Could the new man at the helm of Spark Networks Inc. be what the Beverly Hills online dating company needs to ignite its business?
Although Spark has not kept pace with the growth in the online dating industry, Greg Liberman, the company’s new chief executive, sees the opportunity to grow subscriptions to Spark’s niche websites. Part of his plan is a suite of new sites that appeal to both single members and those who’ve already made a love connection.
Spark, which operates 28 dating websites including Jewish singles site JDate.com, named Liberman chief executive April 11 after former Chief Executive Adam Berger announced his resignation.
Like most subscription-based online dating companies, Spark saw a drop in subscribers and revenue during the recession.
Spark’s competitors, including Match.com in Dallas and Santa Monica’s eHarmony.com, have started to bounce back. But Spark has struggled to get the lovelorn to log back on, said Caitlin Moldvay, an industry research analyst who covers online dating companies for IbisWorld in Santa Monica.
“They’ve been facing a fair number of challenges,” she said. “Their revenue is declining, and their advertising spending is far below the industry leaders.”
The online dating industry had an average annual revenue growth of 4.9 percent from 2005 to 2010 while Spark had an average revenue decline of 9 percent in that period, Moldvay said.
Spark operates dating sites in three different segments. Its Jewish Networks segment includes JDate and other Jewish sites. All other niche sites, including ChristianMingle.com and BlackSingles.com, fall under the Other Affinity Networks segment. Spark also operates sites meant for a larger audience under its General Market Networks segment.
The recession caused an overall decline in Spark’s subscriptions, but the Other Affinity Networks segment saw some growth. But Liberman attributes the majority of the company’s revenue decline to its general market dating sites.
So Spark launched Spark.com, a lower-price site that combines games and social networking, in late 2009, and shut down AmericanSingles.com last year. But Liberman said the company has not yet made a significant effort to draw membership to Spark.com.
“It’s out there and live, but it’s not the primary focus,” he said. “The primary focus is on our niche communities, where we feel like we’ve got a lot of traction.”
Spark’s revenue was $10.1 million in the fourth quarter last year, down 9 percent from the same period in 2009. Net income was $626,000 compared with a net loss of $9.6 million in fourth quarter 2009. (The 2009 earnings were dinged by an impairment charge.)
Liberman said net income grew despite the revenue decline because the company decreased spending on marketing and its general market websites.
He added that fourth quarter revenue increased 2 percent from the third quarter last year and subscriptions rose, which means, he believes, that the company is back on a growth trajectory.
“The fourth quarter tends not to be the greatest quarter in the world, but this year we ramped up subscriptions to some of our other affinity sites,” he said. “That’s what drove the increase.”
Ranked by market share, according to IbisWorld, Spark is the fourth largest online dating and matchmaking company with 2 percent. IAC/InterActiveCorp., which owns Match.com and other dating sites, leads the pack with a nearly 19 percent share, followed by eHarmony with 12.4 percent and Vertrue Inc., which owns Toronto-based dating site Lavalife.com, with 4.2 percent.
The 144-person company’s best chance at growth is with its niche sites because there’s less competition in that market, Moldvay said.
“Their affinity networks segment is one of the things they should be focusing on,” he said. “Niche dating markets experience a lower level of competition so revenue is typically more stable.”
Liberman began his career at Spark in 2004 as general counsel. He became chief operating officer in 2005 and president in 2006. Berger, the company’s chairman and chief executive since 2007, resigned to become CEO of Van Nuys online printing company Digital Room Inc. He will stay involved with Spark as a director.
“I felt I had brought Spark a long way from four years ago,” Berger said in a statement in response to a Business Journal question. “At the same time as I was thinking about how to fulfill the promise of promoting executive talent from within Spark, I was approached by Digital Room Inc. It was facing growing pains and challenges, which I knew how to fix.”
Liberman said he has taken over leadership of Spark at an important time for the company, as he sees big growth potential for some of the Other Affinity Network sites.
After love connection
The company is exploring ways to keep members coming back even after they’ve made a love connection on the dating sites. To do this, Spark has launched Believe.com and JPicks.com, websites without dating components aimed at Spark’s large database of current subscribers.
Believe, which launched in August, is a faith-based website meant for people who use Spark’s Christian dating websites. It features sermons, testimonials, and advice on relationships and raising children. JPicks, which launched in January, is a daily deal website for members of its Jewish networks that offers discounts on shops, eateries and entertainment venues in Los Angeles.
Traditionally, Spark’s websites lose customers after they make love matches. Liberman said the challenge has been finding a way to get those customers to stay even after they’ve found a mate.
“At the end of the day, our core business is putting ourselves out of business,” he said. “JPicks is an opportunity to extend the life of our members on JDate and give other people in the Jewish community the opportunity to interact with us.”
