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

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