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Wednesday, Feb 21, 2024

Tinder Pivots With New CEO

A lot has changed since dating application Tinder first launched in 2012.

Internally, the company has gone through substantial leadership changes, including the recent appointment of its eighth chief executive since its founding, as well as a $3 billion merger in 2017 with Match Group.

The company is also having to deal with changes in the online dating market as fewer college-age consumers – the company’s prime demographic – are using platforms like Tinder less than in years prior.

Shortly before releasing its fourth-quarter results last month, Match Group appointed Faye Iosotaluno as Tinder’s new chief executive. Iosotaluno first became Tinder’s chief operating officer in February of 2022, after spending about five years at Match Group, most recently serving as the company’s chief strategy officer.

Match Group executives said that the Tinder leadership change is aimed to improve user growth and retention, particularly among women and younger users, and Kim said that he believes Faye is “best suited” to lead Tinder into its next chapter of growth.

Faye Iosotaluno

“(Iosotaluno) brings a strategic lens to the opportunities and challenges facing Tinder,” the letter said. “The team will focus on evolving the product to better satisfy women and the next generation of daters, and building a brand that users and employees feel passionately about.”

Leadership cycles

Iosotaluno is the company’s eighth chief executive and its second female leader. Tinder’s first female chief executive, Renate Nyborg, left the company in 2022 after less than a year in the role. Match Group Chief Executive Bernard Kim had held the role in an interim basis since then. 

Nyborg’s predecessors included Tinder’s founder, Sean Rad, former Match Group chief executive Greg Blatt – who resigned from both Tinder and Match Group in 2017 and later faced allegations of sexual misconduct – and Jim Lanzone, who is now the chief executive of Yahoo.

Since Rad stepped down in 2016, no chief executive has stayed for more than two years. According to Century City-based global organizational consulting firm Korn Ferry, the average tenure of a chief executive in the tech industry is about seven years.

Ygal Arounian, an internet equity research director for Citi, said Tinder’s frequent leadership switches have caught the attention of investors amid the company’s declining user growth, since leadership typically goes hand in hand with company performance. Tinder posted about $1.9 billion of direct revenue in 2023, up 7% year over year.

However, its paying user count in the fourth quarter declined to 9.96 million, down 8% since the beginning of last year and down about 10% from the third quarter of 2022.

 “If everything was going great … but you had some leadership changes and turnover, people would be less focused on it, but they are happening at the same time,” Arounian said. “A more consistent chief executive officer presence at Tinder, I think, would be pretty welcome from an investor point of view.”

Tinder is still one of the most popular dating apps in the world and, according to a 2022 study from Pew Research Center, about 14% of U.S. adults have used it at some point. This usership exceeds that of competitors such as Bumble, West Hollywood-based Grindr Inc. and other dating apps in Match Group’s portfolio, including Hinge, OkCupid and Plenty of Fish.

User changes

Online dating has become exceedingly popular over the last few decades, and younger audiences frequently make up the bulk of dating apps’ userbases. The Pew Research Center, in a study conducted in 2022, found that 42% of U.S. adults between 18 and 29 years old said they had used the Tinder app, compared to 16% of those between 30 and 49. By the time individuals reached 65 years of age, that count dropped to fewer than 1%. 

Although Tinder remains one of the most popular dating apps on the market, more and more younger users are starting to log off of the app. According to a survey conducted in October by Axios and The Generation Lab, 79% of college and graduate students said they were using dating apps less than once a month. 

Amid this change in consumer behavior, online dating platforms may face the decision of whether to refocus efforts on pivoting to attract an older audience, or working to capture younger consumers. 

Arounian said that companies would be remiss to give up on their younger audience base.

“The most value over time is going to be capturing younger audiences, because they’ll be there in the dating ecosystem for longer,” Arounian said.”

Kristin Diehl, a professor of marking at the USC Marshall School of Business, said that when an important audience demographic starts to slip, companies are likely to work on expanding their user base.

In addition, most companies typically experience a cycle in which having more people using a platform, particularly a dating app, means more people are enticed to join that platform. With Tinder’s declining new-user count, existing customers may see Tinder’s subscription options as less valuable.

Over time, Tinder has organically grown a de facto reputation among its users as a “hook up” dating application. However, Arounian said that while Tinder has excelled in the “short-term relationship” market for dating apps, the trend among younger audiences is an interest in more serious relationships.

Tinder rolled out a new profile feature in late 2022 that allows users to indicate relationship goals, and internal data found that 31% of Generation Z Tinder users say they’re looking for a long-term relationship.

Kristen Schiele, an associate professor of clinical marketing at USC, said that the current college-age demographic tends to prefer “organic, in-person interactions” and may see the “superficial world” of online dating as a potential hinderance to developing relationships.

“Unlike prior generations, today’s college-age students have witnessed the potential downsides of these apps, such as ghosting, catfishing and an emphasis on appearance determining a person’s value, specifically with the swiping feature used by Tinder and other apps,” Schiele said. “This generation’s pivot back towards more traditional methods of meeting partners reflects an approach to relationships navigating away from the pitfalls associated with the digital age of dating.”

New campaigns

While competitor Hinge has touted itself for some time as a platform intended for the pursuit of meaningful relationships, Tinder implemented a new ad campaign last year to promote Tinder as a place to find a serious partner. The company said its marketing campaign, called “It Starts With A Swipe,” is aimed to redefine its brand, spotlight Tinder’s relationship possibilities and user diversity and appeal to Gen Z, particularly younger women in that demographic.

The campaign’s advertisements depict individuals in serious relationships, with an increased emphasis on portraying queer relationships, accompanied by slogans such as “Proving Astrology Right” and “Comfortable Silences.”

“For years, Tinder has largely relied on virality and has made limited investments in building a resonant brand narrative, which we believe has negatively impacted brand perception and new-user growth,” the company wrote to investors. “The new campaign aims to counteract these trends by broadening Tinder’s overall appeal through highlighting Tinder’s vast relationship possibilities.”

Arounian said that new campaign shows how Tinder is looking to pivot its business model and reputation to suit customers’ changing interests. He said that while dating apps may lose repeat customers if those customers find a serious relationship, the evolution of Tinder’s platform is necessary for users to continue viewing the platform as a worthwhile use of time. 

Tinder said the “It Starts With A Swipe” campaign is the first in a “multiphased, long-term effort” to redefine its brand. Arounian said that Tinder grew up in an era where there was much less competition in the online dating world, particularly among apps focused on younger audiences. He said the company’s customer base continues to be its biggest strength, but that Tinder needs to keep working to retain users and increase its paying customer conversion rate, particularly as it has lost a decent amount of market share over the years to competitors. 

“By continuously improving the product, building on what works while modernizing key features, we’ll produce an experience that aligns with what the next generations of daters are expecting,” Kim said to investors. “2023 was a year of execution and increased product velocity for Tinder, which set a strong foundation.

In 2024, Tinder is adopting a fast-fail mentality, a strategy that prioritizes rapid experimentation and testing … when we do strike gold, it not only elevates our business, but it sets a new standard for our users, which we will continually enhance.”

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