The long tail theory

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08-01-2012

The long tail theory is a very concrete marketing concept that might have huge repercussion on your business once you understand it.

JulienRio.com: The long tail theory

I am no fan of long obscures incomprehensible marketing theories. I am a firm believer of the new marketing era. For decades, marketers have tried to keep you away from their business by using complicated terms and vocabulary.

I believe in traditional marketing (the 4 Ps concept will always be true in some way), but I believe even more in new age marketing.

The world changes. Fashion trends change. Technologies change. Habits of consumption change.

If everything change – and change fast! – how do you explain marketing still remains the same?

I am not saying here that you should trash all your marketing books and forget all you know about marketing. Marketing is based on social science: even though people have changed a lot in the past century and have radically changed their habits, human are still humans and basic social rules still apply.

But if the society changes, you must change the way you look at it. Don’t trash your knowledge, just extend it to a new level, and follow me in what I will call “the new era of marketing”.

 

The long tail, an adaptation of an older theory

 

Before jumping into concrete examples and explaining how the long tail can actually help improving your business, I am afraid I will need to go through a little bit of theory – nothing complicated, don’t worry.

In 1920, Vilfredo Pareto, a worldwide famous Italian economist, created what we know as the Pareto Principle.

If you never heard about the Pareto Principle, you most certainly heard of the 20-80 rule, or the law of the vital few.

The Pareto principle basically states that the world is ruled by an imaginary balance of 80% / 20%: 80% of the effects come from 20% of the efforts.

Some famous examples of this theory concern the worldwide wealth and business profit.

In the world, 20% of the population owns 80% of the wealth. In business, 20% of your customers represent 80% of your turnover.

This rule can verify in almost any situation.

If I take the example of QueCuisiner.fr, a French cuisine website with a lot of traffic, I can apply the same concept using the Pareto Graph: a visual representation of the Pareto Principle.

On this website, 80% of the visitors are searching for traditional French recipes. 9% are searching for more exotic recipes, 6% seek diet ideas, 3% would like to find vegetarian recipes and 2% are expecting to find gluten-free suggestions.

 

This example perfectly adapts to the Pareto Chart:

 

Columns represent the percentage of visitors per category and the line represents the accumulation of percentage.

 

“Ok, but how can Pareto Principle affect my business?”. I am getting there.

This representation shows efficiently what should be your main focus.

This approach has been used for decades and still makes sense today: if 20% of a category produces 80% of results it is understandable to focus on those 20%.

Considering this approach, QueCuisiner.fr should focus on providing more content related to french cuisine to develop further its traffic and forget about side content such as exotic cuisine which has very low impact on its traffic.

However, we will see later that another theory using the same figures can give a very different approach.

 

The Long Tail theory

 

The Long Tail theory was popularized in 2004 by Chris Anderson based on the Pareto Principle.

Anderson included the market concept into Pareto’s theory to provide a larger picture.

If we continue with QueCuisiner.fr's example, we will see that the impact on business can be very different if we use the Long Tail Theory.

In this chart, we have the exact same data as in the previous one. The difference lies in the format of the chart which enables you to see the “Long Tail”.

The Long Tail basically refers to this category of people representing a very small percentage of the result but taking the shape of a long tail: 80% of the effort.

Using the example of Amazon, Anderson explains that some websites and businesses understood that the Pareto Principle’s approach isn’t always right: if everyone focuses only on the 20% of the market which represents high-profit, in the end, the competition is so high on this specific segment and the market-share so difficult to get that focusing on the Long Tail might show more benefits.

Amazon built a website which offers “normal products”, representing 80% of the profit, but also plenty of very niche, very specific products.

If Amazon was focusing on one type of product only, the concept wouldn’t be that successful, as the potential market is very small. However, as soon as Amazon focuses on the whole Long Tail (represented by all the alternative markets of niche products), the accumulated market share becomes consistent.

The same happens with QueCuisiner.fr: if the website focuses on French food only, it pleases the people representing 80% of the traffic (the main focus, according to Pareto Principle).

But if the website decides to offer alternative content on top of what it already offers, such as vegetarian meals and exotic recipes, QueCuisiner.fr immediately extends its market share, attracting people it wouldn't have reached otherwise.

Focusing on French food only, which is a very competitive market for French website, is the insurance of having to fight constantly to get more visitors. But offering alternative services by giving more attention to the Long Tail provides a new income of visitors and helps the overall strategy.

It is for you to think “What is my market” and “Which part of my market is the Long Tail”.

Once you have clearly identified your market, you can see which rule you are currently following.

Now, considering the two methods and your company’s specificity, you can estimate your growing potential: “Does it make sense for me to focus on the Long Tail?”, “Do I have the means to attack only the most competitive part of the market?”.

 

Julien Rio.

 

Last update: 2017-05-24 Tags:

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