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Questionable investment: RetailMeNot spends $4.3 million for new domain names

Company has common investor with new top level domain company Donuts.

Struggling Austin internet company RetailMeNot spent $4.3 million to acquire second level domain names under a new top level domain name, an SEC filing revealed. The purchase was first reported by George Kirikos, and OnlineDomain wrote about it earlier today.

While the SEC filing doesn’t disclose the top level domain or registry, it almost certainly is Donuts. The common denominator is Austin Ventures, which backed both RetailMeNot and Donuts.

As I’ve opined before, Austin Ventures is most likely the reason RetailMeNot forked out money for Donuts’ previous .codes domain names.

This seems like an awful lot of money to spend on these domains, especially in light of the lukewarm reception of new top level domain names. That might be the kicker: the agreement was entered into before new top level domain names started rolling out on the market.

RetailMeNot has struggled with changes in Google’s search algorithm. It needs a way to attract traffic from more diversified sources, but I’m not sure using all of these domains will pay off. I’d be wary of this deal and the venture capital connection if I were a RetailMeNot investor.

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  1. Andrea Paladini says

    Agree with you Andrew, there’s a big conflict of interest here, you see that the deal is classified among Related Party Transactions …
    It’s a shame that RetailMeNot, already struggling (just check their poor results …), wasted 4.3 mln USD in a junk new gTLD to please their financial backers, while at the same time cutting 10% of US headcount …

    P.S. There is a typo in your article, I think you mean “The common denominator is Austin Ventures, which backed both RetailMeNot and Donuts.”

  2. Robbie says

    Many of their names are premium, so I guess they may have priced in a set number of years of paying crazy renewals.

    • Richard Funden says

      Still hoping that the registries will realize their renewal schemes do not work in the real world and switch to a more normal policy.

  3. couponpages says

    As I commented on the original post, buying nearly 1000 .codes domains at early registration seemed pointless. Were they hoping to sell them, or use them?

    They haven’t used them yet as far as I know, so what was the point? Selling them in the aftermarket won’t be easy. A lot of them like 2014couponcodes.code were pure junk.

  4. Joseph Peterson says

    It’s almost as if Austin Ventures were using RetailMeNot’s budget as a slush fund for Donuts’s ICANN bidding.

    We can only speculate about whether RetailMeNot seriously expected to use all those dubious .CODES domain for marketing purposes or imagined that stockpiling them was a good defensive measure. We can imagine Austin Ventures cajoling or coercing RetailMeNot into the purchase, just as we can imagine RetailMeNot wooing Austin Ventures with the $4.3 million nTLD bouquet.

    I’ve only seen a partial list of what they bought, but it included a fair share of junk. The sad thing is, Donuts has better domains that would have been more relevant to RetailMeNot.

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