What Does It Mean?
Basically the Long Tail is a way to describe niche marketing and the way it works on the Internet. Traditionally records, books, movies, and other items were geared towards creating "hits." Stores could only afford to carry the most popular items because they needed enough people in an area to buy their goods in order to recoup their overhead expenses.
The Internet changes that. It allows people to find less popular items and subjects. It turns out that there's profit in those "misses," too. Amazon can sell obscure books, Netflix can rent obscure movies, and iTunes can sell obscure songs. That's all possible because the Internet has taken geographic location out of the equation.
How Does This Apply to Google?
Google makes most of their money on Internet advertising. Anderson referred to Google as "Long Tail advertisers." They've learned that niche players need advertising just as much, if not more than mainstream companies.
CEO Eric Schmidt said, "The surprising thing about The Long Tail is just how long the tail is, and how many businesses haven't been served by traditional advertising sales," when describing Google strategy in 2005.
AdSense and AdWords are performance based, so niche advertisers and niche content publishers can all take advantage of them. It doesn't cost Google any extra overhead to allow Long Tail customers to use these products, and Google makes billions in revenue from the aggregate.
How Does This Apply to SEO
If your business depends on people finding your websites in Google, the Long Tail is very important. Rather than focusing on making one Web page the most popular Web page, concentrate on making lots of pages that serve niche markets.
Rather than focus on optimizing your pages for one or two really popular words, try for Long Tail results. There is a lot less competition, and there's still room for popularity and profit.
Heads and Thick Tails - Money in the Aggregate
People often refer to the most popular items, pages, or widgets as the "head," as opposed to the Long Tail. They also sometimes refer to the "thick tail," meaning the more popular items on the Long Tail.
After a certain point, the Long Tail ends up dipping off into obscurity. If only one or two people ever visit your website, you're probably never going to make any money from advertising on it. Likewise, if you're a blogger who writes on a very niche topic, it will be difficult to find enough of an audience to pay for your efforts.
Google makes money from the most popular ads on the head down to the thinnest section of the Long Tail. They still make money from the blogger that hasn't made the minimum earning requirement for an AdSense payment.
Content publishers have a different challenge with the Long Tail. If you're making money with content that fits in the Long Tail, you want a thick enough portion to make it worthwhile. Keep in mind that you still need to make up for your losses in quantity by offering more variety. Instead of concentrating on one blog, maintain three or four on different topics.