What is the "long tail" of paid search, and why does it matter?

Chris Anderson coined the long tail concept in a 2004 Wired magazine article. Anderson's original argument applied to online merchandising. Because web-only merchants (think Netflix) should have lower inventory carrying costs than traditional retailers (think WalMart), web-only merchants can afford to offer a broader catalog of items. Anderson describes a graph where the x-axis represents SKU sales-rank and the y-axis represents corresponding sales by SKU. Best-selling items appear on the left side of the distribution. These are hit products with large sales, the products carried by traditional retailers. This graph drops off steeply, then heads rightward with an nearly flat long tail. The tail are the niche products, individually unimportant, but—and here's the big insight from Anderson's article—collectively significant.

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