Marketing

Is the New Gmail Killing E-mail Marketing?


Is the New Gmail Killing E-mail Marketing?

Photograph by Getty Images

For Gmail users overwhelmed by inbox clutter, the great Gmail redesign of 2013 may have been just the thing, hiding promotional e-mails and social network updates behind tabs. The companies sending those promotional e-mails, on the other hand, are less than thrilled with the change.

Afraid the “promotions” tab is functionally a black hole, a number of companies from Gilt Groupe to Groupon (GRPN) have been encouraging e-mail contacts to route their messages back into their personal inbox—an easy step accomplished by simply dragging an e-mail from the “promotions” tab and dropping it in the “primary” tab. Other companies are more passively anxious. “We’re definitely hearing about it from our members,” says Artemis Berry, a vice president at Shop.org, the digital arm of the National Retail Federation.

The change may not be as bad as they fear. Yesmail, a marketing company that delivers about 40 billion e-mails a year for companies such as EBay (EBAY) and Hewlett-Packard (HPQ), says the share of marketing e-mails that were opened—a metric that traditionally ranges from 0 to about 25 percent—has dropped by less than 1 percent.

“With what we’re seeing right now, it’s not a game changer,” says Jason Warnock, vice president of market intelligence at Yesmail. “But you’re really going to need to wait it out in the next 60 days.”

A Google (GOOG) spokeswoman says the new inbox was designed to help users organize their mail; happy users are good for Google. Here’s what else is good for Google: more advertising. And while sending out 500,000 e-mail promotions is more or less free, the other options for reaching Gmail users—namely, buying adjacent ads—are not. If the new format drives just a fraction of companies to take that step, the returns could be handsome for Google.

At the same time, the search giant has created a new ad format. It’s adding as many as two paid ads at the top of each inbox of promotional messages. The ads look like e-mails, act like e-mails, and can be deleted like e-mails (though they will eventually regenerate).

The Gmail redesign may not even be the worst thing to happen to e-mail marketers this year. There’s a more troubling trend: Almost half of all e-mail is now opened on a smartphone, according to Yesmail. But when marketing messages are opened on a mobile phone, the reader takes action—buys something, clicks through, whatever—about half as often as when the message is opened on a desktop.

 

Kyle-stock-190
Stock is an associate editor for Businessweek.com. Twitter: @kylestock

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Companies Mentioned

  • GRPN
    (Groupon Inc)
    • $6.68 USD
    • 0.01
    • 0.15%
  • EBAY
    (eBay Inc)
    • $56.63 USD
    • 3.97
    • 7.01%
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