Are location-based apps the future of dating?

Smartphone apps that track a user's location to identify potential mates nearby are gaining popularity, but at what cost?

Geo-dating apps have been available on iPhone and Android for years, but are only now starting to take off. (Photo: Erin Leydon)

If you’re single, looking to mingle and an iPhone or Android owner, there’s a hip new way to meet people. It’s called geo-dating; it uses your smartphone’s location to identify potential mates nearby. Skout, the most popular of these apps, will tell you just how far away JaneDoe XO is. You can also check out her pictures and profile. If she’s interested, you can chat and arrange an impromptu date at a café a few blocks away.

Around for about three years, geo-dating is only now starting to take off. In addition to selling apps and added features, developers are positioned to profit from the rise of location-based advertising. At the same time, the misadventures of a few networks are heightening concerns over users’ privacy and safety.

Launched in 2009, Skout’s dating app is now adding a million new users every month. In April, the San Francisco startup raised US$22 million in funding from venture capital firm Andreessen Horowitz. It has two revenue streams. First, users can exchange real cash for e-credits that unlock additional features, like the ability to see who has checked out their profile. “We love the virtual currency model,” CEO Christian Wiklund says, since it allows the core service to remain free, attracting a critical mass of users. He’s also optimistic about Skout’s other revenue source, advertising.

Location-based advertising is still in its infancy, but a 2011 report by Strategy Analytics estimates it will be worth more than US$5 billion by 2016. “When you bid for adverts, you’re doing it on a more efficient basis,” says Nitesh Patel, a senior analyst with the research firm. An ad for a restaurant will more likely generate a sale when that restaurant is blocks away. Google, AT&T and location-sensitive social network Foursquare are already dabbling. Dating apps like Skout have age and gender data to work with as well—details we cough up in hopes of finding a kindred spirit.

Skout isn’t the only player in the field. Last summer, popular dating site OkCupid added location features to its mobile app, which CEO Sam Yagan says will help improve how the site matches people. “There’s a tremendous opportunity for us to enhance our algorithm by actually knowing when people go on dates and how those dates go.”

Of course, he adds, OkCupid needs to be careful how much of that it discloses publicly. The category’s reputation took a hit in January when Grindr, a geo-dating app for gay men, was infiltrated by a Sydney hacker who used people’s accounts to send out bogus messages. And in March, Foursquare rushed to block its use by another app called Girls Around Me. The latter displayed a map of where women using Foursquare were checking in meshed with whatever details they’d left public on Facebook. In other words, anyone with the app could see—without her knowledge—that Sarah Smith, 23 and single, just checked into a nearby Starbucks. Shortly after, its makers pulled it from Apple’s App Store.