, then you end up at about $2 per member.

Since the conversion from member to sub is about 10-20%, that means their cost per subscriber is roughly $10-$20.

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Jason — Tue, 13 Jan 2009 14:49:31 -0000

Was anybody able to get a good idea of what their marketing cost was per new subscriber?

I'm in the process of starting up a new service oriented subscriber site and one of the hardest pieces of competitive information to find is how much does it generally cost in marketing to sign up a subscriber?

I imagine it varies massively between business types. It would be really interesting to find some kind of comparative breakdown.

The article mentions that they must receive somewhere around 200K new subscribers/month and that they spend roughly $100M/year on marketing so perhaps it's somewhat accurate to say that their marketing cost per subscriber is roughly $42?

Thanks,

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

guicookie — Mon, 12 Jan 2009 01:24:38 -0000

Andrew, thankyou for a superb analysis and post. Can you clarify whether there is a standard definition of "active members" that the dating industry has adopted? I'm currently basing this metric on number of members logged-in within the past six months.

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Peter — Fri, 09 Jan 2009 16:20:44 -0000

It's a great overview of the numbers, thanks for doing the homework.

I signed up for a free account to see how much was free. As a free member you are able to create a profile, and you can search for other members. Yet you can only an index of the different members with their username and picture. You can not read details or contact them. Since the object of the site is to create contact, i would say that the free membership is not a free product. It is rather a way for people to get a look at the people they could contact if you pay.

As I understand freemium it is based on giving away a free product that people can actually use. Some of the most mentioned examples illustrate this, you can have great use of sites like linkedIn og flickr without paying. Since the features available for free members does not amount to a service of any use what so ever, I have to agree with Markus. AFF does not use a freemium model. Rather a “get a look at partially naked people before you pay” model.

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Fri, 09 Jan 2009 14:20:03 -0000

i think it is less than 1% of registered members who upgrade to subscribers, not 1% of visitors.

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

christianbusch — Sun, 04 Jan 2009 01:30:13 -0000

Hey Andrew, happy 2009!

Nice digging here, it's actually surprising to me that they seem to be spending less than 50% of revenue on customer acquisition; i've heard from a few people who know the very large dating sites in and out that it's closer to 75% for mature sites (which AFF definitely is). So regarding profitability - this is one crazy profitable business, unless things like fraud and chargebacks are huge. What's so interesting about AFF etc is that they satisfy a basic need for a lot of people - and therefore enjoy very good lifetimes.

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Markus — Wed, 31 Dec 2008 23:11:09 -0000

If that is your definition there is no such thing as a subscription dating site then they would all be considered freemium.

All the paid dating sites work the same. 1. Every time you view a profile you are presented with a signup screen. Every time you want to message someone and every time you want to view a profile as a member you must become a paid subscriber. Free members can only view 3 profiles before a paid screen comes up allowing you to view more.

Singlesnet on the other hand is a true freemium dating site. On singlesnet any user can message a paying users but only paying users can message both paying and non paying members.

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Andrew Chen — Wed, 31 Dec 2008 00:32:44 -0000

Hmm, I've never joined the site but you may know better - but the S-1 seems to make a clear distinction between members versus subscribers, and talks about tiers of access.

Wikipedia says: "Anyone can join and post a profile for free but cannot respond to messages from members until they pay their membership fee."

So maybe you can't do anything very useful, but it seems like members can at least create profiles and do some basic searching/browsing of other peoples' profiles.

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Markus — Tue, 30 Dec 2008 15:45:00 -0000

Aff is not freemium.... Its purely subscription

You can't do anything as a free member.

Markus.

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

spanky — Tue, 30 Dec 2008 15:06:32 -0000

Cams comes from Legendary Lars Mapstead - he and Andrew merged their companies a few years ago. I'm surprised it isn't making much money - I know other large players in that sector, and they are making a killing.

The good stuff I was referring to was adultfriendfinder - seeing a "nude" pic of someone who lives in your same town, after looking at "clothed" photos on friendfinder. Although there are probably ten men to every woman, there are actually a lot of legitimate woman who use the service, and not decoys as noted. Andrew actually worked hard to keep solicitors off the site. The geo-targeted banners use real people. Subscriptions average about three months. And a lot of couples belong to the service - swinging is HUGE on AFF - it was eye-opening, let me tell ya...

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Andrew Chen — Tue, 30 Dec 2008 13:51:37 -0000

they actually break out Cams.com separately in the S-1 and it doesn't look very impressive. Most of the money seems to be in the subscription side.

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

curiouscat — Tue, 30 Dec 2008 13:11:35 -0000

spanker,

What is the good stuff? Cams.com, etc? Are most people buying a multi month package - as i dont think the lifetime would be high on month to month renewals as the value prop of strict adult casual dating is low given their are not many real women on aff - mostly decoys.

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

chrisco — Tue, 30 Dec 2008 12:54:43 -0000

Sorry if my comment came out wrong. I'm not a pro and not looking for credit. You did a great analysis\I will ping ya if I do any more work on this. Kind of swamped right now :)

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Andrew Chen — Tue, 30 Dec 2008 12:39:02 -0000

Chris, you're clearly a pro at the field - but you don't get credit for talking about writing a post, you get credit for writing it ;-) If you come up with something, shoot me a comment or email and I'll link to it from this article. Look forward to it!

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

Andrew Chen — Tue, 30 Dec 2008 12:38:21 -0000

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

chrisco — Tue, 30 Dec 2008 08:40:43 -0000

Hehe. I just figured some blogger somewhere must have already done it since it's been over a week since the AFF IPO news broke. If some solid number crunching and analysis doesn't show up soon, I may do it and put it one or both of my blogs. Cheers! PS: I spent '99 to '03 venture investing (debt and equity) in subscription-based business models. I love getting into the metrics. Them and marketing (everything about it) are everything.

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

davemc500hats — Tue, 30 Dec 2008 07:16:52 -0000

funy, i was actually thinking i should ask you to write about this... thanks for reading my mind ;)

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

chrisco — Tue, 30 Dec 2008 06:10:38 -0000

Looking forward to hearing/seeing your results, spanker. Thanks ;-)

Re: Freemium business model case study: AdultFriendFinder ARPU, churn, and conversion rates

chrisco — Tue, 30 Dec 2008 06:07:44 -0000

You need to slice and dice these metrics down some more, such as sussing out average customer acquisition cost vs. average average customer lifetime value,which requires you calculate average customer lifetime (month). Next we look at trends in these numbers. This these are the basics of any subscription business. Next get over to the cost side :)