People now have more to choose from, the digital and technology age is helping bring down transactions costs. This allows companies to extend their variety. This need for variety can be a company’s strategy to be more competitive. Take for instance the Pay TV industry traditionally we had an archive of broadcast tapes, and the broadcaster broadcasted the most popular movies over the traditional channel. Due to the limitation of the analogue era broadcasters were restricted to the number of channels broadcasted. Now with video on demand (VOD) and satellite transmission viewers have a multitude of choices. In addition Technology is changing the playing field and bringing new players into the market. The internet alone has made it possible to stream the content you want to watch, when you want it. Movies don’t need to be watched via the local pay tv operator, but the customer can download movies via the likes of bittorrent (collaboration of internet peers around the world, making content available) or online rentals like Netflix. So stretching the concept of the long tail, customers now have a variety of channels/options to get they’re content.
Below is the graph of Netflix percentage of total demand (with ratings used as a rough estimate of rentals) – vertical axis, and the popularity rank of the DVD titles – horizontal axis, sourced from the Longtail website. Between 2000 and 2005, the Netflix selection grew from 4,500 DVDs to 18,000, and the effect on the demand of this increase in variety is shown below.
Skype is another example who is challenging telephone operators around the world. The attractive pricing and video conferencing makes it a worthy opponent.
Having said the above, more is not always better, focussing out the broadcast industry and scanning through the local satellite provider, there is spectrum of channels of no real significance and is of poor value which is in the long tail. Nonetheless the choice is now available to the customer. A company that took advantage of this was Nike in the 2006 World Cup, according to Sue Elms, and she talks about the “Media Long Tail in Action”
There is no question that the long tail of media presents tremendous opportunities to a savvy marketer. Nike proved this by using the tail to outmanoeuvre Adidas during the 2006 World Cup. As the official sponsor of the event, Adidas was able to prevent Nike from running any advertising during the 64 televised games. This was the dominate side of the long tail (The HEAD).
Nike responded by developing a new media campaign around the idea of “Joga Bonito” (Portuguese for “play beautiful”). The campaign featured the broadband TV channel JogaTV, viral videos, and a social media site, co-sponsored by Google, called Joga.com. By the middle of June, halfway through the tournament, Joga.com was getting nearly twice as much traffic as Adidas.com. They targeted the tail!!
Below is the Long Tail of Media, courtesy of Geoff Livingston. From it we can see: -
Adidas = the Head, and Nike = Long Tail. Nike exploited the long tail, because they saw opportunity, giving the customer more choice!
There is abundance of choice to the Consumer, for the following clear reasons:-
- Companies understand the phenomenon of the long tail, reduction in transaction costs is now possible, and to remain competitive more variety is needed. Collectively the sum of unpopular “GOODS” could potentially be more than the popular ones.
- Technology not only reduces transactions costs, but brings in new players into the market, whom in turn create more options to the customer. No need to watch the TV schedule, you can download your content!
- The tail is an opportunity for competitors to penetrate markets that seem to be closed. As long as there is opportunity there will be a drive to increase the tail! Nike shows us this in the 2006 World Cup!
