"Our business model is the long tail," said one Google employee. "Management talks about it all the time."
Long-tail marketing, which was first practiced by Sears, Roebuck & Company with its big wish-book catalogs, has been developed to a double-bang level by Internet marketing companies—Google in particular. The long-tail model gets its name from statistical curves, such as the familiar bell curve or the Pareto curve. The curve starts at zero and rises to a peak, then drops and flattens. But it almost never returns to zero. The tail end of the curve may level out and go on seemingly forever.
In sales or marketing graphs, the top of the curve typically describes a company that has high sales, but usually with a limited number of top-selling products. Long-tail Internet companies, which can sell from huge inventories because they're not actually warehousing the goods, may indeed make money from selling the most popular products, but they also have the capacity to extract endless sales from more specialized, obscure, even weird products. In his book, The Long Tail: Why the Future of Business Is Selling Less of More, Chris Anderson calls this "markets without end."
Eric Schmidt explained at the company's first annual meeting in 2004 that Google's advertising program was so lucrative because it captures the high end of the curve, by serving the few large advertisers, and then follows the tail by serving the millions of small advertisers all the way down ...