To begin, I would like to look at two different business models to help explain the Long Tail of Marketing and the benefits.
A video rental shop, with a physical store presence and a reliable customer base, caters to the popular demands of its customers. It has limited space for storage, and thus does not keep many lesser well-known videos in stock. Instead, it makes the majority of its sales from new releases and popular films, and makes clear use of its store space and marketing strategy to promote these videos. As a result, the store’s inventory has very little variety, and it makes very little sales from customers with specific or more unique interests.
A large online retailer, with essentially unlimited “storage” space and promotion through search engine optimization, offers virtually every movie that has ever been released, as well as new releases. This company makes just as many sales from its “niche” items as from its more popular ones, because customers can find almost anything they are looking for, and together, all of these small “niche” sales provide an equal or greater amount of revenue than the few, more well-known products.
The contrast between these two businesses lies not just in their size, but in their marketing strategy. The first represents the “head” marketing strategy; a business understands what the majority of its customers want, and caters to those “in demand” instead of branching out. The second represents the “long tail”, which includes all of the smaller purchases that are made by customers seeking specialized content which add up significantly as well.
Continuing the example of the film industry, “head” businesses, such as Blockbuster Video, are fading out because of the lack of variety that they offer. The accessibility of the internet, instead, has led to the rise of large online video retailers, such as Amazon and Netflix. These companies offer a wide variety of videos, and receive far larger profits because of it. They employ long tail marketing, a technique that offers exponential growth in sales – but comes with its own set of challenges.
What is long tail marketing?
The long tail theory of marketing was developed in 2006 by Chris Anderson in his book The Long Tail: Why the Future of Business Is Selling Less of More. In the book, Anderson referenced online business giants such as Amazon and Apple, and coined the term “long tail” to reference the retailing strategy employed by these companies.
Ultimately, long tail stems from the idea that, if promoted correctly, less popular products can collectively provide greater benefits for a business than stocking up on the most popular items.
Many businesses make the majority of their sales off of popular items, such as major brands or new releases. Proportionately, they spend the majority of their marketing strategy focusing on promoting these popular brands, in order to keep up with competitors and attract more customers automatically. Although they have other items, such as niche products and specialized items, the majority of their sales comes from a small grouping of their most popular products, and thus, these are the products kept in stock.
Alternatively, a business can choose to stock up on a variety of different products to appeal to different people of varying interests – and this forms the foundation of long tail strategy. Together, these more specialized products can match or exceed the sales from more popular items, and thus provide a good marketing strategy for businesses that can properly employ long tail techniques.
The name “long tail” comes from the graph of a business’ sales; looking at a sample distribution of a company’s sales, the more popular products will be clustered at the front, with a high amount of sales each. See an example of this in the graphic above.
This forms the “head”; the “long tail” however, is the sales of other products; the tail only becomes “long” once a business has a variety of different products that appeal to different groups of consumers. Together, all of these products can surpass the sales from the “head” products, simply through sheer numbers.
I often look at my own business model for Vinci Digital. I’ve heard other marketers say we should niche down and focus on one particular service, i.e. inbound marketing, web design, or one industry and not worry about the rest. But nearly 50% of our revenue comes from other services we provide such as SEO, PPC, Hosting, Logo Design, Printing services, and Website Maintenance.
What would we gain by ditching our own version of the long tail?
I personally love diversity in both clientele and service offerings and giving clients the satisfaction that all their marketing needs are attainable through one company. Customers who need marketing services are also not interested in hiring 3 or more companies to handle their needs. They don’t have time to manage that many vendors. Therefore, offering more adds value and since so many services are interrelated it only makes sense to provide all services to our customers.
And similar to the other business models above, our marketing and advertising dollars focus primarily on the services in high demand, but that does not mean there are not inquiries about all the other lesser known services as well. It pays to be versatile and there are many opportunities to cross-sell or upsell additional services once the demand for your more well known products is established.
Who uses long tail?
The case studies brought up earlier – of a large online retailer and a brick-and-mortar video rental business – are two real examples of businesses that use (and don’t use) long tail marketing. The first can be seen in the example of Amazon, which uses its Amazon Prime service to offer on-demand video streaming. Amazon doesn’t need to worry about its products competing for space, and thus it can offer a large, almost unlimited selection; all it has to do is have these movies available digitally. This extends to Amazon’s entire business model; since it keeps its products in warehouses and not storefronts, it has nothing to lose by offering everything that it does physically in the virtual space as well.
