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Groupon Says Gmail Tabs Hurt Its Business. Are They Hurting Yours?

by Dela Quist  |  
January 15, 2014

Since Gmail announced its new Tabs feature back in July 2013, the marketing industry has been sustaining a long conversation on its potential impact on businesses. (I even wrote a piece on how Gmail was rewriting the rules of email marketing earlier this year.)

Brands tried to combat the Tabs switch by sending out emails pleading with subscribers to move their emails back to the priority box (with some sending details instructions on how to do so), and that seemed like the end of the conversation.
But now, Groupon is actually blaming its recent poor earnings report on Gmail Tabs, saying, "Results were impacted by Q3 seasonality and double-digit declines in email open rates related to the new Gmail promotions app that was rolled out earlier in the quarter." Google's move earlier this month to start hosting and caching all images in emails viewed in Gmail will likely raise additional complaints among daily deal sites, as it means they will no longer be able to use email pixel tracking to geo-target customers.
Given that Groupon blamed its earnings miss on Gmail, other businesses that rely on email may feel the pressure to re-evaluate their reliance on email marketing. Groupon, for example, told analysts it plans to explore other marketing channels to diversify its efforts. That raises the question: Should your brand be doing so, too?

The Trouble With Daily Deals

Back in 2011, daily deal sites like Groupon exploded—with Groupon's IPO becoming the second largest IPO by a US Internet company since Google raised $1.7 billion in 2004. Driven by the immediacy of email marketing, Groupon and other daily deal sites enjoyed the success of a business model essentially built on daily engagement with consumers via email marketing that comes armed with an unrelenting sense of urgency. Both the seller and the buyer are faced with a limited amount of time to complete a sale. If communication around that sale fails to convey that urgency, or in the case of Gmail Tabs, prevent or change the way that communication is received, then some of that required urgency is lost.

For anyone starting to panic that this could happen to their brand too, hit pause. I am actually not surprised that Groupon missed its targets and associated that miss with Gmail Tabs. Is it out of the realm of possibility Gmail Tabs did in fact impact Groupon's bottom line? No. Does this mean every business should begin re-evaluating its email marketing campaigns immediately? Also no, as several brands have also reported no real impact on business since the tabs were implemented. The reality is that the daily deals market is—and should be treated—very differently when email marketing. They have a different business model that most traditional e-commerce or retail companies.

Moving Forward

Some organizations, such as Return Path, have already begun releasing some of their findings on the impact of Gmail Tabs. Some of the most interesting findings suggest that so far, the impact really has been minimal. Most users left the new configurations on the default setting—with tabs for Priority, Promotions, Social, and Updates. Overall read rates remained pretty much the same, and little got rerouted into spam. So we know one thing for sure, those campaigns pleading for your brand to make it into the Priority inbox were unheard—and that's okay. If that remains the case for most brands, email marketers can worry less about fighting a war with Gmail Tabs and more about creatively and effectively reaching customers regardless of which inbox it ends up in.

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Dela Quist is CEO of Alchemy Worx, digital marketing agency dedicatedsolely to email. With offices in Atlanta and London, Alchemy Worx has a diverse client portfolio that includes Getty Images, Hilton, and Sony Playstation.

Twitter: @DelaQuist

LinkedIn: Dela Quist

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  • by James R. Halloran Thu Jan 16, 2014 via web

    Great post, Dela!

    I think Groupon and other daily deal sites like them are the reasons behind Gmail's move to instill its new Tab features in the first place. I also think you're right about Groupon's under-performance having more to do with its inability to adapt to the changes online than from Gmail's tabs.

    Much like everything else in the internet world (especially SEO and marketing), if you fail to adapt with the changes, you best be sure to fail in the future.

    Thanks for the great article! You inspired me to write a post based off this topic.

  • by Dana Tue Mar 25, 2014 via web

    We have found that almost if not all our our emails going to a Gmail account are bouncing back. (these are current and past customers). Ww would appreciate any suggestions!

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