Flirtomatic, the UK’s leading mobile social networking service announced that they’ve welcomed the millionth user this week. Not surprisingly, since the service cuts to the chase: it’s just about flirting. Most of those flirting users are British and more than half of them seduce folks via the mobile phone. Flirtomatic has just started to lure Germans into their flirting heaven.
The growth of Flirtomatic is rather spectacular. It had 225,000 registered users in February 2007, which means an almost 350% growth within an 18 month period. What’s even more interesting, is Flirtomatic’s impressive revenue growth. According to a press release, it has “skyrocketed” by 475%.
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That’s fascinating, as at all the mobile conferences I’ve been, people have been complaining about a lack of revenue through mobile advertising et al. Maybe Flirtomatic is exaggerating and their revenue increased from 1 euro to nearly 500 euros. But I figured it would be worth it anyhow to ask Flirtomatic CEO Mark Curtis to share his thoughts on generating revenue via mobile sites.
Curtis: “Generating revenue on the mobile web is basically about either advertising or user payments. You can forget data revenue share with operators, especially with the – slowly growing – move to flat rate.”
Advertising? At MoMo Amsterdam, I heard Yme Bosma from Holland’s largest social networking service Hyves say that they would only think of advertising when they have millions of users. So how about that?
Curtis: “Advertising is bumpy but growing. It’s rather difficult to separate out the effect of the credit crunch on advertiser confidence from the inevitably inconsistent demand of a nascent marketplace. In other words, the revenue stream is good and getting better but is damn hard to predict.”
So user revenues might be a more secure option? Curtis: “Luckily user revenues are easier to predict once you have some runway behind you, and are continuing to lift. It’s easy to see why: a long time ago operators put in place micro billing through handsets and users became accustomed to it through the first mobile content boom. There remains however a lot of suspicion following the dodgy subscription packages that many consumers were caught out by.”
“Partly as a result of that, subscriptions for content over a time period (say £3 for a month) appear to be on their way out, though they have been the model most tried at first. We’ve seen a lot more success at billing customers as and when they wish to buy, though our model adapts that a little by selling them “flirtpoints” that they use flexibly as a currency. We also see a minority of customers prepared to use credit cards, on the mobile internet.”
Flirtpoints are the Flirtomatic currency with which users can buy extra services like sending virtual gifts or delete “freaks”.
Operator billing is a big, big issue
To conclude with, Curtis wanted to address the problem of operator billing: “A big big issue is that operator billing means you lose around 35 percent gross revenue before you move. This makes it very hard to sell anything with a reasonably known market value – for example a book, because the retail margin kills the business model. So if you are going into business on the mobile internet, and you want user as well as ad revenues, ensure you can survive on those margins.”
“This will change in my view, mid term, IF phones become wallets. At that stage the operators will have to sacrifice margin in return for volume (so uses can buy, say, Mars Bars) or else neither Mars nor the retail outlet will co-operate. When that shift happens, 35 percent take off the top will disappear.”