Internet Marketing Technologies
INSIGHT ON TECHNOLOGY
THE LONG TAIL: BIG HITS AND BIG MISSES
The Long Tail is a name given to
various statistical distributions char-
acterized by a small group of events
of high amplitude and a large group
of events with low amplitude. Coined
by Wired Magazine writer Chris Anderson
in 2004, the Web’s Long Tail has since gone on
to fascinate academics and challenge online mar-
keters. The concept is straightforward. Think Hol-
lywood movies: there are a few big hits and also
thousands of films that no one ever hears about.
It’s the legion of misses that make up the Long
Tail. Anderson claimed to have discovered a new
rule: no matter how much content you put online,
someone, somewhere will show up to buy it. Rather
than 20:80, Anderson suggested that Internet
search, recommendation engines, and online social
networks all enable niche products to be discovered
and purchased. For example, eBay contains millions
of items drawn from every Aunt Tilly’s closet in the
world and still seems to find a buyer somewhere for
just about anything, generating revenue that would
not be realized without an online marketplace.
On the Internet, where search costs are tiny,
and storage and distribution costs are near zero,
online retailers like Amazon and Alibaba are able
to offer millions of products for sale compared to a
typical bricks-and-mortar retailer like Walmart or
Sears. Without physical stores to maintain, online
merchants can save on overhead and labor costs
and load up on inventory. Wherever you look on the
Web, you can find a great many items that only a
few people are interested in buying. But with over 3
billion people online, even a one-in-a-million product
could find over 3,000 buyers. Researchers note that
most shoppers have a taste for both popular as well
as niche products.
One problem with the Long Tail is that people
sometimes have difficulty finding niche products
because they are—by definition—largely unknown.
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The revenue value of low-demand products is
locked up in collective ignorance. Here’s where
recommender systems come into play: although
these systems can skew toward the most popular
selections, they can sometimes guide consumers to
obscure but wonderful works based on the recom-
mendations of others. Netflix has spent millions in
recent years on improving its recommender system,
and Pandora’s recommender system focuses on gen-
erating quality music without regard to popularity.
Search engine optimization is another area
where marketers are trying to unlock the power of
the Long Tail. Long-Tail keywords are phrases that
a small but significant number of people might use
to find products. For instance, instead of investing
in keywords such as “shoes” or “men’s shoes,” a
marketer focused on the Long Tail might choose a
keyword like “purple all-weather running shoes.”
Google has rolled out various updates to its search
algorithm that improve Long Tail searches. Accord-
ing to Google, Long Tail searches comprise as much
as 50% of all Web queries, with approximately 20%
of searches being extremely unique or never seen
before. Google uses textual analysis to deliver better,
more focused results for these searches. An increas-
ing number of Internet users are using natural lan-
guage searches (searches that are phrased in the way
we would speak naturally, like “where is the nearest
pizza place?”) to find products and services. These
searches are also a part of the Long Tail, and while
big businesses tend to control the more frequently
searched keywords, smaller businesses can focus on
natural language and other Long Tail searches to
dramatically improve their conversion rates.
Social networks also make the Long Tail phe-
nomenon even stronger. A recent study found that
popularity information of the sort produced in a
social network spurs sales of niche products more
than mainstream products because of the higher
perceived quality of the niche product.
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386 CHAPTER 6 E-commerce Marketing and Advertising Concepts

Long Tail search is also pivotal for online
sales of rare books. A 2014 study showed that
used books sell for higher prices online than in
physical stores. The study’s authors surmised
that book buyers are willing to pay a higher price
because without the Web, they wouldn’t have found
the book they sought.
Anderson claimed that the Internet would
revolutionize digital content by making even niche
products highly profitable, and that the revenues
produced by small niche products would ultimately
outweigh the revenues of hit movies, songs, and
books. But some newer research casts some doubt
on the revenue potential in the Long Tail. Solid best
sellers have expanded and produce the vast part of
online media revenues. Netflix’s most recent earn-
ings report boasted record highs, which it credited
to its growing group of original series and recently
added blockbuster hits like the television series
Friends, not the thousands of titles in its Long Tail.
In fact, its DVD business, where most of its Long
Tail titles are available, has only 5.5 million sub-
scribers, compared to 62 million subscribers of its
streaming service, which consists primarily of more
popular movies and shows. Similarly, another study
found that while the number of ISBNs of e-books
in the Canadian market expanded rapidly in 2014,
the number of ISBNs selling at least one copy
remained unchanged. The situation is similar in the
music industry. As music services compete to offer
increasingly large catalogs of songs, the well-known
artists do better, while each individual member of the
growing Long Tail finds it harder to stand out amidst
lesser-known peers. On mobile devices especially,
“front end display” for music services and e-books
is smaller than on desktop screens, and only the
superstars get this valuable marketing real estate.
On the other hand, up-and-coming artists have
fewer barriers to entry and more avenues than ever
to promote themselves without the aid of major
labels. Artists like violinist Lindsey Stirling started
out in the Long Tail; she has put up her own videos
on YouTube, and has since become a major com-
mercial success. Indie music labels’ percentage of
the top 200 albums by sales grew from just 13%
in 2001 to 35% in 2010. And would-be authors
have more options to publish their works and market
themselves, despite the low odds of penning a smash
hit.
Both the Long Tail and the winner-take-all
approaches have implications for marketers and
product designers. In the Long Tail approach, online
merchants, especially those selling digital goods
such as content, should build up huge libraries of
content because they can make significant revenues
from niche products that have small audiences. In
the winner-take-all approach, the niche products
produce little revenue, and firms should concentrate
on hugely popular titles and services. Surprisingly,
contrary to what Anderson originally theorized, the
evidence for online digital content increasingly sup-
ports a winner-take-all perspective.

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