Sunday, September 20, 2009

EveryYou: Individuation and going beyond the Long Tail theory

This post is part of my developing series on the EveryYou concept– the ability we are developing to create a specific and targeted recommendation of one based on the unique combination of desires, needs and interests of each individual at any moment in time (first post here).

It is Internet marketing heresy to say anything that might contradict the gospel of the Long TailChris Anderson’s now famous 2004 book on how the removal of the constraint of needing to support physical inventory and location (ie moving from stores to sites and physical to bits) has expanded marketing and sales opportunities beyond items that have achieved mass popularity to the niche and obscure. Anderson says this will result in demand shifting shift from the Head (mass popularity) to the Tail (niche products). But in my introduction to the EveryYou concept I said that one of the advantages we now have from the four dimensions of data available to us is that…
“We could kill off the head, body and long tail of sales and replace it with a sale of one, a market of one for the EveryYou.”
It is dangerous to be a heretic in Internet folk law but thankfully I found some support for my blasphemy in a recent article from Knowledge@Wharton called “Rethinking the Long Tail Theory: How to Define 'Hits' and 'Niches'

In this article professor Serguei Netessine and doctoral student Tom F. Tan looked at Netflix data to see whether or not the growth in niche or tail sales was proving that the tail was catching the head. They concluded that
“The presence of the Long Tail effect might be less universal than one may be led to believe."
Instead of seeing the death of the 80:20 rule, Netessine and Tan found that the growth in demand for the top 20% of the movies (ie the head) was faster than the rest (the Tail) (note that the data was comparing 2005 to 2000). One of their conclusions was that the challenge with internet distribution was not the supply side (making digital inventory available on the web) or the traffic side (bringing people to the web) but was the discovery side (getting the people to find the thing they did not know they were looking for). Netessine and Tan say
“product variety has been skyrocketing in the Internet age, and therefore more and more products can be left unnoticed by consumers, or are being discovered very slowly, even though the customer base is also expanding."
This is exactly the point of the EveryYou principle adds value. The Long Tail is based on matching the unconstrained supply of the Internet to niche demand. What is missing is that the niche demand in Long Tail theory is constrained because it depends on knowledge. That is, someone can only demand a niche product if they know about it and believe that they like it (or could like it). For unconstrained niche demand you need to have a systematic and automated means of making trusted and targeted recommendations to someone. This is the EveryYou principle. Using the four dimensions of data we now have on people interacting with our sites (breadth), the different things an individual does on a site (depth), the interrelation between the data we have one person and others (context) and the freely provided data we have unrelated to transactions (community) we can develop a specific and targeted recommendation of one based on the unique combination of desires, needs and interests of each individual at any moment in time.

Without the recommendation part the tail is undiscoverable and therefore demand constrained. Through the EveryYou principle you don’t need to think about a head, body or tail as you can use technology and social change to target each recommendation and individual as a single, individuated marketing activity.

More on EveryYou soon.

PS - thanks to Madame BOOT for sending through the article

No comments:

Post a Comment