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Stephen Logan

Could Facebook Email Service Impact Search Revenue?

15th Nov 2010 Social Media, Facebook, News, Industry News 3 minutes to read

Internet providers and search engines have always maintained a healthy majority in the email account stakes. In fact, this is one of the few areas that Yahoo has maintained a competitive edge despite deteriorating search figures. But it looks like Facebook is preparing to pull that particular rug out from beneath the old guard by introducing its own email service.

Facebook look set to introduce its own integrated email service later this evening at a specially convened press conference. Or at least that’s what the rumours suggest. If this is true, what might it mean for those currently providing email services?

Microsoft Hotmail currently leads the way in the Webmail stakes. Their Hotmail service has a reported 400 million users; that’s 100 million more than Yahoo and more than double Google’s Gmail according to figures on PC World [see: Facebook Mail: 5 Questions About the Rumored Service]. But Facebook could possibly dwarf these all, thanks to the 500 million active users already at its disposal.

So why should Microsoft, Yahoo and Google be worried about the imminent arrival of Facebook Mail?

Well, the big issue is the user numbers. The ability to retain current users and the signing up of new ones could be severely impacted by a major new competitor. With all Webmail sites featuring advertising of some description, dwindling visitor numbers could see a rapid decline in their revenue streams.

Fewer Users = Fewer Ad Impressions = Reduced Ad Revenue

The email services provided by search engines are also a major part of their initial attraction. For example, I might never go out of my way to search using Yahoo; however, I might check my Yahoo Mail, then move to their news section before finally performing a search just out of convenience. If a second Webmail provider then became my primary email account, the likelihood is that I wouldn’t return to Yahoo as often – if at all.

Therefore the issue of losing a few customers might not be immediately concerning, but the knock on effects – particularly for YaBing – could be significant. Fewer impressions on those all-important display ads will hurt in the short-term. The loss of regular visitors could be far more damaging in the long run.

Issues Facing Facebook

But this apocalyptic scenario for the more webmail dependent search engines may never come to fruition. Firstly, we don’t know for sure what the service will be. Secondly, we can’t predict what the uptake will be for a Facebook-based email service would be.

The very public privacy issues surrounding won’t be doing much to convince some members that they are the company to be trusted with all their online communications. Plus they already have a messaging service that you can use between friends, which will serve a similar purpose for most.

Users who have had a Hotmail or Gmail account for the last x number of years won’t necessarily want to switch. Why would they abandon an email address that all their friends, family and other contacts know?

The issue for search engines is simply one of competition. Yahoo, Bing and Google want you to spend as much time on their sites and use as many services of theirs as is possible. This not only keeps you coming back to perform searches, but ensures you see as many of their display ads as is humanly possible. The more encroachment there is on this domination, from social or search rivals, the more their dominance is diluted.

Facebook Mail might be a storm in a teacup, but it will certainly be something to watch out for. Could this dent search engine traffic, will it reduce revenue? Only time will tell.

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