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

8 comments:

Ron Hodson said...

At WheresURL.com, we have been addressing the problem by making the "where" & "what" of the Long Tail of Travel quick and easy to find. Looking for a Dude Ranch in Colorado, an Irish Pub in San Francisco, or a Childrens Museum in Connecticut? Choose the category and move the map anywhere to see what's around. Except for hotels, every place has only one location (no Starbucks or McDonalds), which are the truly local flavor of travel.

Peter Topping said...

This is a good read.There is a sweet spot in your argurment but 4 things mitigate against it in its current form at the moment.

1 Search patterns have changeed with processing power dramatically since 2005. In 2005 we were in the pre "widget" or "App" phase of distribution. So the value of the supporting data is limited.

2 From a behaviorist point of view, humans do tend to do what other humans do by instinct and a small number deliberatly dont do what the others do. Hence most people dont want to be different or "Nichey". We seek security in treading a well worn path on our travels.

3 The supply side distribution is effected by competance and the balance is A symetrical in favour of national & international brands. Niche suppliers in many cases offering a genuine travel experience lack technical competancy or the tech integrations required to supply to the major distribution partners.

4 Noise. The sheer volume of internet noise created by the major players drowns out many niche providers. Major players have huge connectivity, 1000s of key words and SEO pages often driven by marketing agencies working on Ad spend metrics based around rewarded targets and not client focused aquistion.

Just when you think you have found a site that is expert you find it comes back to hotel club, Pegasus GTA blah, blah.

That all said you have something prehaps the Aldi model supermarket stock and inventory model vs the Coles Woolies may offer us some insights into choice in mass markets.

Steve Sherlock said...

i'll just comment on this quote: "getting the people to find the thing they did not know they were looking for".

the way i look at it, is that the long tail gives smaller, low budget operations a chance to get a start and on the radar.

and if they create a product that people can't find anywhere else i.e. it appeals to the EveryYou and if there are enough EveryYou's showing interest, then that business starts to move up the tail towards the head.

for example, i think twitter started off in the long tail, appealed to a few EveryYou's then bang - everyyou's and everyme's were draw in once a tipping point was reached.

Ram Badrinathan said...

Where perceptive comments here. The very personalized which honors the four dimension of breadth, depth, context, community is moving in the direction to understand the every but a eminent American philosopher Ken Wilber has said that individual has 16 perspectives on a particular situation. it is based on AQAL Model which takes into account how the individual, collective, techno economic structures all interact dynamically. Your 4 dimensions in a sense map to 4 of the 16.

This theory transcends and includes Long Tail and does not exclude long tail. Long tail also does say the little guy has influence now. Also let us understand that keywords display intent. And if the traveler has identified his intent for e.g. yoga retreats in Tuscanny, he will get his wishlist and that is the real power of Long tail. The fact that sum of niches is greater than the tail is debatable but the principle is not

Tim Hughes said...

@Peter T - thanks for great and detailed comments. Niche demand can also come in the form of the combinations of travel choices in addition to a particular destination. The "traditional" way to think of niche is an targeted experience that is off the main stream agenda (like elephant back safari in Africa). Another way may be someone ending up in mainstream locations but in an unlikely combination. For example a person looking for a month long holiday of skiing, shopping and scuba who ends up doing Sydney to Japan to London to Thailand then home. For the first the discovering part is around specifics - how do I find out which the best elephant back safari to do. For the second we need to use the data we now have to push this idea out - kind of like a forced discovery - as the consumer is not going to know to look for it. Great comment. Thanks

@Steve S - I agree - as with comments above if suppliers create a great product that is deep into the tail and that a consumer understands then sales should/will follow. The challenge is when consumers don't understand some part of the product. For example I visited Nelson in New Zealand a year ago. I did so for family reasons but soon discovered that is in a great location because it is in between the Marlborough Wine region on the right and the Able Tasman national part on the left. A consumer might not know the "value" of that or go looking for it. My hope is that we can use the ideas in this post to eventually push products like this

@Ram - thanks - am going to check out Ken Wilber's work. See you in a few weeks

Jaime said...

Fascinating theory (EveryYou) and very interesting comments. Let me add my two cents (Canadian cents) if I may. What jumped out at me in your post was "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)." I agree completely with this assertion.
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If I understand it correctly, the theory of EveryYou, would allow marketers (in this case travel marketers) to push product to an individual based on that individuals available digital data, similar to the way Google Reader recommends blogs based on the existing blogs the user is already following. I have "discovered" some great blogs this way. However, when it comes to travel (or new independent music artists, for example), an organization (be it hotelier, destination or restaurant) would need access to the individual's preferences at any given time (and this isue of any given time is key). ("For unconstrained niche demand you need to have a systematic and automated means of making trusted and targeted recommendations to someone.") Notwithstanding the technology available, I have strong doubts that most individual's data (save for actual purchase history) would be very reliable because, as you rightly point out - "human beings are a mess of contradictions." and preferences change over time and unless the individual constantly "updates" his or hers digital persona the automated system may end up recommending something totally irrelevant.
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"Using the four dimensions of data...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." In theory, this looks great and maybe with time there will be a digital service that can do this (my wish would be for a system whereby you ask a question as you would a human being and your "digital agent" would come back with the perfect answer/recommendaion).
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But even if the technology is there - what about trust and brand? In the era of "too much information" I think the brand becomes more important than ever. As a traveler and consumer, who can I trust to make impartial recommendations about products or travel? For example, speaking about hotels, I have been a Priority Club Ambassador member at IHG for a few years. I trust IHG brands over most other hotel brands. IHG must have quite a bit of data on me, but they could have more if they knew how to ask. For me to trust unknown hotels or B&B's or Villas in Tuscany I have to either a lot of online research or stumble upon a friend who's been there.
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The head of the tail is powerful because that's where we find the big brands. Some people believe advertising is dead or that you can do away with advertising by solely participating on social media (e.g. start a Facebook fan page). This clearly does not work (try building a fan base on Facebook when nobody knows you or about you).
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I don't believe advertising is dead and I don't believe that brand is dead. In order to break through the "too much information" and "too much choice" era, those who can advertise and advertise well are the ones who can breakthrough because, with few exceptions, the challenge of discovery can only be overcome with advertising. Of course, the more relevant and targetted the advertising the better (that's what I mean by advertise well).
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Hope all is well with you Tim. Unfortunately, I won't be able to attend PhoCusWright in Florida this year. If you go, have a great time. Maybe I'll go to ITB next year.
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cheers,
Jaime
www.canadiantourismblog.ca

Gerard said...

Fantastic post.
I've just read it after following the link from today's blog post.

One thing I've noticed is that because of the limited number of airlines in Australia the keyword spread is much more focused on brands. e/g/ cheap qantas flights to Bali' rather than just 'cheap flights to Bali'
So while this UK research is great we need to remember that Australia does not operate in the same open environment as the EU has

Tim Hughes said...

@Gerard - good point. Thanks