Social gifting startup Boomerang goes antisocial

By Richard Nieva , written on January 24, 2013

From The News Desk

The social gifting market is crowded. Before the big daddy of them all, Facebook Gifts, entered the market, you had services like GiftlyGiftivoGiftdishGifthitGiftSimpleGiftDrop,DropGiftsZiftitLet’s Gift It competing to be your gifting service of choice. Even the sub-category of digital gift cards has become standing room only, thanks to crowding from companies like Boomerang, YouGift and Wrapp.

It seems the only way for a social gifting startup to differentiate itself is to leave social gifting.

The Chicago-based Boomerang is doing just that. The company specializes in small denomination gift cards from well-known and local brands – a $5 gift card to Ghiradelli or a $10 gift card to the City Winery in New York City. The card is delivered with digital flare, similar to what it looks like when you open a Paperless Post.

That service will stay intact, but today, the company launched its big differentiator: a B2B platform. It's a cross between a social gifting service and a marketing program. Boomerang has developed a channel that lets brands give gift cards to their marketing email lists.

For a brand, it’s a bit of a white label version of the social version of Boomerang, but gift card recipients familiar with the service will still recognize the Boomerang presentation. When a customer receives the digital card, he or she is also given the chance to share the card with 10 or so friends on Facebook to receive rewards like another gift.

The company wants to bill the product as “the first social gifting for brands,” says Zachary Smith, the company’s founder and chief executive. But that doesn’t seem all that accurate. Sure, users are incentivized to share on Facebook. But taking away the user-to-user exchange eliminates the core of the social experience. Without that, the service starts to look less innovative and more like what we’ve already seen in the email lists of Web 1.0. For Boomerang, it’s a good way to cut through the noise of the competition, but getting corporate spam is not as fun as getting a gift from your friend.

Still, the spam contains a $10 gift card. Who cares who its from? Smith says emails that a brand sends with Boomerang cards have shown 10 times more engagement than other emails they send out. And compared to other email campaigns, Boomerang's platform increases revenue by 80 percent, he claims.

Thanks to those early results, brands are actually willing to give away gift cards for this engagement. Boomerang's B2B platform has about 20 brand partners already. The company raised $1 million from Lightbank and others in June.

For a startup in the nascent area of social gifting, going the B2B route seems like a big boy move – if only because it leaves that pesky task of wrangling users out until the very end of the process. In fact, when asked what the biggest difference is between Boomerang and Wrapp, Smith points to the new product coming out today. With the Valley economy cooling down on users-first, and revenue-later social media startups going gaga over anything that decides to call itself enterprise tech, Boomerang is attempting to straddle both. Call it hedging your bets -- and this isn't the first time Boomerang has switched gears. The company fled the crowded social travel with its product, Gtrot, pivoting first into a local activities site, then abandoning Gtrot altogether for social gifts, aka Boomerang, in July.

[Image courtesy: cogdogblog]