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Wednesday, July 24, 2013

The Long Tail of Internet Media

Over the last year I have been writing back and forth with a young media planner who reads Media Realism. He has wondrous enthusiasm for all media issues and I love the dialogue that we have established together. About six months ago, he proudly sent me a list of 16 different sites that he had chosen to use for a client message. Results were some 22% better than what his predecessor’s online plan had delivered the prior year for the same money.

Now, let me start by saying that this young man works harder than just about anyone that I have ever seen. He took me through his thought process and the screens that he used to come up with the 16 winning sites he selected for client use. I had to admire his effort but could not give him the vote of confidence that he wanted.

I tried to gently use a literary example to make my point. Back in 1604, the great Spanish author Cervantes in DON QUIXOTE urged “ look not for a needle in a haystack.” My point was that looking for the 16 sites that he chose was incredibly labor intensive and he likely missed a great deal of opportunities. Sadly, like many of his generation, he could not relate to an analogy over 400 years old although he asked “Don, are you telling me that I am tilting at windmills.”

Next, I tried to continue the “needle in a haystack” theme by quoting John Bogle, the founder of the Vanguard funds. Bogle has made many ordinary investors millionaires by touting the virtues of index funds. You do not try to outsmart the market by buying a few select stocks, you simply buy the whole market and do not get eaten up by fees for money management. Over time, the trend is for stocks to go up. Did you take a haircut in 2008-2009? You bet! Now, you are doing fine again.

Bogle often uses the quote in seminars or speaking engagements that investors should “forget the needle and buy the haystack (index funds).” My young friend warmed to this a bit and then asked “do you want me to buy my client one of those crappy blind ad networks?” (a blind network is an ad network that does not let advertisers known where the ads will be displayed. Increasingly passe, they are often sold as remnant inventory at a low cost)

Finally, I shifted gears and got my point across. I asked if he knew of Chris Anderson who, when he was editor in chief of WIRED magazine wrote an article in 2004 called THE LONG TAIL and then followed it up with a book of the same name in 2006. My media planner said he loved reading WIRED. Anderson kicked off the book with a marvelous story of how a book on mountain climbing entitled TOUCHING THE VOID became a bestseller ten years after being published. What happened is that a slew of recommendations on Amazon.com popped up after a similar book was published.  Anderson stated this as “an example of an entirely new economic model for the media and entertainment industries, and one that is just beginning to show its power.”

Anderson says that if you plot sales (or musical downloads) against actual products you will find many sales against a relatively small number of products or choices. But there will be an extended “flattish” tail that may stretch to hundreds of thousands of sales year after year if someone chooses to stock the items online.

The above example illustrated two principles that Anderson made clear:

Make everything available
Help people find it

Anderson said that when Amazon analyzed book sales they found that a large share of sales came from books that were not readily available in book stores. Music illustrated a similar pattern. Go to Wal-Mart and you can find the most popular selections on any given day.  However, if you try and find some obscure CD from a local or regional band, you can forget it. So online you have what is known as the “long tail.” Most sell only one CD a quarter. A similar pattern exists for Netflix films. They have over 100,000 titles but most are rented in very low volumes.

Lego, the Danish toy manufacturer, was another case of the long tail. Most toy stores stock only 1-2 dozen Lego products. Yet their mail order business has 1,000 choices. And, today, only a handful of their top sellers can be found in stores. Many children around the world design their own Lego products and the company shrewdly posts them on the website and many others buy them.

The point of all this is that in online the niche market is very strong, even powerful. After some back and forth, my young friend asked a leading search engine to come in and, with their help, his next plan had an ad message on 1700 sites. Sales skyrocketed vis a vis his “sweet 16” choices in the quarter before. He had not “bought the haystack” but he was reaching hundreds of thousands more prospects with pinpoint targeting. Playing the Lone Ranger was heady for him but it was not generating maximum return for his client.

This has been going on for at least 5-6 years yet some media people out in the hinterlands have not been optimizing their online buys. The same is true with cable TV. Planners buy a couple of channels when a package of 6-8 could do them a world of good.

Anderson concluded his thesis of THE LONG TAIL when he said, “when you dramatically lower the costs of connecting supply and demand, it changes not just the numbers, but the entire nature of the market.

So do chose some sites that are perfect fits. Just remember that there are thousands of others that can add a fresh, new audience in small numbers that can work very well for your brand.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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