The Cash Cow You Probably Didn’t Know Google Was Milking

By Tad Miller | May 6, 2010
More Articles by Tad


It was recently reported that their are 170 million Gmail users worldwide. Google provides Gmail accounts for free and offers up to 4 Gigabytes of storage for those free email accounts. It’s a great public service that Google is providing, but don’t think that they are just losing fortune in data storage just to be nice or for the public good. Google makes money off PPC advertising on Gmail pages.

But It has been speculated that Google hasn’t made much off of it’s Gmail advertising, in fact Seeking Alpha has speculated that YouTube is worth 10 times more to the value of Google’s stock than Gmail based on revenue per page. But Google recently made a change, one that they didn’t really give a ton of notice to advertisers about, to the way they serve up Google Content Network ads on Gmail.

It used to be that Gmail only showed ads that were contextually triggered by the content of the e-mail a Gmail user was currently reading. This is the way all Google Content Network advertising works – it’s contextually targeted based on the on page content shown on the page. This is what makes your advertising relevant and targeted.

On January 20, 2010 Google changed the way it served Gmail ads and can now serve them to Gmail users, based on any of up to 100 different emails (on the same list page of e-mails) received or sent and in the mail box of the Gmail user. That e-mail can be days or weeks old and long forgotten by the Gmail user and it doesn’t matter, Google can serve your ad based on that old e-mail even if users are reading a totally unrelated e-mail at the time.

This is a major change, and it has had a major impact on our clients Content Network Performance and a major impact on our clients Google Content Network spending on Gmail ads. The before and after comparisons for the first 100 days with this change versus the previous 100 days before the change are staggering:

  • Spend on Content Network ads on Gmail increased 156%
  • Clicks on Content Network ads on Gmail increased 157%
  • Impressions on Content Network ads on Gmail increased 131%
  • Gmail went from 8.7% of our total Content Network spend before the change to 23.7% after the change
  • Gmail went from 6.6% of our total Content Network clicks before the change to 17.8% after the change
  • Gmail went from 13.8% of our total Content Network impressions before the change to 29% after the change

I definitely noticed a change in our clients Content Network conversion rates – some went bad and stayed bad on Gmail.  Before the change, which I wasn’t even aware had happened, we had pretty decent conversion rates from G-mail, we would have a bad week every once in a while, but never had sustained bad performance.

After doing a little research I found this Gmail Help page for Gmail users (http://mail.google.com/support/bin/answer.py?hl=en&answer=6603 ) – I didn’t find anything about it in Adwords Help.  Google says:

But sometimes, the ads related to a particular message aren’t good enough. Rather than show less relevant ads, Gmail can now instantaneously serve ads based on another recent message on the same page of your inbox, helping make the ads more relevant to you. For example, if your friend sends you a message to say happy birthday, but there aren’t any good ads to show related to birthdays, you might see ads related to another message in your inbox instead — like flights to Chicago.

  • The impact of E-mail marketing on your Content Network PPC can be huge.  If your company sends out an e-mail blast, it could potentially be triggering Content Network ads for weeks on Gmail.
  • Some People use Gmail everyday.  They usually don’t revisit the same exact content that triggers your Content Network ads on a daily basis.  If your ad performs poorly from the start, it could likely keep performing poorly for weeks.  You might have to exclude G-mail from showing your ads if it doesn’t work well to avoid spending all your budget – or try placement targeting to Gmail with much lower bids.
  • It’s likely that the most expensive Cost Per Click keywords in a persons Gmail account could trigger the most ads (even if the email triggering the ad was received weeks ago).
  • Contextual relevance on Gmail to your ads is potentially meaningless.  The value of Content Network is that the ad is relevant to the content on the page.  That isn’t happening anymore and Google isn’t charging you less money to show your ad next to a contextually irrelevant e-mail.

I personally think this is just a simple revenue grab by Google, and has little to do with helping the advertisers achieve success with their advertising.  But you need to treat it just like any form of PPC advertising, if you don’t get the conversion results you are seeking from it you need to lower the cost per click bid on it or exclude it from showing ads.

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