In Online Dating, Size Doesn't Matter

Even with large competition, niche dating is still a good business to be in.

Love or online dating concept heart shape symbol on laptop keyboard

TallFriends.com, MilitaryFriends.com and Geek 2 Geek are all examples of niche dating sites.

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Sites like eHarmony may be aggressively running Valentine's Day promotions, but a host of specialized dating sites run under the radar, despite the deals from high-profile matchmaking services. Singles seeking everything from farmers to goths, or even leather-clad bikers can find their soulmates online via niche sites that, despite their general-audience competition, have still managed to grow and remain profitable.

The economics of online dating can seem counterintuitive. It's easy to think that these small sites would be completely overrun by mammoth dating sites like OkCupid—think about the hit that small mom-and-pop stores can take when Walmart moves into town. But niche dating sites often thrive, even with much larger sites signing up the bulk of singles in search of love.

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"It's a lot easier to sustain an online dating service if you open it up in the niche marketplace than if you open it up as a general online dating service," says Joe Tracy, publisher of Online Dating Magazine, an online publication that covers the industry and reviews sites. "Niche sites are a lot easier to market. They're not necessarily competing with Match.com and eHarmony.com," he adds.

One reason why this is true is because people who belong to and are seeking out a particular demographic are often content to stick to these small, specialty outlets, even if a larger competitor might also have some potential matches. Sifting through the choices can just get too time-consuming. It's like trying to find something relatively unusual, like a kumquat, at the Super Walmart—you could wander around the produce section for 45 minutes looking, but you might find it more easily at the specialty grocer down the street.

In addition, says Tracy, there is the simple fact that the largest sites have the general-interest market cornered. EHarmony and IAC—the parent company of Chemistry.com and OkCupid—together have a nearly 65 percent share of the online dating market, according to market research firm IBISWorld.

"99 percent of online dating sites that open up to compete with the Match.coms and the eHarmonies will fail within two years," he says. The failure rate for niche sites is still high—though he has no firm data, he guesses that it's around 70 percent—but still better than the general dating ones.

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One site that has thrived is Geek 2 Geek, whose owner says that the site had its most profitable and fastest-growth year in 2012. Currently, around 350,000 people have profiles on his site, around 100,000 to 150,000 of whom are active users at any given time. Compare that to eHarmony, which claims to have over 20 million registered users.

"The typical profile on Match or eHarmony says, 'I like long walks on the beach, and I want to find my soulmate.' Geeks really want to know, 'What kind of video games do you play?' or 'Do you go to Renaissance fairs?' " says Spencer Koppel, the site's founder and owner. "If you're a geek, you don't go to bars. You might go to Comic-Con."

Koppel, a retired actuary, considers himself a geek, but in this case, necessity did not drive invention. His dating days are long gone, as he has been married for 40 years. Still, he says that his site would have appealed to him back in the day, as it would have allowed him a place to comfortably reach out to the type of match he was seeking.

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Because his site is so specialized, he says, he does not feel threatened by competition from larger sites. Indeed, Koppel has found just one of many profitable niche markets. Tracy says that vegetarian dating sites tend to be particularly strong, and single baby boomers are also a fast-growing demographic.

However, Koppel is unusual in the sense that he runs his own site. Many successful niche sites are run by large companies. One company might run dozens of sites, making cross-advertising and site maintenance for all of those sites much simpler than if all of them were run independently—not to mention leveraging massive site databases to pre-populated profiles from existing sites. One company, SuccessfulMatch.com, runs a wide range of sites in this way, including TallFriends.com and MilitaryFriends.com.