Search engine advertising works on the simple principle of supply and demand. The highest bidder gets top billing for keywords he has chosen. And the most sought after keywords will be the most expensive.
Not surprisingly, the cost of high-traffic and high-conversion keywords is constantly rising. But is bidding for the most popular keywords the only way to get traffic and increase ROI?
It certainly is not. More and more people are increasingly buying into the long tail concept. So what exactly is the long tail of search engine advertising? Let’s illustrate with an example.
Let’s say you sell digital cameras and accessories online. You want to run a search engine advertising campaign. To begin with, let’s consider the keyword ‘camera’. It’s a very popular keyword and costs Rs 100 per click and delivers 100 clicks per day. Your cost works out to Rs 10000 per day. Now what if you have a budget of only Rs 1000? Simple: check out the tail. Buy lower-priced keywords such as ‘2 megapixel camera’ ‘3 megapixel camera’, ‘canon digital camera’, ‘nikon digital camera’, and ‘digital slr camera’ etc. If we assume an average price of Rs 10 for each of these keywords, you could get 100 clicks for Rs 1000 instead of a 100 clicks for Rs 10,000 you would have paid for ‘camera’.
Of course, this is a simplistic example, but it brings out the power of the long tail. Google estimates that nearly 50 percent of all searches are one-of-a-kind. That’s more than 100 million unique searches per day on Google alone. All those 100 million searches are what the long tail is about.
The term long tail was coined by Chris Anderson in a Wired Magazine article to describe the success of online retailers such as Amazon.com and Netflix.com. Anderson contended that in the physical world, retailers stocked only the bestsellers since shelf space was limited. Online retailers have no such constraints on the inventory that they can stock. As a result, they were able to cater to the narrowest of niches. In the aggregate, these niche markets often proved to be larger than the bestseller or ‘hit’ market.
In search engine advertising, as the cost of popular keywords keeps rising, long tail keywords can be a powerful force
While, the cost per click of long tail keywords will obviously be lower, there are other compelling advantages as well. Broad-based words such as ‘camera’ may indeed attract a large number of searches, but the conversion rates could be much higher at the narrow end of the spectrum. When someone is searching for the keyword ‘camera’, that person may be searching for anything from camera maintenance tips to camera servicing centers. But when someone searches for ‘5 megapixel digital camera’ or ‘nikon digital slr camera’, they are looking for a specific product. Clearly, the narrower the search, the more likely they are to convert.
In fact, many experts believe that people who enter long tail keywords are those who are far ahead in the buying cycle. When people begin researching a product they tend to be more broad-based in their queries. But the queries become more and more focused and refined as they approach the end of the buying cycle.
So, it’s not just a question of lowering your costs, but it is also about increasing effectiveness and ROI.
Here’s another reason why the long tail is important. According to Joe Kraus, a co-founder of search engine Excite, while the top 10 searches were thousands of times more popular than the average search, these represented only 3% of the total volume on Excite. A vast majority – 97% — of its searches came from the `long tail’, that is, queries asked a little over once a day. According to him, Excite went out of business because it couldn’t figure out a way to make money from that long tail.
Search engine advertising has become an extremely important tool for any online marketer. That’s because it’s relatively inexpensive, can be targeted with a fair degree of accuracy to the right audience, and offers the best return on investment. It’s also becoming big business. According to a study by Forrester Research, search engine advertising is expected to become an $11.6 billion industry by the year 2010.
So you can imagine the competition that’s going to be out there. To win, just grab the tail.
