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How Important is the "Tail"? An Emperical Study

Sometimes conference presentations are simply befuddling. At a recent show one of my colleagues heard a speaker claim that the "tail" was not important and that by focusing attention exclusively on the head, you can build a better program. This, of course, is nonsense. Certainly the high traffic KW demand the most attention, but cutting off the tail for want of proper management tools is somewhere between foolhardy and criminal negligence. How important is the tail? As with most pieces of the paid search game the answer is "it depends." The importance varies tremendously by the type of business, the number of products/services offered, and how people search for what the advertiser offers. DEFINITION: There are at least two different ways to define the head/tail demarcation.
  1. A fixed number of KW. We could make the case that the head is represented by the X highest traffic KWs, perhaps corresponding to the number of KW someone could manage by hand. We picked 250 as that number.
  2. The number of KW with more than X amount of traffic. One could make the case that any KW that generates X amount of click traffic in Y days is a head term. For our purposes we picked 500 clicks in 90 days.
Because we're making the point that the tail is important -- albeit to varying degrees -- we decided to use whichever definition above gave the advertiser the smallest tail. If the tail still looks important using the least generous definition then it's hard to argue the point. METHODOLOGY: We studied 90 days worth of data from Q4 for ~20 Google accounts. We grabbed diverse advertisers with programs ranging in size from $15K in spend per month to more than $750K per month; ranging from advertisers carrying widely available commodities to those selling their own products; from 100s of thousands of products to less than 1 thousand. For simplicity sake we aggregated the data by KW collapsing the distinctions between geo-targeted campaigns, different syndication and match-type settings. We submit to our readers that all these programs have been "well-managed." KW lists have been built exhaustively by our OCD analysts, the "head" KW have received heavy attention with smart use of combined match-types, syndication settings, thorough and appropriate negative lists, well-chosen and tested landing pages and copy. FINDINGS:
  1. The importance of the tail varies tremendously. Of the client accounts studied the least important tail generated 8% of the client's competitive search sales during the period. The most important tail generated 83% of the sales -- the top 250 KW by search volume netted only 17% of its total sales! The median tail for the group generated 31% of the competitive search sales.
  2. People search differently for different types of services/products. The number of KW generating at least one impression over ninety days ranged from a mere 3,300 to almost 300,000. While this is somewhat related to the number of products on the site, that doesn't explain all the variance. In one case an advertiser with only ~1,000 products had more than 90,000 KW fire at least one impression. At the other end of the spectrum, a retailer with more than 20,000 products had fewer than 9,000 KW generate an impression.
  3. The importance of the tail does not depend on the size of the search spend. The advertisers with the most important and least important tails referenced in #1 each spend more than $250K per month on Google alone.
  4. The tail is most important for SKU-based commodity retailers. Not surprisingly, those who re-sell goods in a competitive marketplace find the most value from a well-managed tail.
  5. The tail is critically important for some advertisers. In the most extraordinary example, a client with 1,200 head terms (each generating more than 500 clicks during the evaluation period) nevertheless generated more than 71% of their revenue -- over $3.2 million -- from tail KWs.
From this analysis two facts are plainly obvious. First, with proper management, the tail is clearly significant to almost every advertiser. Even the company with a tail amounting to "only" 8% of its sales generated more than $600K in sales from that tail. Second the degree of importance depends widely on the types and quantities of products sold and how users search for those products. All of these accounts are managed by RKG analysts with the same core training, the same tools and the same approach to paid search management, yet the importance of the tail to these clients varies tremendously. Some might object that the tail occupies too much of the management time and that by eliminating that burden greater focus on the head will yield better results. This may be the case for those lacking the proper tools. If 99% of the KW are "tail" and they require just as much time to manage as the other 1%, then clearly the cost of managing the tail may outweigh its benefit. However, this is a false choice between two bad alternatives ignoring the existence of an obviously better alternative. A well-managed, extensive tail shouldn't preclude a focus on the head. Smart algorithms and automation of repetitive tasks that can suck up management time should allow a good analyst to manage a monstrously large KW list in the millions of KW almost as easily as they manage much smaller programs. At RKG we devoted a good bit of IT time to building those tools for our analysts with the idea being that smart humans shouldn't be wasted on robotic tasks. Proper allocation of management resources should not require a "tail-ectomy". There is too much value to be lost. Over-reliance on broad match to make-up for a missing tail results in less targeted bids, landing pages/ ad copy, less flexibility, and ultimately a smaller program. Folks who say otherwise either lack experience or the power tools necessary to manage a comprehensive program.
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