SOURCE: bloomspot

August 09, 2011 05:00 ET

bloomspot Unveils Groundbreaking Performance-Based Model for Local Marketing

Closes $40 Million in Capital to Continue to Scale Innovative New Model

SAN FRANCISCO, CA--(Marketwire - Aug 9, 2011) - bloomspot (www.bloomspot.com), a leading online offer platform for customers seeking to discover their next local favorite, today unveiled a performance-based business model that takes responsibility for the profitability of its merchant partners. The company is closing the redemption loop by delivering complete transparency around consumer spend and return, and now guarantees profitable spending levels from bloomspot customers. In doing so, bloomspot is addressing the sustainability of the existing daily deal model, which charges merchants regardless of consumer spend or return, and is thereby enabling an increasing number of high-quality merchants to provide compelling offers to consumers.

The platform's growing success is supported by the closing of $35 million in series B financing, co-led by InterWest Partners and Columbia Capital. Also participating in this round are Menlo Ventures, True Ventures, QED Investors and Harrison Metal, as well as individuals including Erik Blachford, Chairman of Butterfield & Robinson and former CEO of Expedia Inc., and Gary Parsons, former Chairman of Sirius XM Radio. Additionally, the company has closed $5 million of venture debt from Western Technology Investment.

Until now, the ability to deliver truly profitable, measurable relationships between merchants and customers has been elusive in the local marketing space. Recognizing the problem, bloomspot has integrated its product -- with consumer and merchant permission -- into the credit card experience, rewarding patrons for their spend and return levels and providing customer spending and repeat visit information to merchants. As a result, merchants are able to benefit from:

  • Guarantees: bloomspot leverages proprietary algorithms to predict consumer spend and return levels for qualified merchants with each promotion. This capability allows the platform to underwrite the profitability of specific offers in the form of guaranteed spend and return rates, thereby creating true alignment between bloomspot's business model and the interests of its merchant partners.
  • Transparency: bloomspot provides complete visibility of customer visits and in-store credit card transactions, allowing merchants to evaluate an offer's profitability and success. In conjunction with today's announcement, the platform has released a sample of anonymized merchant offer results, which give merchants the opportunity to assess the profitability of their marketing expenditures. This critical visibility serves to address merchants' desire for transparency around the value of local offers for their businesses.
  • Private Offers: Detailed information about customer transactions allows bloomspot to make private offers available exclusively to the highest value patrons. Contrary to group buying models that send deals to mass subscriber bases, bloomspot's new model enables the platform to provide the best offers only to the patrons that consistently generate the greatest profitability for merchants.

bloomspot has filed for patents around each of these innovations.

"Much as we saw the credit card business was ripe for reinvention in the early 90's, we believe the local marketing sector will undergo waves of disruption," said Nigel Morris, Managing Partner of QED Investors and co-founder of Capital One Financial.

"Our focus is to establish a new model based on merchant profitability and rewarding the best local customers," said Jasper Malcolmson, co-founder and CEO of bloomspot. "We're recreating the experience of a great customer that receives special recognition from a local merchant because of his or her superior patronage."

"bloomspot's innovative offering ensures that we do not lose money on each voucher redeemed, a huge concern for most businesses when participating in programs like this," said Steve Chen, owner of 5a5 Steak Lounge in San Francisco. "Equally important, bloomspot brings the clientele that our restaurant seeks to have as frequent patrons."

With a team comprised of former Yahoo! and eBay executives, along with individual investors, including Erik Blachford, Chairman of Butterfield & Robinson and former CEO of Expedia Inc.; Gary Parsons, former Chairman of Sirius XM Radio; and Brad Garlinghouse, President at AOL, Consumer Applications Group, bloomspot has a group of executives and advisors with considerable expertise in innovating solutions that benefit both merchants and consumers.

"Our investment represents our belief in bloomspot's ability to close the loop in the local offers space," said Doug Pepper, Partner at InterWest Partners. "We believe that a performance-based model focused on merchant profitability and customer satisfaction is the next step for this industry."

"We believe that mature industries gravitate towards rewarding the most profitable consumers with the best offering," said Arun Gupta, Partner at Columbia Capital. "We've seen this evolution in industries such as credit cards, airlines and insurance, and we believe that in the local offers space, the greatest customers should be rewarded with the highest quality offers."

About bloomspot
bloomspot is the leader in bringing the performance-based offer model to local merchants and providing a platform for customers who seek to discover their next local favorite. The company gives merchants critical visibility into customer behavior and ensures merchant profitability around each promotion. As a result, bloomspot delivers lasting value to its premiere member base by procuring the best quality offers and rewarding patrons who demonstrate ongoing loyalty to local businesses.

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