A big ques­tion many U.S. adver­tis­ers have when expand­ing their busi­nesses beyond a domes­tic offer­ing is what price dif­fer­en­tial they can expect with their adver­tis­ing. In the search engine mar­ket­ing (SEM) world, many com­pa­nies includ­ing Effi­cient Fron­tier release reports and insights about inter­na­tional trends. How­ever, there is far less insight when it comes to Display.

Of course, non-U.S includes more than 190 coun­tries that speak numer­ous lan­guages, and includes first-world and third-world nations, so it can­not be taken as an absolute, applic­a­ble to every for­eign mar­ket. How­ever, the trend data should give U.S. adver­tis­ers, and indeed inter­na­tional adver­tis­ers, a sound direc­tional insight as to what they can expect cost-wise from their Dis­play adver­tis­ing, which would sig­nif­i­cantly aid their fore­cast­ing and planning.

In Fig­ure 1, we show the rel­a­tive CPM (cost per thou­sand impres­sions) Index of the U.S. and non-U.S. Dis­play mar­kets through 2010, with the U.S. CPM index for each month used as a base­line across the EF client base.

Fig­ure 1: EF U.S. vs. Non-U.S. Client CPM Index Trends 2010
Blog5fig1

Through­out 2010, the non-U.S. CPMs in dis­play have been about 70% cheaper than the U.S. CPMs, with that gap widen­ing as the year pro­gressed and macro U.S. eco­nomic indi­ca­tors improved.

This cov­ers all ver­ti­cals, so nat­u­rally there could be dif­fer­ences if we com­pared this across a given ver­ti­cal. We will doc­u­ment more detailed insights in that vein in the com­ing weeks and months.

Another inter­est­ing point to note is that just as non-U.S. CPMs were about one-third the price of U.S. CPMs, the CTRs of these ads for non-U.S. was about one-third the U.S. CTRs for 2010. It is dif­fi­cult to draw a defin­i­tive con­clu­sion from that sta­tis­tic alone beyond that, U.S. con­sumers have a greater propen­sity to inter­act with Dis­play mar­ket­ing messages.

Ulti­mately, the level of inven­tory, nature of the com­pet­i­tive land­scape and sophis­ti­ca­tion of the Dis­play mar­ket­place infra­struc­ture out­side of the U.S. is still a cou­ple of lev­els behind, and this plays a sig­nif­i­cant part in the Dis­play inven­tory pric­ing dif­fer­en­tial. This is quickly chang­ing as all major play­ers in the Dis­play ecosys­tem are rapidly expand­ing their oper­a­tions, footholds and prod­uct offer­ings to Europe and Asia in particular.

It is for this rea­son that any part­ner an adver­tiser chooses in this mod­ern age not only under­stand the dynam­ics of adver­tis­ing glob­ally, but can also exe­cute that mar­ket­ing effort to the same opti­mal per­for­mance stan­dards they would expect in their domes­tic market.

Chris Jacob

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