There’s a disruptive online dating website called Ashley Madison that’s designed for married people who want to have an affair. Yes, you read correctly—married people who want to have an affair. Although revolutionary in itself, this brand has also developed a new business model for data, which other social networks and data aggregators, should consider.
Started in Canada in 2001, Ashley Madison has made money from married people wanting to have an affair, in some 27 countries. In early July 2013, Ashley Madison launched in Japan, its first foray into Asia.
Ashley Madison is disruptive in many ways. The concept of social network for married people considering an affair is shocking to many, and the idea that a brand can make money from infidelity is audacious.
The brand’s marketing is equally bold as Ashley Madison presents itself with the slogan “Life is short. Have an affair.” Write-ups on the company regularly point out that the brand’s marketing campaigns are rejected, including:
Superbowl: NBC banned an Ashley Madison ad from appearing.
Toronto Transit Commission (the City’s main transportation company): banned $200,000 in streetcar advertising
Phoenix, Arizona: Rejected a $10 million bid to rename Sky Harbor Airport to Ashley Madison Airport.
Ashley Madison's character is arguably best presented in this billboard featuring Newt Gingrich.
But perhaps the most interesting part of the Ashley Madison brand is its treatment of data, i.e., the records (names, addresses and contact details) of those 19,935,000 anonymous members, and its previous members. The company charges $20 ($19.99) to destroy the data of these users at their request.
While this $20 may at first seem trivial, consider the thought of the data for those married people having an affair falling into the wrong hands. In Canada, where the site originated, a data breach could mean the loss of half your wealth and a significant dent on your reputation.
As a result, one can see how Ashley Madison probably can count on nearly $400 million in revenue ($20 x 20 million) for simply destroying its users' data. On top of this, its business model charges for credits versus a monthly subscription. For a conversation between two members, one of the members must pay five credits to start a conversation. All follow-up messages between the two members are free, after the communication has been initiated. Ashley Madison also provides a real-time chat feature that is also metered. Credits are used to pay for a certain time allotment of chat.
The moral of the story
The learning here is that data has amazing value—much more than most people initially realize. As an entrepreneurial company Ashley Madison has learned to monetize that data by charging to destroy it. Clearly this type of model is a sign of things to come. Baidu, Facebook, Mixi and Naver could learn a lot from this model.
My experience is thankfully very dull when it comes to Ashley Madison. I’m not a member and found out about the brand and its interesting business model when discussing interesting topics for a TEDx event in Waterloo, Ontario. That said, I see the brand, and its business model with regard to making money from data, as both being very innovative.
The Rising Sun
July 7, 2013