Translating “geek talk” into useful business ideas, that is what I want to do in this new column. Is “love & peace” back in town thanks to social software and RSS feeds, or will we buy a Google micro-PC so we do not only time shift but also shift locations? This kind of babbling I want to translate into actionable insights. And I count on you to give this column the obligatory Web 2.0 flair; indeed this will be an interactive column. Well, I guess that’s quite obvious as you’re reading this on my blog …
This column actually talks about Google’s core business: SEARCH, or rather as Google describes it in their mission: “to organize the world's information and make it universally accessible and useful”. Search is one of the driving forces behind every “Long Tail” business model, and as long as Google nurtures that strength, their success story will continue.
Let’s make it a little easier on you, this is what you need to know about “The Long Tail” to understand the rest of this column:
The 80/20 rule as invented by the Italian economist Pareto is no longer valid in the digital world. Example: Even a large bookstore can only store a limited number of books (typically 130 000). Within that limited collection, 20% of the titles bring in 80% of the revenue. Amazon.com on the contrary has an almost unlimited collection (2,3 million books). When analyzing Amazon’s turnover we learn that more then half of the turnover is realized by those books that are not available in physical stores.
So, Amazon.com doubled the market size with a huge number of titles that are only occasionally sold. But because Amazon.com is a virtual store with an extremely low cost for an extra title, every book sold ads to the profits.
The Long Trail theory, soon to appear as a book (pre-order now), is in my opinion the basis for a great number of successful online business models today, and even more as the digital economy grows.
So, by now you should be getting an idea of why search is so important. Right, The Long Tail can only work if consumers find what they want in this massive amount of information. If Google succeeds in playing a role in all these Long Tail business models they are on the way to heaven. What started of as “search anything” has evolved to search based e-mail (gmail), searching video and audio, organizing RSS feeds and soon, who knows, a Google replacement for Windows or OSX? Companies can order their Google search server or, the ultimate Long Tail of advertising, place ads based on what the consumer is searching for.
We can find an interesting Belgian example with Delhaize. They can never stock their full wine collection (> 1300 wines) in one single (physical) super market, it’s simply to elaborate. That is why they launched Delhaizewineworld.com. With Hypervision (soon Agency.com Brussels) we recently added a new search/navigation feature which allows the consumer to dynamically select a number of parameters (type, origin, price, etc.) to find the right wine. You literally flash through 1300 wines in seconds to end up with a short, relevant and practical list of wines to choose from.
“The Long Tail” with a layer of user friendly search technology, and of you go to e-commerce heaven.
Agree or not?
Submit a comment. And if you have suggestions for future columns, just let me know.
By the way, “The Long Tail” can be opened up in some more ways, but that’s a subject for another column.