Tuesday, June 21, 2011

Google's Anti-Competitive Strategy for Offers

While all eyes are on Groupon and its forthcoming IPO, Google is quietly pulling a fast one on everyone in the daily deals space.

Taking a page out of Microsoft's playbook, Google is using it's dominance in webmail to push its new daily deal service, Offers.  Here's how:

Google Offers, like the rest of the daily deal providers, relies on email as the primary means of reaching prospective customers.  If you're not one of the nearly 200 million Gmail users, or you don't have Gmail's Priority Inbox enabled, every daily deal comes in on equal footing - each is just another email swarming your inbox, enticing you to buy steep discounts on local businesses.  

For Gmail users with Priority Inbox enabled, you may start to notice that Google Offers emails are prioritized as 'Important' and placed at the top of your inbox, while other daily deal emails (such as Groupon and LivingSocial) are categorized as 'Unimportant' and relegated to the bottom pane of your inbox.

This gives Google Offers an unfair competitive advantage in acquiring email opens and conversions (see screenshots below)

According to Google, Priority Inbox works by using "a variety of signals to identify important email, including which messages you open and which you reply to."  I first noticed this phenomenon in my personal email, where I've opened and forwarded many different daily deal emails.  To show that Google was truly treating Offers emails differently than other daily deals, I needed to create a new Gmail account with no signal history of what I consider to be important or unimportant email.  

Here's what I did, which anyone can replicate to see the same effect.  I don't know if this is intentional or a bug, but Gmail is clearly giving preference to Offers.  

1.  I signed up for a new Gmail account at gmail.com 

2. I activated Priority Inbox under 'Mail Settings' -> 'Priority Inbox.'  You'll notice that as of 6/21, 'Important Markers' are now enabled by default, so Gmail may actually be favoring Google Offers for all of its users.  

3.  I signed up for a sampling of daily deal subscriptions.  My sampling included Groupon, LivingSocial, Yipit, HomeRun, Scoutmob, Tippr, and Google Offers (Portland is the only city currently emailing offers).

4.  I didn't open any of the resulting subscription confirmation emails.  Since Priority Inbox sorts emails based on your reading/replying history, I didn't want to give Priority Inbox any additional information about which daily deals emails to prioritize the next day.  

5.  I waited until the next morning for the slew of daily deal emails to come in.

6.  There you have it.  Observe below that the Google Offers email shows up at the top in the 'Important and Unread' section, while every other daily deal shows up below in the 'Everything Else' section.