In a deal finalized on December 6, Groupon acquired Lightbank-backed social gifting startup Boomerang for an undisclosed amount. According to CEO Zach Smith, he and his team will be absorbed to work on Groupon Freebies, a new feature that the company introduced in late November.
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Smith (left) and his team were responsible for the back-end and business development of Freebies, a service that moves Groupon firmly into the coupon and sampling business. It’s a natural fit for Smith’s team, who built Boomerang through partnerships with hundreds of advertisers, including the likes of Gap and Barnes & Noble. These relationships resulted in millions of dollars in incremental sales, according to Smith.
“We'll be shutting down Boomerang at the end of this month in order to focus on Groupon Freebies, which is bittersweet but necessary,” Smith said. “Mostly, I'm excited about the future of Groupon Freebies and the technology we're developing, especially the mobile experience.”
Founded in January 2012, Boomerang allowed friends and brands to send virtual gift cards. For individuals, connecting to the platform via Facebook made sending gifts easily, whereas brands got the opportunity to send followers coupons instead of discounts. “Groupon sees this area as an obvious extension of their current offering and a huge market opportunity,” Smith said.
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Looking ahead, Smith says he and his team will be focused on pushing Freebies to the next level. That involves creating a mobile experience that ties to in-store coupons and negotiating exclusive coupon deals for Groupon customers from top brands.
Although acquisition wasn’t quite on Boomerang’s radar yet, when the Groupon offer came around, it was too good to pass up. “We looked at our options and realized there was a very special opportunity at Groupon,” Smith said, especially considering the brand’s existing reputation, audience and relationships. To Smith, the most important thing was keeping his team intact, and being able to do so made the decision easier.
All in all, the transition from being funded by Lightbank — which was founded by Groupon CEO Erik Lefkofsky and co-founder Brad Keywell — to being owned by its star company should be a natural one for Boomerang. Smith believes that, too. He said, “Through this acquisition, we're able to take our expertise and relationships to a global platform that has both immense scale and unlocked potential. It's an exciting next step for us.”
