For Gannett Co.âs foray into the mobile consumer loyalty market, the media conglomerate chose a Dallas-based startup whose Key Ring app has been downloaded by more than 5 million users.
In a deal announced Thursday, Gannett acquired Mobestream Media, the appâs developer, for an undisclosed price.
The acquisition will allow Mobestream to expand with the financial and nationwide marketing support of Gannett, whose media holdings include 82 newspapers, 23 TV stations and merchant marketing sites like ShopLocal.
Mobestreamâs free Key Ring app allows consumers to manage their loyalty accounts for grocery stores and retailers like CVS and Best Buy as well as get mobile coupons and promotions on their smartphones.
The seven-person startup will operate as a stand-alone business in Dallas.
âThis is a phenomenal opportunity for us,â Chris Fagan, Mobestreamâs chief executive, said in an interview. âWeâve had considerable traction from a consumer perspective. We really understand the heartbeat of what mobile consumers want in a mobile shopping environment. What we need is access to additional content and consumers.â
For Gannett, Key Ring adds another asset in its efforts to become a âone-stop shopâ for online marketing solutions ranging from websites to digital coupons to social marketing, said Vikram Sharma, president and chief executive of Gannettâs Digital Marketing Services.
Last month, for instance, Gannett acquired social media marketing company BLiNQ Media.
Sharma said he expects Mobestream to add employees, expand product capabilities and increase marketing prowess to create greater brand awareness of Key Ring.
Sharma and Fagan met a year ago and began discussing how the two companies would fit together.
Sharma said he was impressed with how Faganâs small team was able to build traction with little marketing. Fagan will report to Sharma.
âTheyâve created a consumer base thatâs really exciting,â said Sharma, noting that Key Ring has 1.7 million active users.
Fagan, a former Accenture technology employee, began developing Key Ring in December 2008.
He and co-founder Ross Bates joined the 2010 inaugural class of Tech Wildcatters, a Dallas business accelerator designed to help entrepreneurs nurture their ideas.
A total of 26 startups have graduated from the program that provides up to $25,000 in seed money, mentoring, business support and opportunities to meet investors. In exchange, Tech Wildcatters takes up to 10 percent equity in each company.
Typically, Tech Wildcatters has taken a 6 percent stake in each company, said co-founder Gabriella Draney.
The deal with Mobestream, the first Tech Wildcatters startup to be acquired, means the program will get a return on its investment.
âOne of the reasons we started this was to help and enable entrepreneurs to get to this point faster, easier, better and bigger,â Draney said. âSo to see them reach that, itâs exciting.â
Venture capital firm Austin Ventures was also an early investor in Mobestream.