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This is the first of two articles about how to engage and optimise the Long Tail of your affiliate programme.
Whilst the term has its origins in statistical sciences as early as 1946, it was popularised 60 years later with the publication of Chris Anderson’s book of the same name.
So how does this apply to affiliate marketing?
The Long Tail
In his words a ‘Long Tail’ utilises “the efficient economics of online retail to aggregate a large inventory of relatively low sellers.”.
For offline bricks-and-mortar stores it is not feasible to stock low-selling items due to shelf space; they instead stock the big-sellers, and unsurprisingly that is what people buy because that is what is available.
However, things are different online. Without the problem of shelf space, Amazon for instance, can sell everything.
Anderson notes that this creates the effect of inexhaustible demand even at the end of the Long Tail: even the 500,000th best selling product still sells in the thousands, and the Long Tail never reaches zero.
Thus there is a market for almost everything.
So how does this apply to affiliate marketing?
The ‘Long Tail’ of an affiliate programme is collective name for the sites that share the same distribution curve Anderson noted with Amazon, but of affiliates rather than products.
It is the affiliates themselves that form the Long Tail, the multitude of sites outside the top performers that sell in small volumes individually but large volumes collectively.
Every affiliate programme has a Long Tail if defined solely as those outside the top 10 or 20, but as the concept implies that endless choice available online creates unlimited demand, affiliates can help advertisers to cater for this demand.
It is through this natural affinity that affiliate networks are able to target relevant partners for advertisers’ programmes.
In the affiliate world, the Long Tail should be able to cater to all audiences.
Just as a retailer captures more of the market by selling more products, so an affiliate programme can capture more potential customers with more affiliates.
Search, for example, is the predominant way to find products online, but advertisers are unlikely to cover Long Tail keywords that are as niche as their Long Tail of affiliates: they are simply unable to bid on as many products as they sell.
However, their affiliates may rank naturally for these terms. Advertisers can thus use their affiliate Long Tails to effectively expand their search budgets.
Volumes from the Long Tail are potentially huge. One telecoms advertiser saw its Long Tail grow over the last four years to generate collectively as many sales as a top 10 affiliate. However, Long Tail optimisation is a long-term strategy requiring investments of time, money and resource.
Moving from theory to practice, we find advertisers constantly asking questions about their affiliate programmes which indicate that, practically, engaging this Long Tail is tricky.
Indeed, their questions are symptomatic of problems with Long Tail engagement: ‘Why are there not more affiliates referring sales?’; ‘Why are we so reliant on a few top players?’; ‘Why can I not just cull non-performers and bring my top affiliates in-house?’
What is the extent of this problem?
Studying the growth in commissions paid to affiliates by Affiliate Window over the last four years shows that the top 200 (on a network of 75,000+) account for the vast majority of all commissions paid.
At the same time, commissions to those outside the top 200 are decreasing rather than following the same growth trajectory of total network pay-outs, with the gap between commissions to the top 200 affiliates and those from the Long Tail having grown in 2011 compared to 2010.
So is there an affiliate divide?
Amongst Affiliate Window’s top 20 advertisers, the average programme has 2,716 affiliates, with 16% driving at least one sale, and 47% at least one click.
In the period September 2010-2011, the top 10 revenue-drivers contribute an average of 76% of total sales. The gap between sale and click-drivers therefore suggests that the problem is one of conversion rather than engagement.
Many affiliates are engaging enough to get a click, justifying their value to advertisers, but cannot convert. Perhaps the issue is one of context over content: whether or not users are in the right frame of mind to buy when they are browsing such sites.
Of course, each advertiser may define their Long Tail differently, but it's useful to make a three-way distinction not just between the top 10 and the Long Tail, but between the Long Tail and the potentially larger number of inactive affiliates.
The Long Tail in this sense would still drive sales or click-throughs, just in smaller numbers. What is important is the extent to which there is a divide between the top 10 and everyone else.
Distinguishing between the Long Tail and inactive affiliates helps address this by aiming to raise the game not just of the Long Tail but also raising inactive affiliates into the Long Tail.
Having got a measure of the extent of the issue, in the next part we will look practically at how Long Tail engagement and optimisation can be achieved.