"Chasing the long tail" just means finding keyword phrases that are specific enough to be relevant to your specific product or service. Still, you also want them to be just broad enough to get enough of an audience to get your voice heard. This is, obviously, much more easily said than done.
One of the most common examples that are used to illustrate chasing "long-tail keywords" is by adding a color to a certain phrase. For example, if you sell linens, "blankets" is a ridiculously broad term that gets hundreds of thousands, if not millions of searches a day. "Baby blankets" is obviously a lot more specific and has considerably more refined search traffic. But to "chase the long tail" so to speak, you need to find three or four word keyword phrases (or perhaps longer) that are more specific to what your customers are looking for.
For example, think of "blue baby blankets." It is a fairly common color for baby blankets. So it's not surprising that it's a search phrase that actually gets about one thousand searches a month on Google alone. So you might want to write some content about "Why Are Blue Baby Blankets So Popular?"
Now, why would you limit yourself to a specific color in your content? Preferably, you would have content around red or green baby blankets, as well. The concept of chasing the long-tail is more about zoning in on the types of people that are closer to ready to buying a product.
However, chasing the long-tail must also consider the variations on a keyword phrase. I have mentioned "red baby blankets" and "green baby blankets" as possible options for content surrounding "baby blanket" searches. However, per Google's Keyword Planner, "green baby blankets" get about half of the monthly search volume as "blue baby blankets." However, "red baby blankets" on the other hand, gets about 700 monthly searches, which is very close to "blue baby blankets" at about 900.
What does this research show exactly? If you have a section of your business devoted to baby blankets, this is rather important information to consider. It means that your blue and red baby blankets are twice as likely to sell as your green ones, at least according to the Google search audience. This is pretty powerful information.
If you were to optimize for simply "baby blankets," which is a term that gets 245,000 monthly searches, you're going to be lost in the noise of all the other companies out there trying to rank on Page One of Google for that product. Focus in on the specific products people are looking to purchase, especially in a particular color. As the longer keyword phrases never have the same amount of competition, you can rank much more easily for the long-tail phrases. Then, you're much more likely to get someone's attention.
Think of some basic ways you can help focus your content on specific permutations of your product. It can be basic as color, size, or model. Just make sure that people are searching for that specific thing on a regular basis. It can be just a few hundred searches per month, if it's specific enough. Even if you don't have a physical product, there are still certain ways that people interested in what you have to offer will search for it. The free Google Adwords Keyword Planner (with sign-up for a free Adwords account) is great for doing this sort of research. It can also give you other keyword ideas for content you should be producing surrounding your content.
Keep in mind that search traffic alone isn't everything. You need to be getting the right traffic, too. By focusing on the power of specifics, you get more targeted, more relevant traffic.
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