SaaS: Top Long Tail Aggregators
In the third segment of our four-part series on The Long Tail, we’re exploring successful SaaS aggregators who have effectively mastered the concept and dominate their field.
Once you have grasped the concept behind The Long Tail and begun to integrate it into your thinking, you are going to find yourself looking for good examples of its use. As I started on this article, I found that it was fairly easy grab strong examples, but when it came to putting together a list – I realized that in the SaaS context, it becomes a little more difficult. The first question became – what really is and isn’t SaaS? Or more critically – when is a platform just eCommerce (as we used to say…)? And finally – does it really address a wide range of needs in specific ways – or is it just generalized Software as a Service?
Let’s start with a fairly easy one – Google Docs. Google Docs is an online replacement for a desktop word processor, spreadsheet, calendar, email client, photo sharing, personalized websearch – and a whole lot more. There is an ad supported (“free”) individual version that is pretty much a front end for all the web-based services Google offers. There is also a Premier Edition that has some additional features and guarantees for $50 per user per month without the ads. Because the Premier Edition is business-focused, it includes the core business productivity applications like the word processor, email, storage, and scheduling.
It is certain that Google Docs is SaaS application. It is a straight-forward replacement for a number of desktop applications many people use everyday. You can run your “instance” of Google Docs from computers other than your own because all the data and functionality is accessible from a web browser. Does the individual version qualify even though there is no subscription? Yes. No one ever said SaaS had to provided by a cash-based subscription. If Google can afford to offer the whole suite by leveraging advertising on some parts, you “pay for it” in effect by being an audience for the ads.
But – is it a good example of leveraging The Long Tail? No, not directly. To be clear, Google does offer many applications that can be leveraged for special uses and customized in various ways, with services like Google Gears. But there is nothing about the document features that is specifically attractive to a group like authors and accountants would find many functions missing from the spreadsheet application.
Google does have some excellent Saas business models that leverage The Long Tail however. Google AdSense allows web publishers to add advertising to their sites without developing a system to acquire advertisers, manage content placement or receive payment. The software picks ads based on the site content and the user base of the publisher’s site and pays based on “clicks” – the choice made by users to go to view the advertiser’s content. Because of its ability to be highly targeted and to adopt a “pay as you go” model – it is one of the best examples of SaaS and The Long Tail.
With that example – what about Amazon? I followed a series of “conversations” on Twitter the other day about what is and isn’t SaaS. When I mentioned Amazon, the opinion seemed to be – no, it can’t be – it just an online store. Certainly, from an individual buyers perspective – it is an online store. But, from that same person’s perspective, it does “suggest” items to its users based on their purchases and search history. It allows them to save their information for future purchases, post “wish lists” that will allow others to ship gifts to them, and participate in product feedback. So, in return for being able to show you advertising for products, it does offer services that would be hard for an individual to duplicate. That may not fit everyone’s definition of “Software as a Service” – but it is a service online.
However, think about it from a vendor’s perspective. Amazon provides services to vendors that allows them to integrate their inventory into Amazon’s “store front.” The vendor doesn’t need to build in customer preference, search, wish lists, shipping, or even build a website. Amazon will do it all for a “transaction fee” on sales. If Amazon didn’t exist, all the vendors on that platform would have to provide the services directly, use someone else, or not sell online. The fact that Amazon has the largest online audience, a good interface, and personalization for customers makes it an unbeatable service. Add on their data storage, application services, and off platform advertising and it becomes apparent that Amazon has many services for online businesses delivered in a strong mix of SaaS, eCommerce and infrastructure that is well positioned to leverage The Long Tail concept.
From that strong example, let’s consider Netflix. Netflix offers DVDs and now movie feeds as service to subscribers. On one level, it is tempting to describe Netflix as “Movies as a Service” rather than software. But, consider what the service provides online for its subscribers: They can browse real-time catalogs of the titles in the library and their availability. They can keep lists of what they have seen and what they want to see when it becomes available and their is a slot in their “queue.” Users can leave and check reviews of other users, see previews of movies and check the status of their returns and movies being shipped. They can choose to stream movies and show them in their home theater systems if they are computer attached. What provides these services? Software. It isn’t software others could leverage to provide their own rental services and it doesn’t provide access for others to share in the Netflix customer base. But it is a service, and it is software doing the work – end to end – right down to the system that queues DVDs for shipping, labeling and receiving.
Finally, let’s consider one of the most discussed SaaS offerings – Salesforce. Salesforce has gone so far into SaaS, it has truly crossed the line to cloud-computing, no matter how you define it. Salesforce is a CRM system at its heart, but it has been integrated and leveraged many ways by its AppExchange and AppStore, where other companies can offer value-added services, and its partners to become a full suite of related services. Does Salesforce leverage The Long Tail in providing its services? Yes. The ecosystem provided by the AppExchange and AppStore serves ISVs who leverage the Salesforce software and infrastructure to provide vertical services and customization. Salesforce CRM has diversified its offering to verticals, provides ways for customers to customize the process flow and presentation of the service to their users, and there are several integration tools that allow data to flow to other applications in a business. Salesforce is trying very hard to serve a small to mid-sized market as well as the largest enterprise customers. It isn’t an easy balance, but it is succeeding at many levels.
For those that hoped this article might be a list of the top Long Tail leveraging aggregators – I have to say that is something you will still have to define for yourself. From this overview, you should have a good grasp of the concept to analyze what you find, but it is a growing field and there are many viewpoints. Regardless, my point in writing this article is to say that the leaders in SaaS leverage The Long Tail in many interesting ways – but most effectively by being the head of a broad range of services that continue to be of value to many users with specific needs.
In our next article, we’ll close this series by considering how Social Media drives the power of The Long Tail down to the individual.
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