Tinder: Firing up Revenue Potential

Tinder launched in September 2012, the year mobile dating surpassed online dating in active users and user traffic. Since then, the mobile app has matched over nine billion couples, averaging over one billion swipes and over 25 million matches per day.

Tinder’s location services track users, pulling personal information from Facebook pages to create profiles including first name, age, chosen photos, and liked pages. With this data, Tinder matches users who can “swipe right” to express interest, or “swipe left” to pass. If both swipes go right, a match is made and users can start chatting.

While Tinder initially operated without a revenue source, it has moved to capitalize on the multi-billion dollar online dating industry. Its first ad, released earlier in 2015, allowed users to download and stream a new Jason Derulo song on iTunes. A subsequent campaign for The Mindy Project matched user profiles with TV characters and included a link for more details about the sitcom.

While user feedback was generally mixed, these campaigns may foreshadow the future of strategic partnerships between the app and major web services. The ads demonstrate Tinder’s ease of transitioning between synergistic sites as it expands its reach in tracking user demographics and other data.

Tinder has also evolved into a “freemium” service, a model widely used by Internet start-ups and by established players such as Linkedin, Dropbox, and Hulu.

Users get the Tinder basics for free and pay a monthly subscription fee for exclusive features. Free service enables Tinder to expand its user base without incurring much advertising and marketing costs. The membership fees brings a stable source of revenue.

Tinder Plus launched earlier this year, with subscriptions at $10 a month for US users under 30 years old and $19.99 for users 30+. Its premium features include an “Undo” function that allow users to return to a person who may have initially been swiped away. A “Passport” feature broadens search parameters beyond the immediate geographic region, and swiping is also ad-free.

As acceptance of dating apps continues to increase — and factors such as interface design and interaction become more sophisticated – questions naturally arise about what Tinder will do next to create more sources of revenue.

The “freemium” model works for those companies that can scale and innovate quickly so that paid customers will stay and new customers will join.

With the rise of competing dating apps, basic factors such as brand loyalty will also influence the sustainability of Tinder’s business model. However, given the social popularity and multipurpose value of data generated from users, it is evident that dating apps are here to stay.