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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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Comments
41 Responses to “How Important is the “Tail”? An Emperical Study”
  1. Jeremy Brown says:

    Interesting post.

    Another way of looking at the head is by using percentage. Take the top 20% of keywords (so 200 if 1000 keyword campaign).

  2. Thanks Jeremy.

    Percentages would work but I didn’t go that route for a couple of reasons. The total number of KW can be ridiculous, with many multiples of the active KW list that never have gotten and never will get an impression. For hardware store clients you can have permutations around every size of nut, bolt and screw known to man, producing a stupendous list that generates no impressions whatsoever.

    Even if you go off just the “active” KW list, you still run into problems of scale. For the client referenced in the post with 300,000 unique KW generating impressions on Google, that 20% figure would still be a HUGE number of KW…far more than should really be thought of as “head” KW in my view. To me “the head” carries connotations of being a collection of KW you can meaningfully look at in a spreadsheet and could conceivably play with by hand. Any straight percentage of the total exposes you to much bigger lists than one could wrap their brains around.

    For most of our clients, using the definitions above, we only classified 2-3% of the active list as “head”.

  3. dhiraj says:

    I tried it and it helps us a lot to achieve our PPC goal

  4. Josh says:

    George – Is there any data on cost per order differences between the head and tail terms? I’ve seen some accounts where cost per order on tail terms is significantly higher than head terms, and other accounts where the reverse was true, but nothing in terms of looking at 20 accounts to see trends. Thanks!

  5. Hi Josh, great question.

    With proper bid management, and assuming the objective is to maximize revenue within an efficiency target, the cost per order or cost/sales or cost/margin should be the same for the tail and the head.

    That is in fact what we see: very little variance between the cohorts. If the tail is significantly more or less efficient than the head it means something is wrong with the bid management algorithm.

    We did see a couple of instances where the head efficiency looked worse because we were pushing some high traffic KW as part of a branding campaign. On the flip side, there was one instance where the tail was less efficient as a result of a push to hit “first page minimums” for a bunch of tail KW. Otherwise they were all in line.

  6. Mark Benoit says:

    Thank you for sharing this information. Something that is impossible to conduct but would be an interesting study is to determine how much the return on advertising spend (ROAS)would vary between a PPC account with all the KW heads set on broad match versus an account that is thoroughly built out with all terms set to phrase and exact match. I think it is a fair assumption that the ROAS would be higher for the account with the higher keyword volume. However, if you were able to test both methods on the same account you could then do a cost benefit analysis to see if the variance justifies the management time. I know that many agencies have great ABM technology but most company’s that manage their PPC accounts in-house probably do not. After conducting the cost benefit analysis, one could determine whether the investment in human or IT resource is really worth it. It would be interesting to know if anyone out there has pre and post KW build numbers that they could share that are in line with the testing previously referred to.

  7. Mark, thanks for the comment. We think the difference is material.

    Relying on broad match to cover the tail results in a smaller program at the same efficiency level, often much smaller. (If you budget, the result is reduced efficiency instead of proportionally lower spend and sales)

    There are three reasons for this: 1) Extensive KW list and the segmentation that follows yield more targeted ad copy. Better copy => higher CTR and QS; 2) Better segmentation means better targeted landing pages => higher conversion rates => higher bids => more traffic; and 3) Bidding differentials. Being able to target bids appropriately yields a larger program at the same efficiency for the same reasons I outlined in the syndication post. Glomming all the performance into one broad matched KW means overspending for some of the more general traffic and underspending for the more targeted traffic.

    Now, if all these together mean a program with a well developed tail yields a 20% – 30% bigger program is that enough to make it worth while? It depends on what the base is. If the current program only spends 10K per month a 20 – 30 % improvement probably won’t cover the cost of the management fee. If the spend is $100K the math changes considerably.

    We’ve taken over many many small KW list/ broad match programs and seen huge benefits associated with expansive build-outs. Hard to disentangle the benefits of the KW list, from improved bid management, copy, landing pages etc, but…

  8. Jeremy Brown says:

    George, building on that last comment, I’d love to hear more about how you are using broad match these days (if much at all).

    Do you use it to generate keywords which are then built out into their own ad groups? I find that to be useful in addition to using them in smaller campaigns as a way to capture extremely low-impression or unique keywords.

  9. We use broad match extensively, but often in conjunction with exact match (google.com only) versions with higher bids.

    As you suggest, broad match can be helpful in building out other permutations KW that may have different economics, but it’s also useful for capturing misspellings, typos and word orderings that are hard/impossible to anticipate.

    We’re eager to have greater controls for broad match, but have found that used wisely in its present form it can provide ongoing sales volume with solid ROI. The folks who’ve turned away from broad match entirely are missing the boat, imho.

    I’ve been meaning to revisit a study we did in 2007 on the value of broad matched traffic compared to exact match, but haven’t made that happen yet — will do so!

  10. Jeff Sable says:

    George,

    This was a nice read.

    I think it is amazing that more marketers and advertisers are not yet taking advantage of the strong intent end user searches (longer tail), which they can be part of on a pay for performance basis. I equate this to a retailer being able to have pay for performance rent in every physical shopping destination anywhere in the world, open 24×7 all year long, and not having to pay any fees to stock products, pay employees and fees to run any of the stores, and having $0 logistics costs to manage this global footprint. Why wouldn’t you want this deal?

