Google looks to increase engagement by opening Gmail to developers

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Jul. 1 2014, Published 12:00 p.m. ET

Google opens up its Gmail platform for developers to improve user reach

During the recent I/O developer conference in San Francisco, Google (GOOGL) announced that it will open Gmail up as a platform for developers to develop applications. These applications will benefit users, as the apps will arrange their inbox better and also act as a reminder for important notifications. Google’s latest efforts come as the company looks to increase users’ reach and engagement with Gmail.

Gmail’s reach well below Facebook’s among smartphone apps in the U.S.

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According to a report from Comscore and as the above chart shows, even though email has become an essential element in people’s lives, Gmail’s audience reach is below Facebook’s (FB) and Pandora’s (P) on smartphones in the U.S. The Facebook app’s reach on smartphones in the U.S. is about 74% and is way higher than Gmail’s, at 41.6%. Although Google’s other platforms, such as Google Play, YouTube, and Google Search, fare better than Gmail, they’re nonetheless still behind Facebook.

Google’s main revenue source is search advertising rather than display advertising

Although improvement in Gmail’s reach and engagement would help Google earn more display advertising revenues, Google’s main source of revenue is search advertising revenues. Google is an undisputed market leader in the search advertising market on both PC and mobile platforms. Mobile is becoming an important platform for the Internet industry, and according to eMarketer, U.S. mobile search ad spending was about 25% of overall digital search ad spending in 2013, but it could increase to more than 50% by 2015 and then to about 86% by 2018.

Smartphone search apps are the main threat to Google’s search business on mobile

The main threat to Google on mobile comes from other search apps specifically designed for smartphones. According to the same report from eMarketer, Google’s share of mobile search ad spending could decline from 82.8% in 2012 to 65.7% in 2014 as mobile apps become an increasingly important way to search for information. The report also mentioned that other mobile apps, such as Microsoft (MSFT) Bing, Yahoo (YHOO), Amazon (AMZN), KAYAK, Indeed, and Shazam, are increasingly popular search options. This is why Google is losing share in the mobile search market.

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