November 15, 2010, 4:20 PM

Facebook’s new messaging service could deliver bad news to retailers

E-mail open rates could fall, unless retailers buddy up to Facebook users, experts say.

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Facebook Inc. today announced plans to slowly roll out a new messaging system called Facebook Messages that melds text messages, instant messaging and e-mail. The service could make it more difficult for retailers to reach consumers via e-mail, experts say.

The initial, by-invitation rollout of Facebook Messages begins today. As part of the offering Facebook eventually will provide an @facebook.com e-mail address to every person on Facebook who wants one.

What distinguishes Facebook’s approach to Google Inc.’s Gmail and other web-based e-mail services is that messages will not have traditional subject lines, nor will users be able to carbon copy or blind carbon copy other subscribers. The offering will also organize messages by connection so that every text message, chat transcript and e-mail message from one user to another is grouped together as part of the same conversation.

“I’m intensely jealous of the next generation who will have something like Facebook for their whole lives,” wrote Joel Seligstein, a Facebook engineer on the social network’s blog. “They will have the conversational history with the people in their lives all the way back to the beginning: From ‘hey nice to meet you’ to ‘do you want to get coffee sometime’ to ‘our kids have soccer practice at 6 pm tonight.’ That's a really cool idea.”

If a user receives a message while he is online, that message will be delivered as a chat. Like chat, consumers will be able to reply to a message by clicking Enter on the keyboard.

While Facebook says its service is not intended to replace e-mail, it could pose a challenge for retailers’ e-mail marketing programs, say experts. That’s because the Facebook service has two main messaging folders and the main folder will only contain communications from Facebook friends or friends of friends. All other messages, including retailers’ e-mail marketing messages, will be grouped in an Other folder.

“It seems wrong that an e-mail message from your best friend gets sandwiched between a bill and a bank statement,” wrote Seligstein. “It's not that those other messages aren't important, but one of them is more meaningful.”

The program will also allow consumers to control their privacy settings to set who can send them a message. Moreover, Facebook says it is preventing developers from using Facebook messages to contact consumers without their explicit permission.

“This kind of message control is pretty unprecedented and people have been wanting to do this with e-mail (and phone calls) for a long time,” wrote Seligstein. “Messages reverses the approach to preventing unwanted contact. Instead of having to worry about your e-mail address getting out, you're now in control of who can actually reach you.”

That will probably increase the importance of the Like button, says Brian Deagan, co-founder and CEO of digital marketing firm Knotice, because retailers that a consumer has clicked that they Like will be able to deliver their messages to the shopper’s primary folder, which he likely will be checking frequently to keep up with his pals.

“If a retailer’s demo is on Facebook, this will increase the importance of communicating to them on Facebook,” he says, referring to the demographic a retailer targets. “But it really depends on who a retailer’s customers are.”

For instance, he points to e-mail marketing campaigns where the percentage of consumers reading the e-mail on an iPhone reaches as high as 35%, whereas other retailers with less tech-savvy consumers have only a 5% to 10% iPhone penetration. For the retailer with the heavy iPhone user base, it’s important to make messages easily readable on the device, whereas that’s less of a priority for the other retailer. Much like the case with the iPhone, retailers hoping to reach Facebook users with e-mail messages will have to find ways to tailor those messages to the social network.

Deagan says that with holidays rapidly approaching, he doesn’t expect Facebook’s announcement to have a major effect this year. “But for next holiday season marketers will need to figure out how to be able to communicate with consumers in ways that they didn’t need to have before,” he says.

Retailers also need to be prepared for consumers switching their e-mail addresses to Facebook.com, says David Daniels, a former e-mail marketing analyst at Forrester Research Inc. who is now CEO of The Relevancy Group, a marketing consulting firm.

“Marketers will have to do a better job measuring e-mail click behavior in order to spot subscribers that are potentially inactive,” he says, pointing to an April Relevancy Group survey of 674 marketers that found 38% of marketers segment subscribers by click-through behavior.  “Marketers need to look at and segment subscribers by behavior to understand which addresses might be churning.”

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