The Long Tail and the Impact of Web 2.0

So I am just now getting into the articles and readings for this week, and I have to comment on Gil and Frank's discussion on Chris Anderson's book "the Long Tail". This is a very interesting concept, and I can see this concept come to life. For example, within a CPG company, if there are 100 different products within a key brand. About 80% of the brand's sales are done in the top 20 items. With traditional retail outlets (Walmart, Costco, CVS, etc), the successful sales of these top items, or the pressure that these items are the top items to carry means the retailers will tailor distribution to match these top products. However, e-retailers like Amazon or drugstore.com may carry 60 of the top 100 items in this brand because they are less impacted by shelf space or inventory holding costs than traditional retail. By carrying this expanded distribution or wide assortment, consumers are able to choose between more items, and can find the right item to meet their individual needs.

The internet easily allows consumers to meet specific and specialized needs. As the comparison costs go down and assortment increases, the largest section, the majority, becomes smaller as people begin to find exactly what they are looking and move down the curve into the long tail. In the old world, marketers would focus on the top products, where 80% of the consumers are, often using a shotgun approach to catch as many consumers with their message as possible. However, as the long tail grows, there is a way for marketers to target advertising to the specific consumer groups whose needs are met by the products, more of a sniper approach.When marketers target their message to a very specific consumer group, the conversion rate increases, and the audience is much smaller both of which lead to a better return on investment.

In Gil and Frank's discussion on the long tail, I also found it very interesting how rankings, recommendations, and the overall social component of online actually minimizes the long tail. It seems that the internet both increases the importance of the long tail and simultaneously allows instant interaction and recommendations, which decreases the long tail.