Saturday, July 20, 2013

The Business strategy behind Gmail's new Inbox interface

You may love it or hate it. But the shareholders of Google will love the new Gmail Inbox interface and the representative aggresssion to garner more ad revenues.

The new Gmail iterface sorts mails in our inbox and shows it in different tabs. The default tabs are Personal, Social and Promotional. I like it. It makes my life easier as I otherwise sifted through mails in a similar manner and priortised personal message over social media notifications and gave the least importance to Promotional mail from sites I had subscribed to.  This classification seems to be working well on my mails too.. unlike a few others who are facing mail bounces and wrong classification issues.

But this simple change reduces the value of database for marketers and their direct mails get sorted in Promotion tab to which users will give the least time. Thus to get access to these users now the advertisers would have to advertise on Gmail even though these users have given the advertisers authorised acces to mail them. This strategy is similar to Facebook's Timeline strategy which reduced the value of Likes for Sponsor's by filtering messages from Sponsor's Pages in the user's Newsfeed through Facebook's Timeline algorithm. Thus the sponsors who earlier paid for ads on Facebook to get Likes now have to again pay Facebook to reach the users who have liked their page  through sponsored posts.

[ More: Facebook squeeze: now Pay and Promote your Posts ]

Google similarly provides an opportunity for advertisisers by initiating ads via mails in the Promotion's tab. These ads are placed at the top to look like regular emails with background color change that diffrentiates it as an ad. When the user clicks on these sponsored ads in the Promotion tab, it opens like a typical email message (like the one above) and includes an option to forward it or dismiss it. If you opt to dismiss the ad, you won’t see it again. However, the only way to opt-out of seeing these new ads in the Promotions tab is to disable the tab itself.

These ads are priced on a CPC model where an advertiser is charged when users click the “teaser” message and opens the ad. Users can click on the ad multiple times, take an action like completing a form, watch an embedded video or click-through to a landing page, forward it, etc., and advertisers are only charged for that initial click. This model might be only at the beta stage, soon there might be a charge per impression when the mail ad is opened and incremental price when the message is clicked.

Google had till date refrained from mail advertising unlike its rivals. But now its growing more agressive and has decided to interfere in the user's experience through these ads. This is a first for Google as far as I know. It represents their hunger for revenues. Will this change of apporach augur well for Google in the long run or will the users loose trust in this 'do no evil' company. Will Google layer its revenue growth strategies through better customer experience or will it push such experiences further? Only time will tell.

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