You hear it left and right … do not start in TIER-1 GEO’s straight away, learn the basics in developing countries first. But why is that? Or is it true at all? I will summarize the reasons in this article and try to explain why it is so and whether it’s a rule to follow in 100% of cases.
Note: This is a repost from the STM Forum, where I posted the article originally, in November last year. I decided to repost my own articles from STM from time to time, so guys who don’t have membership over there, can benefit from it too.
LET’S DEFINE WHAT TIERS MEAN FIRST.
When talking about GEOs, we often use the so called “TIERS” to define what countries we actually have in mind. 3 tiers are used most of the time : Tier 1 are considered the most competitive, Tier 3 are the least competitive ones.
There is no definitive list of countries per Tier or a fixed set of rules that would define them unfortunately. On top of that, several industries or agencies have their own rules for this. So we gotta come up with our own definition, in relation to internet marketing and affiliate offers.
Basically, the longer it is possible to monetize a certain GEO with online offers, the higher Tier such country belongs to, in terms of affiliate marketing. This is closely tied to the available payment options and the wealth of particular countries.
HOW MANY TIERS DO WE HAVE?
Not so long ago, the only way to pay for something on the internet, was to use a Credit Card. As you can guess, only a limited amount of GEOs were developed enough for this : USA, Canada, founding EU members, The Nordics, Australia, Switzerland … the most developed Asian countries like Japan etc … These were the original TIER 1 Geos.
New EU members followed quickly, forming the TIER 2 group of countries, along with the most developed players in South America, Asia or the Arabic world. Many of these could be already considered TIER 1 too.
As the technology started to develop, new payment options were introduced – such as pay-by-phone, dialers, SMS and carrier billing, internet banking, prepaid cards, various tokens and coupons or the massive spread of Cash On Delivery in Ecommerce …
Micro-payments handled by the mobile carriers were a game changer for example, that’s why we can now monetize plenty of rather poor and still developing African, Latam or Asian countries … that’s something we could only dream about 10 years ago. These GEOs can be considered the TIER 3 group.
DO YOU HAVE A LIST OF COUNTRIES BY TIERS?
As I already said, I’m not aware of any definitive list that would define Tiers, you can find several list that will be different from each other. But here is one that I think is pretty good, I would personally move some countries from Tier-1 to 2 and some that are listed in Tier-2 would better suit the Tier-3. But the list is good enough to get an idea about the Tiers.
TIER 1 COUNTRIES
United States of America
TIER 2 COUNTRIES
Antigua & Barbuda
Bosnia & Herzegovina
St. Vincent & The Gren
Trinidad & Tobago
United Arab Emirates
TIER 3 COUNTRIES
Central African Rep
Papua New Guinea
SO WHY ARE TIER 1 COUNTRIES MORE COMPETITIVE AND HARDER TO WORK WITH?
The answer is pretty simple, because they are the target of online marketers for a longer period of time.
This simple fact has a bunch of consequences :
1. These GEOs are more regulated, because marketers already tried MORE tricks on these markets. The governing bodies had to react and introduce pretty strict rules. Regulators in TIER 3 GEOs are not aware of these tricks yet and many are still allowed there, which equals to better conversions.
2. There are marketers who run in developed markets for many years, they have the tools and experience that you don’t have. As a result, they are able to bid higher, which makes it impossible for you to compete with them.
3. Mature markets attract more BRANDING advertisers! There is 0% chance to compete with branders, since they aren’t that much results oriented … try to compete with someone who is only looking to spend their budget…
4. These markets are mature and saturated – TIER 1 GEO’s citizens are on the internet longer than the rest of the world. They have seen it all by now. The WOW effect is gone. They are banner blind, they won’t shit their pants when you show them the latest battery saving app …
There is one more thing that is specific to the USA and to UK as well. These are English speaking GEOs and every single internet marketer speaks some English … it’s tempting to start with GEOs where you can write your own ad-copy, without having to use a translator.
WHY IS IT BETTER TO START WITH TIER 2 OR 3 GEOs?
The reason is pretty simple again and it’s basically just the opposite of what makes TIER 1 more competitive TIER 3 GEOs are not targeted by online marketers for too long. Combine this fact with the available micro-payment options and you have a winning combination.
TIER 2 and 3 countries are still growing when it comes to internet usage, there is a ton of internet virgins who are about to watch their first porn movie online or to install the first few apps on their new Chinese smart-phone they bought for $50 bucks. These are perfect targets for our affiliate campaigns.
But there is more to this :
1. The regulations in these GEOs are non existent, or still very low. This is changing thou, so do not wait too long.
2. Payouts on offers in these GEOs are low, which turns a lot of big players away … they think it’s not possible to make $ with offers that pay cents … boy, they can’t be more wrong. I wrote a separate article on this, check it out : http://www.matuloo.com/low-payout-offers-vs-high-payout-offers/
3. The massive volume of TIER 2 or 3 GEOs is an argument on its own. Think about countries like Brazil, Mexico, Indonesia, India … On top of that, many of these GEOs are quickly developing, which means an ever growing audience that is hungry for anything related to the internet.
4. The traffic in these GEOs is cheap, this is one of the most important factors that a new affiliate should consider. Working with cheap traffic means more data for the same amount of $ compared to TIER 1 GEOs.
SHOULD YOU STAY AWAY FROM TIER 1 COMPLETELY?
NOPE! Tier 1 GEOs can be very profitable and it’s obviously possible to make them work. They are just not a good pick, when you are starting out. Learn in the less developed markets, then attack the top ones.
When I was starting out, I picked dating in USA and I even had a few profitable days, but I couldn’t sustain the profitability for a longer period of time. That happened only when I ventured out into less competitive GEOs.
These days, I’m running in TIER 1s again too, but I’m also utilizing the emerging markets a lot. This is what everyone should do, limiting yourself to just a certain “type” of GEOs is foolish. There is so much opportunity out there, just use it.
Thanks for reading!
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