Long Tail theory in Product Strategy

People get used to focus their eyes on the “Hit”: there are thousands of technology start-ups, but “tech news” section in New York Times or Financial Times are alwasy flooded by FAAMG; there are millions of talented singers and musicians out there but superstars are capturing the vast majority of music revenues; even in consulting interviews, applying 20/80 rule in market sizing questions does not require further explanations. This “Hit Culture”, was brought to an end by — according to Chris Anderson, the author of The Long Tail — the internet.

In a nutshell, the theory of the Long Tail is that our culture and economy is increasinly shifting away from a focus on a relatively small number of “hits” towards a huge number of niches in the tail. As the costs of production and distribution fall, especially online, more products in long tail are made available. The aggregate revenue from the long tail can be as economically attractive as mainstream fare.

This sounds theoretic, but take a look at the big tech firms, Long Tail has been in their product strategy for a while:

Netflix

The usage surge in Netflix lately can be credited to Tiger King, but Netflix also carries just as many — if not more — less known movies & dramas in different languages for different markets (for example, Money Heist is a great success in Europe and so does Nacos in Latin America). The idea behind this is by expanding the portfolio of products they attract new subscribers from smaller markets that together form a large marketplace. It currently has just over 4,000 movies and 1,500 shows, which contribute to the overall watch time and attract niche visitors besides Tiger King.

Amazon

If we display all the 350 million products on Amazon in a brick & mortar store, we probably need a space no smaller than the size of the real Amazon forest. How many of them are “hits”? less than 0.01%. Amazon employee described the long tail as follows :“ We sold more books today that didn’t sell at all yesterday than we sold today of all the books that did sell yesterday.”

Google Ads

Google Ads helps marketers to optimize their inbound marketing strategy with hundreds, if not thousnads, of keywords. Long tail key phrases may drive a low volume of traffic but the combined traffic of all the keywords in the tail portion matters. Also, it’s discovered that visitors to a site from long tail key phrases tend to be better leads as they’re searching for something very specific.

However, to fully monetize on the long tail strategy, you need a solid recommendation system. And the long tail section usually put the recomendation system to hard test. It’s easy to explain: good recommendation requires ample contextual knowledge about the product (say, a book or a movie), which is usually sparse in long tail section.

Still, Long Tail is a good strategy worth consideration when you design your own product or service.