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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Do you think Google's new Gmail feature will affect online companies? Use the list below as a starting point for your own analysis. 

1. Groupon, Inc. ( GRPN): Operates as a local commerce marketplace that connects merchants to consumers by offering goods and services at a discount in North America and internationally. Market cap at $6.29B, most recent closing price at $9.50.
 

2. priceline.com Incorporated ( PCLN ): Operates as an online travel company. Market cap at $47.37B, most recent closing price at $933.13.

 

3. eBay Inc. ( EBAY ): Provides online marketplaces for the sale of goods and services, as well as other online commerce, platforms, and online payment solutions to individuals and businesses in the United States and internationally. Market cap at $67.53B, most recent closing price at $52.07.

 

4. Google Inc. ( GOOG ): The world's most popular search engine. Market cap at $287.81B, most recent closing price at $865.65.

 

5. IAC/InterActiveCorp. ( IACI ): Engages in the Internet business in the United States and internationally. Market cap at $4.19B, most recent closing price at $50.15.

 

 

( List compiled by James Dennin, Kapitall writer. Analyst ratings sourced from Zacks Investment Research, all other data sourced from Finviz. )

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