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The Business Of Spam: Google Complicates Email Marketing

James Dennin, Kapitall: Everyone has to eat. But I have a hard time feeling sorry for the online companies  complaining about the new Gmail format from Google (GOOG), specifically the site's new spam features. The problem? They work. The new function pre-sorts your emails as they come in, with helpful tabs to automatically distinguish which are personal, which are promotional, and which came from social media sites. The companies' concern is that with so many of their precious emails automatically siphoned off, who will actually read them?

Some websites, especially Groupon (GRPN), rely heavily on email marketing to match online consumers with local suppliers. These companies are now scrambling to get their customers to manually reset privacy controls, so that promotional emails from still go through.

[More from Kapitall Wire: Is It Time To Sell Groupon?]

Software for sending mass-emails is widely available, and providers make it easy to gauge what works. These companies point to their own numbers, which show that the new inbox feature has dented the amount of clicks an email gets by maybe 1%. However,  Businessweek suggests that Google is up to something even more sinister.

By rendering traditional email marketing obsolete, Google is in effect putting companies on the fast track to update digital advertising methods. Remember that Google doesn't collect revenue from the number of emails that it processes, but rather through advertising. If online companies are having trouble garnering actual views for certain pages, they may resort to making direct appeals through the inboxes themselves, or other online outlets where they know their messages are getting through to the right kinds of people. 

My only question is: who on earth could help them with that?

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