A Blog by Jonathan Low


May 14, 2016

Whoever Owns the Platform Makes the Rules: Will Gmail Go Algorithmic?

Email has lost its cachet - but not its power. The question for those who own such platforms and the brands trying to figure out how to reach increasingly elusive consumers - more by the volume of the messages they are receiving than by intent and craft - is how to mobilize the mobile feed via whatever channels and platforms they can to break through.

Consumers, meanwhile, in the co-evolutionary nature of such developments, will attempt to maintain some semblance of control via ad-blocking and feed choice - but it will be a constant, losing battle given the financial stakes for tech and business interests. JL

Neal Romangnolo reports in Venture Beat:

80 percent of promotional emails go unopened.For Internet retailers, who generate up to 60 percent of revenue from email, this change could be especially problematic.
As Twitter and Instagram embrace the trend of social networks that are introducing algorithmic feeds, is it only a matter of time before the promotions feed within Gmail follows suit?
Based on the paid/earned/owned media framework, email has historically been classified as “owned media,” along with a brand’s website, blog, and social media pages. Facebook has quickly become a “paid” channel, as brands have watched organic reach plummet from 16 percent to approximately 2 percent. Charting this decline against the growth in Facebook’s market cap since its IPO in May 2012, it’s clear that the two are inextricably linked.
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Brands own email lists; Google owns the platform and makes the rules

In May 2013, Gmail introduced a tab that segments promotional emails into a separate folder. This new promotions tab saw its first native email ads a few months later, in July 2013.
In December 2013, Gmail introduced image caching, restricting marketers’ ability to segment by location. Then, in February 2014, Gmail made another “UX improvement,” this time in the form of an unsubscribe link within email headers. By September 2015, Gmail allowed users to block senders, with any future emails from a blocked sender marked as spam.
Meanwhile, after two years of testing, native Gmail ads (email marketing without emails) were also made available to all Adwords marketers (in September 2015).
As is typical of black swan events, Facebook’s transition from owned to paid now seems predictable, especially since brands started heavily investing to establish their presence on social media a short time ago.
The takeaway is that whoever owns the platform makes the rules, and these rules can change with little to no warning.
But while this notion is now widely accepted for social platforms, it is not so commonly understood for email platforms — even as Gmail continues to make changes under the very same premise as social, in the guise of creating a better user experience.
So let’s think for a second — what would happen if Gmail promotions became algorithmic?
Would it lead to a mass exodus of Gmail users or would it actually provide a “better user experience”?
To answer this, we need to consider whether the average person actually cares about the order in which they receive promotional email.
With 80 percent of promotional emails going unopened, the likely answer is that they don’t.
Consider this March 15 post from the Instagram blog:
You may be surprised to learn that people miss on average 70 percent of their feeds. To Improve your experience, your feed will soon be ordered to show the moments we believe you will care about the most.
Would it really come as a shock to see a similar post on the Gmail blog someday?

Stakes couldn’t be higher

On its Q4 2015 earnings call in February, Google announced that Gmail had become its seventh platform to reach more than 1 billion monthly active users.
Email marketing is the godfather of native advertising, and native advertising is projected to reach $21 billion by 2018. Few are better positioned to capitalize on this than Gmail, and, as a public company, Google has a fiduciary responsibility to do so.
Part of what’s made Google so special is not just that it knows how to generate revenue, it’s that the company knows how to generate revenue while continuously improving user experience. From the first web search toolbars to perfecting the cost-per-click (CPC) model, Google has consistently put the user first, proving that optimizing for experience and building revenue can go hand in hand.
While we can’t say what an algorithmic promotions feed would do to email marketing, what’s happened with algorithmic feeds on social platforms provides a compelling case study. For Internet retailers, who generate up to 60 percent of revenue from email, this change could be especially problematic, as Wayfair recently acknowledged in its public filings:
Our business is highly dependent on email. These messages are an important part of our customer experience and help generate a substantial portion of our net revenue. In 2013 Google Inc.’s Gmail service began offering a feature that organizes incoming emails into categories (primary, social and promotions). Actions by third parties to block, impose restrictions on or charge for the delivery of emails or other messages could adversely impact our business.
The question isn’t whether brands are cognizant of this challenge, it’s what they are doing to mitigate the risk.

What brands can do

Brands need to implement strategies that solidify customer relationships within the channel — and they need to do it now.
To calculate the risk, they’ll need to assess the status of their relationships in the inbox. Brands with high subscriber-experience ratings are less susceptible to platform changes because the overwhelming majority of their subscribers are advocates who want to receive their emails.
In the Welcome to the Human Era report, the marketing agency Hill Holliday explains that meaningful relationships can’t be formed in one direction — they require reciprocation. Brands must start by taking their email marketing beyond the me-too push of native advertising, where there is little to distinguish whether an ad is coming from a particular brand or from that brand’s competitor, via Google.
By creating subscriber-driven email programs that prioritize the customer experience, brands can transform their email subscribers into their biggest advocates and mitigate the risk created by Google’s ongoing efforts to improve the email experience.
As Marketo noted when Gmail introduced tabs, brands should be thinking of their email marketing in terms of relationship building, and all relationships are built around trust. While email 1.0 was product-focused, email 2.0 is people-focused, coming at a time when brands that are truly committed to building open and honest relationships through communication will be the biggest winners.


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