    When looking at their PPC clicks, I am curious to know how many marketers and advertisers are unaware of the actual end user search queries that are “converted” to shorter tail Keyword terms by the search engines.

  11. Thanks for the comment, Jeff.

    As the benefits of smart automation have taken root and spread, some of the agencies that have been working off spreadsheets for years and years got left behind.

    They justify their approach by saying that broad match plus negative associations is just as good as having a comprehensive KW list. As I outlined in comment #7 above, they’re just plain wrong.

    How many email marketers or direct mailers would make the case that segmentation is bad? Segmentation rules, and the better it is done the better the ROI.

  12. Hello George, thanks for this interesting information. I think it good when people like you to give so much trouble… thanks for the contribution
    Marco

  13. Scott says:

    Hi George – great piece of work which I´m sure will generate some debate.

    I´m presuming the work is based on last click analysis of Paid Search traffic.

    What do you think would the effect be of including cross channel (natural search) traffic?
    Also what would the effect be of chaning the analysis to first click analysis or even more thorough click path analysis?

  14. Thanks Scott,

    We’ve done enough research on the first touch last touch issue within paid search to know that that won’t change the results — A small effect greatly overblown by the engines and shameless agencies to justify overbidding on general terms. Folding in natural search might be of some interest, but again the fundamental conclusions won’t change: the importance of the tail varies; it’s material for almost every sizable account; it can be the lion’s share of the account for some.

  15. Nomar says:

    Very nice study!

  16. Brian Carter says:

    Hey George, thanks for the study. Always enjoy your insights :-)

    You mention that SKU-based retailers find more value from long tail PPC keywords, but you didn’t quantify the comparison the two groups. Most of our PPC clients are hotels, which means they don’t have quite as many long-tail keywords for their products, and I haven’t seen long-tail to be nearly as important as you assert- I’ll have to do a study to verify.

    Tagging on your comments about match types, I recently did an analysis of ~15 ROI-oriented clients that I have not yet published. For us, the ROAS of broad, phrase, and exact match was not surprising- #1 was exact, #2 phrase, and #3 broad. Quality score followed the same pattern.

  17. Hi Brian,

    I wouldn’t be surprised if you found hotels to have a relatively less important tail. Each hotel has essentially one product, and the number of ways people describe that product is likely limited. Have you tried building out KW related to the conferences scheduled near the different hotels? It goes without saying that the tail will appear more important the greater the quantity of quality KW developed. You’re probably all over that.

    You’re right, I should have quantified the differences for SKU-based vs not SKU based accounts. The definition is a little squishier than I like; and the SKU effect is sometimes washed out by the “how people search for your products” effect. Let me dig up that data set and see if I can give you a more concrete range.

    Thanks for your comment!

  18. Laurence says:

    Hi George,

    Thank you for the enlightening post. You’ve sold me on how important the long tail is so over the past few weeks I’ve been building out my campaigns accordingly. Unfortunately I’ve run into two problems with this approach:

    1) ~15% of keywords have a QS of 4 or lower despite best efforts to make tight and relevant ad groups and ads.

    2) ~80% of keywords are paused by Google due to low search volume.

    Now take into account that Google penalizes account quality score for both of these points and I’m beginning to wonder what I should do with the majority of my keywords. Does RKG run into this problem when building its extensive keyword lists? And more importantly, what do you do about the penalties?

  19. Hi Laurence,

    We think folks spend far too much time worrying about mythical penalties. The account QS is dominated by the QS on your high traffic KW. If some of the low traffic stuff has lower QS it really shouldn’t impact the rest of the account.

    That said, QS of 4 or below is pretty bad, and surprising if you’ve put some attention to writing targeted copy. You may find that as Google learns, the QS will improve, but starting out that far in the hole makes me wonder if the account QS on the whole is not very strong.

    With respect to ads paused for inactivity, we do tend to clear those out periodically just to make sure we don’t waste time and energy on KW that don’t matter. I do wish they wouldn’t do that, but…

  20. Wiesner Vos says:

    An insightful post. There is great value in a well-managed long tail. The tricky and somewhat arbitrary aspect of measuring the long tail is defining the head/tail demarcation. I like the idea of considering a subset that can be managed by hand as the head. We find that an useful way to compare campaigns with each other and over time is to plot the cumulative contribution to total revenue by the top x% keywords in terms of traffic. You can see an example of such a plot in some of our own long tail research:

    http://www.clicks2customers.com/c2cblog/paid-search-keyword-tail.html

  21. Really funny to read this article ^^
    I mean actually a tail is always important :-P

  22. We’re eager to have greater controls for broad match, but have found that used wisely in its present form it can provide ongoing sales volume with solid ROI. The folks who’ve turned away from broad match entirely are missing the boat, imho.

  23. We totally agree. The benefits of well-regulated broad match, properly bid, are well worth the management headaches. We just wish there were fewer headaches :-)

  24. billig sprit says:

    Hello again,

    we use only long-tails for our seo. We`re sure, that the most google-user take a longtail.

  25. Thanks Billig. We recommend pursuing the tail in both paid and organic. High value traffic and less competition.

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