Bloomspot, a San Francisco-based local offers company which debuted back in 2010, has been acquired by Chase Bank, a subsidiary of JPMorgan Chase & Co., to form the basis of forthcoming offers-focused products, the companies are announcing today. Terms of the deal are not being disclosed at this time, but it involves the acquisition of both the technology Bloomspot developed, as well as its team.
The majority of Bloomspot’s 100-person team will be joining Chase. The transition to new offices won’t be very difficult, either, given that Chase’s San Francisco-based office is only a few blocks down the road from Bloomspot, as it turns out.
Although Bloomspot was sometimes erroneously lumped in with daily deal providers like Groupon or LivingSocial, the startup had different take on how offers should work. Instead of targeting the wider mainstream with daily deals, Bloomspot allowed merchants to specifically target their best customers. Using credit card data provided by consumers, Bloomspot could not only better target offers, it was also able to close the loop, and verify if the offer had been redeemed and how much the consumer spent.
At the time of the acquisition, Bloomspot had around 2 million members and some 500,000 merchants working with the company. It primarily served large urban markets across the U.S., including New York City, San Francisco, Los Angeles, Chicago, Washington DC, Boston, Houston, Seattle, Denver, and San Diego. The company also had been working on developing a card-linked offers program, similar to edo or Cartera, but this had not yet launched at the time of the acquisition.
According to Jeff Kinder, President of Chase Offers, the company has been running smaller offers programs for years, including things like its Freedom Card cash back offers, offers for debit card customers, and more. However, it wasn’t really in the offers business, per se. To date, the company had only been running some small-scale beta test of daily deals and other offers, beginning earlier in the year in places like Denver, Phoenix and Seattle. Some of these tests are still underway.
What Chase found was that its consumers were very receptive to their bank presenting them with offers, says Kinder. “In a lot of our focus group tests we found that consumers are not only excited to get these offers, but they also expect us to give them more relevant offers,” he tells us.
Kinder says that Chase was planning to hire substantially to fill out its internal offers team in 2013, and through the Bloomspot acquisition, they can now fill that group with domain experts. “We think Jasper [Jasper Malcolmson, Bloomspot CEO] has put together a great team at Bloomspot, and we will integrate that team right away,” Kinder says. He adds that the team’s advantage also has to do with their past experiences working at other internet companies at scale. “They bring to us an understanding of how you do things at scale, and what that complexity is of operating at scale – that’s hard to find. And Chase is massive, so that’s a real asset in terms of fit.”
On the technology side, Kinder says Chase appreciated what Bloomspot had done around matching as well as the sophistication of what they’ve done around relevance, too, again going back to the team’s search backgrounds. (Company exec including Malcolmson, COO Frazier Miller, and CTO Ashish Baldua were previously at Yahoo.) But also key was that the startup had figured out a means to close the loop on offers redemption, which is really hard to do, Kinder noted.
Bloomspot’s focus on targeting and redemption previously had a direct impact on customer and merchant loyalty too. In June, the startup reported that 72% of its customers who purchase offers from its partners become repeat customers of that business and spend an average of nearly $140 above the price of the offer they purchase.
That being said, local deals is a tough market, and Bloomspot had faced layoffs and cuts in recent months. It makes sense that the company would be ready to find a more stable home within a larger organization like Chase.
In terms of what’s coming up next, Chase won’t share its roadmap details, but says integration of the teams and technology will begin right away, after the deal closes in early 2013. Kinder also says that Chase won’t be focused only on daily deals, either. “We tend to think about the offers marketplace much more broadly than daily deals…that’s but one type of offer,” Kinder says. He foresees Chase introducing offers online, on mobile, on statements, on ATMs and more.
Bloomspot had raised $46.1 million in venture funding from InterWest Partners, Columbia Capital, Menlo Ventures,True Ventures, QED Investors, Harrison Metal, Western Technology Investment and individuals such as Erik Blachford (former CEO of Expedia) and Gary Parsons (former Chairman of Sirius XM Radio).