Andrew Conru, CEO at FriendFinder.com is telling us how to get into this business and what we can learn from the adult industry. FriendFinder.com has +90 million users, +200 employees, …Users began to upload more “interesting” photos, so they started AdultFriendFinder.com. They’ve branched out into intls, religious groups, etc. Users log a lot of time on their sites. They’re close to Google based on those figures.

Adult sites know about making money TODAY. They’re always looking for good conversion rates. Lots of cross-promotion.

Tricks they use: clients, toolbars, popups, spam, spyware, adware, affiliate marketing programs, etc. A Collaborative Traffic Network let’s them track clicks across many sites. They really know their sales funnel and how to reduce charge backs from the credit card companies. They optimize the hell out of this stuff.

Rich media, live and streaming, etc. Why are they so innovative? Large number of publishers, so there’s A LOT of contribution. Big tail. The traffic source controls the advertising, not the advertisers. There’s a ton of money in this. $445 million spent in 2003 for adult content on-line. But margins are getting tighter–there’s lots of content and hard to differentiate. Search engines make it easier to compete on pricing.

The industry is evolving. Registration and personalization. Reducing entry/exit pop-ups. Using softer pitches and create a better user experience.

Over-optimization in the short term is a danger, so think long term.