In contrast, stores with a physical location, such as Blockbuster, which in the last few years went out of business, find themselves forced to choose between small stocks of a large variety, or large stocks of a small variety. They almost always choose the latter, because more customers usually means more profit; however, in the case of Blockbuster, offering the most popular options wasn’t enough, as its customers flocked toward the greater selection of videos that online companies offered.
Customers also prefer convenience. In the case of Blockbuster, the physical store became less appealing when their direct competitor (Netflix) puts movies right in the customer’s mailbox, or enables thousands of titles to stream instantly to TVs, computers, even smartphones.
Blockbuster made attempts to compete with online retailers and rental services in mid 2000s offering online service as well as a “Total Access” plan which let you rent movies from home through their website, and return by mail or directly to the store. While it seemed like a better option and on paper, it was, ultimately it failed due to once again, a limited selection of titles. Even while exploring the online business model, Blockbuster failed to see that their greatest flaw, yet again, was lack of selection.
Is Head or Long Tail best for me?
Ultimately, the idea of which businesses should use which strategy comes down to the type of business. Brick-and-mortar stores usually can’t afford to employ long tail marketing, unless they have long tail competitors (which is what happened in the case of Blockbuster). They also physically do not have the space to store every oddball movie selection under the sun that someone might come looking for one day.
Online e-businesses, on the other hand, can and should use this strategy, because an online format makes it much easier to offer a greater variety of products. Furthermore, when users conduct searches, they often use very specific keywords; embedding these keywords into relevant product pages on your website can increase viewership, and therefore sales.
What are the benefits?
The main benefit of long tail marketing is simply attracting greater customers with more diverse interests. Although certain items may be very popular, by offering a greater variety, you will be able to attract a significant portion of the market that previously was unavailable to your business.
This is especially important if you are a business with a physical presence that has competitors in an industry that offers online sales; for example, going back to the case study of Blockbuster, video retailers have to compete with online streaming, and with the easy accessibility of the internet, the online stores almost always win out. Therefore, opening an online branch of your business (and offering a greater variety of products there) is a way to keep up with competitors and maintain your viability as a business.
Attracting customers in an online space delves into the strategy of search engine optimization, or SEO. So the point to take away from the value of Long Tail is:
When you use a greater variety of keywords on your website, you’ll show up more in search results that contain those specific keywords; therefore, your website will receive more traffic and more customers.
Websites offering every product under the sun have better probability of showing up for more potential searches than a niche site with one target audience. Why else do you think a site like Amazon will rank high in the search results when you type in just about any type of consumer product? Volume!
How can you incorporate it into your business?
Creating a long tail strategy involves several steps, starting with product and pricing and moving onto promotion and customer support. To start; evaluate your business strategy and your current sales model.
- Which products are most popular?
- Which are taking up the majority of your space and/or inventory?
- How can you expand and offer a greater variety of products that would appeal to more niche markets?
After evaluating your products, consider pricing.
The benefit of offering a wide selection of specialized items is that you only have to worry about competitive pricing for the products that are in higher demand. When you and 20 other video stores are all selling new releases, the pricing of those new releases is crucial if you want to compete. However, by offering less well-known movies, you will have an advantage over competitors who don’t offer this; therefore, you don’t have to consider competitive pricing as much. Also, you can even increase your pricing on specialty items to help offset the competitive prices on your more popular products.
Implement a promotional strategy
You can begin to label yourself as a business that offers variety; to do this, channel your marketing into different market segments, especially those that were previously unaware of your presence and the products that you offer. Once you can build a reliable customer base in these niche markets, you will be established as a retailer that makes a large amount of profit not just from the marketing “head”, but from the “long tail” as well.
When it comes to creating a website, you can leverage search engine optimization, social networks, and other online strategies in your online business. The long tail strategy can work not just for products, but for promotion; creating a lot of content is one way to attract more viewers and followers, as the more you create, the more likely it is that you will attract the attention of viewers browsing the internet for specific information. Although you may have a few posts that reach a lot of viewers, overall a large amount of content marketing spread out over a length of time will reach a greater number of total viewers, promoting your business even more extensively.
Want to learn more about how to harness the power of long tail for your marketing strategy or are you interested in developing a more in-depth overall inbound marketing strategy. Let us help!