Google Says Gmail's For Real

As it turns out, Google Gmail is not the big April Fool's joke everyone thought it was. It could, if it catches on, become a decent source of ad revenue for the Mountain View, Calif. company.

Google boasts that Gmail offers 1,000 megabytes of email storage. Best of all, Google is offering consumers Gmail for free. Most Internet Service Providers and portals offer less storage--Yahoo!, for example, offers 6 MB of free space.

Google will support the new email service with AdWords, the same contextual advertising program it deploys on its search engine and publisher sites. "When users sign up," notes Salar Kamangar, director, product management, Google, "they have to sign an agreement stating they are willing to accept ads."

Google says Gmail users won't be receiving intrusive pop-ups or page- stealing rich media productions, but only text ads, which will appear along the sides of pages as they currently do on the Google search engine. Ads will be served based on email message content. An automated program crawls the content of a sender's message and then serves the appropriate ads based on keywords that advertisers bid on. Advertisers will not have to pay extra to market on Gmail; their keyword buys will include the new email service.

Gary Stein, senior analyst for Jupiter Research, believes the Gmail proposition is a good one for advertisers: "It's a great move viewed from an advertiser point of view, because [the email ad format] incorporates a massive inventory, and an inventory that is already of a very high value." Stein also notes that from a consumer perspective, "text ads are easier to ignore if you want."

The litmus test, Stein says, is whether consumers like the fact that ads are being based on the content of their messages. Stein says that even though consumers know an automated program is serving the ads, it may feel intrusive.

Ad placement will also be "completely family-safe," Google's Kamangar notes, meaning that any messages that deal with personal subjects or subjects deemed inappropriate by the automated program will be filtered out, and no related ads will be served.

Google claims that its foray into email was prompted by user complaints that their email was too slow, difficult to organize and sort, and didn't include enough storage. Google believes it has come up with an answer to these problems, but will it be able to attract defectors from Microsoft Corp.'s Hotmail, and email services offered by America Online and Yahoo!?

"Yeah, I think they will," says Stein. "They got the buzz factor, they got the Google brand name, but especially because they offer free space that all their competitors charge for."

Separately, Google also introduced a new AdWords program on Thursday called Smart Pricing, which essentially guarantees advertisers that all bid-winning search terms will be priced according to the likelihood of conversion. "By looking at the value of clicks generated, we now identify the clicks based on their likelihood to lead to a conversion," Kamangar says. For example, a query for "photograph tips" that is less likely to return a sale to a bidder who placed an ad selling digital cameras would be charged less for the ad. Google declined to specify just how much less.

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