Facebook Friends in Search of Romance Drive App Growth

With the rise of the Internet, people began looking for love on websites such as Match.com and EHarmony.com. With the growing popularity of social networks, they’re turning to services like AreYouInterested.com.

The dating application, available on Facebook and Apple Inc.’s iPhone, lets users see beyond the personal details of potential mates to their social circles, including friends and family. AreYouInterested.com is adding more than 50,000 users a day, according to New York-based parent SNAP Interactive Inc., compared with the 20,000 new daily users Match.com reports.

AreYouInterested.com is now the largest Facebook dating application, with more than 13 million average monthly users, according to research firm AppData.com. Its popularity may cut into the growth of Match.com, part of IAC/InterActiveCorp, and EHarmony.com Inc., whose Facebook programs have 72,712 and 8,607 average monthly users respectively.

“Those traditional online dating companies don’t have a large app presence like us,” Snap Chief Executive Officer Cliff Lerner said in an interview. “Our growth, as well as the growth of a couple competitors, has come out of nowhere.”

Match.com has greater appeal for serious daters and a stronger long-term business, though it may not be signing up as many new users, said Gregory R. Blatt, CEO of IAC. Founded in 1995, the dating site collects pages of data from users to help them find appropriate mates, with a large engineering team to refine its site and algorithms.

“AreYouInterested is a flirty, fun little app,” Blatt said in an interview. “They have a few people working in a garage. We’ve got hundreds of engineers maximizing our business. You need huge degrees of sophistication, huge amounts of data behind it, and a huge community.”

AreYouInterested vs. Match.com

IAC’s Match business, which includes other dating websites such as Chemistry.com and SeniorPeopleMeet.com, had revenue of $292.4 million in the first nine months of the year, up 13 percent from a year earlier. Blatt ran the business until he took over the CEO role this month from Barry Diller, the billionaire who built and controls New York-based IAC.

Snap, traded over-the-counter, had $3.9 million in revenue in the first nine months, up 65 percent. Lerner and his brother, natives of Long Island, New York, founded the company with $750,000 from friends and family. Cliff, 32, had worked as an equities analyst at Lehman Brothers Inc; Darrell, 36, ran a fantasy-sports company. Snap has 17 employees and, for the record, operates from an office building in Midtown Manhattan.

Digital Teddy Bears

Snap Interactive rose 30 cents, or 150 percent, to 50 cents at 3:59 p.m. New York time in over-the-counter trading. The shares have increased 233 percent this year. IAC fell 26 cents to $29.71 in Nasdaq Stock Market trading and has gained 45 percent this year.

The brothers first started a dating website called IamFreeTonight.com in 2006, and shifted their focus after the initial success of their social-networking products.

AreYouInterested.com is a software application, or app, that users can load onto their Facebook page or iPhone with a half-dozen mouse clicks. It lets you click through photos of potential matches, and exchange messages or virtual gifts of digital roses or teddy bears.

One reason dating apps on Facebook are popular is that they give romance-seekers insight into potential partners through the social-networking site’s existing information, according to Darrell Lerner, Snap’s co-founder. People who meet on AreYouInterested.com can become Facebook friends and learn about each other before they ever agree to an actual date, he said. They typically can see another person’s Facebook posts and photos or videos of them and their friends.

‘More Comfortable’

“A lot of people on dating websites don’t put up legitimate information,” Darrell Lerner said in an interview. “Because we’re an app on Facebook, every user is legitimate. Before people go out with someone, they look them up on Facebook, they add them as a friend, and they see who their friends are. They get a better representation of the person, and it makes them more comfortable.”

IAC’s dating sites have 1.8 million subscribers, who pay $24.95 a month or $99 for a year. The websites had 6.5 million unique visitors in November, up from 60 percent from a year earlier, according to the market-research firm ComScore Inc. Operating profit for the group rose 25 percent over the first nine months to $77.3 million.

“Never has Match experienced the kind of growth it’s experienced in 2010,” Blatt said.

The company is working to introduce new Facebook apps that will compete with AreYouInterested.com, he said.

More Mobile

On Facebook, other competitors also exceed Match.com in number of users. Zoosk.com, backed by Canaan Partners, Bessemer Venture Partners, and ATA Ventures, has 6.1 million average monthly users for its Facebook app, according to AppData.com.

Snap plans to expand the AreYouInterested.com brand beyond Facebook, particularly on mobile devices, Cliff Lerner said.

“We believe there are big growth opportunities around mobile as web usage continues to increase rapidly and there are exciting opportunities around location-based features for dating apps,” he said.

One online dater, a 26-year-old event planner in Manhattan, said she had joined a couple dating websites before she recently registered for AreYouInterested.com through the Facebook application.

“For people in their 20s and 30s on Facebook, dating is a big aspect of our lives, and a lot of people use Facebook as a dating thing anyway,” said Adi, who declined to give her last name for privacy reasons. “There’s something to be said for a dating website that’s linked in with the most popular social network. It makes it feel more real.”

To contact the reporter on this story: Brett Pulley in New York at bpulley@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom in New York at pelstrom@bloomberg.net.

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