If you’re new to working in the online advertising industry, then you’ve probably been coming across a seemingly endless stream of acronyms. Two that you’ve likely already encountered on multiple occasions are “Tier” and “GEO.”
In this article, we’re going to define and review these important terms and look at how they’re used in the modern digital advertising industry.
What’s a GEO
GEO is simply short for geographic location. The term is employed when it comes to targeting an audience. Your “GEO” is the location that you’re going to target for a particular campaign.
GEOs can be very specific, or they can be rather broad. But when it comes to targeting a national level, which is the norm, then a two-digit country code will be used.
These two-digit country codes conform to the ISO 3166-1 alpha 2 standards and are, therefore, extremely uniform and predictable across the entire industry.
Thanks to these standards, there is no confusion between Nicaragua (NI), Nigeria (NG), and Niger (NE).
That said, GEOs can be target areas that are much more specific and restricted. Often, you don’t want to target an entire country, especially when it comes to countries that are very large, like the United States, Russia, or India.
Or you might want to target specific regions in nations that have considerable variations in wealth (this also applies to the above-stated nations).
Further, in nations like the United States, laws can also vary significantly from state to state. These legal differences sometimes mean that you need to change your parameters or how you advertise for each state.
In some states, certain kinds of advertisements are illegal while they’re legal in others. This is often the case with online gambling.
The GEOs used for each campaign will reflect this reality.
Why GEOs are important
GEOs are important for several reasons – not only because they allow you to remain in compliance with laws that vary by nation or state. They also allow you to better target customers and adapt to regional variations.
Many apps, for example, are not useable in certain countries, indeed they may only be usable in a single nation. This situation often occurs with things like taxi-hailing apps or food delivery services that require a substantial infrastructure to be built up at the location before the apps become usable.
Buying patterns also tend to vary significantly with geography. Not just because of variations in disposable income, but for cultural reasons as well.
When one’s advertising budget is limited, as it always is, it’s essential to pick out only geographic locations that have a high likelihood of conversion.
But often all that matters is that the area has a high level of development and high disposable income. This consideration is by far the most important for many applications as they can be installed and used anywhere one has a smartphone capable of using them.
The very fact that the person has a smartphone already sorts them by socio-economic class. If they can afford a 500 dollar phone, a 2 dollar app won’t be such a hard sell. Or it shouldn’t be anyway! That will depend on your creative.
It’s in situations where an app can be downloaded, installed, and used anywhere, one would likely sort by “Tier.”
What are Tiers
Tiers are essentially geographic categories that contain nations roughly sorted by the average value of an impression. The more in-demand an impression from a particular country, the higher its tier.
This simple system allows for the sorting of almost every nation in the world and, better, it enables advertisers to easily (if very broadly) communicate what demographics they want to target in their campaigns.
And this is the whole point of sorting nations by Tier.
It’s used to give guidelines to ad agencies and networks about what GEOs can be used. Someone might only want to buy traffic from certain tiers, but he doesn’t care about a specific GEO within the tier.
The ad network, DSP, agency, or whoever else might be placing the order, can start by targeting the entirety of the tier.
Then, once the earliest results have been returned, they can begin targeting within the tier based on which specific GEOs are performing well.
It’s worth noting that tiers are NOT sorted by the geographic region, by language, or by anything else of the sort.
It’s just the categorization and division of GEOs by their size, economic development, per capita income, and a host of other factors.
The three tiers are broadly broken down into these three categories:
Tier 1 – Developed, Wealthy, Desirable
These are the highest wealth GEOs. They have developed internet infrastructure, high per-capita income, and, for these reasons, conversion usually leads to higher returns.
For all the above-stated reasons and more, Tier 1 GEOs are by far the most sought after. If you’re running a limited campaign promoting an expensive app that targets those living luxury lifestyles, then you’d target Tier 1.
It’s not just expensive apps and services that target Tier 1, though. Due to the diverse, highly developed, wealthy consumer base, it is often the default target Tier for campaigns across the board.
Tier 1 traffic is generally the most expensive because it is the most valuable. It is also by far the most competitive. Everyone wants Tier 1 traffic, and it’s a small minority of the global population. So not only are you going to be paying more, but you’ll also need to be playing smarter if you want to see a good Return On Ad Spend.
Examples of Tier 1 countries are the United States, Canada, Australia, the United Kingdom, France, Germany.
Read more about what makes a Tier 1 nation here – it’s more complicated than you might think.
Tier 2 – Developing, somewhat wealthy
These are generally semi-developed countries, countries that include portions that are very wealthy (and therefore worth targeting
Examples of Tier 2 countries are Japan, India, and China.
In many ways, Tier 2 countries are nations that are closer to Tier 1 than they are to Tier 3. Tier 1 are the countries that have made it and that everyone wants to target. Tier 2 are countries that have almost made it and that many advertisers might want to target.
That is to say that there is a quality “floor” in Tier 2. This is not the case at all in Tier 3.
Tier 2 countries can also be quite wealthy, but are simply too small or require very specific ad copy, tactics, or compliance that makes them something of a special situation.
This is why a very rich, very connected country like Japan is considered Tier 2. Advertising in Japan is usually very Japan-specific and therefore it’s rarely categorized as a Tier 1 country.
Tier 3 – Undeveloped Markets
This is essentially the participation trophy tier. The countries in this category generally have the least valuable traffic. Per-capita income may be low, payment services inadequate, or any number of other things might keep these nations out of Tier 2.
In general Tier 3 traffic is cheap, plentiful, high volume, and very, very low value.
Often, even when advertisers are looking to make a high-volume, low-value campaign, they still only target Tier 1 and Tier 2 countries, leaving Tier 3 out entirely.
Example: Somalia, Eritrea, Sudan
Is there anything worse than Tier 3?
Absolutely, below Tier 3 are nations that have international sanctions placed on them by global trading organizations or by important Tier 1 countries (namely the United States, the United Kingdom, etc.).
Countries below Tier 3 are ones that you want to avoid because working with them could have significant legal and financial penalties. A couple of examples of countries that wouldn’t fit anywhere in the Tier listing would be Iran and North Korea.
Targeting users in these countries is probably not a good idea for the time being.
Ranking is not an exact science
If you look online, there are many, many people offering various and divergent lists of Tier 1, Tier 3, and Tier 3 countries. There isn’t an exact consensus when it comes to what constitutes a Tier 1 country in comparison to a more desirable Tier 2.
Countries that are on the border might be considered Tier 2 with one Ad Network and Tier 3 on another.
So, there is a certain fluidity to these descriptions, and the lines between them are relatively blurred. What matters is that these terms, inexact though they may be, are used all over the digital advertising industry.
In the end, it’s mostly a matter of income
When you get right down to it, the primary criteria by which we determine tiers is per-capita income and not something like Purchasing Power Parity (or PPP). PPP is useful for comparing the quality of life. However, when it comes to international sales operations, all that matters is nominal disposable income per capita.
So while the different Tiers are a bit arbitrary, one can generally figure out what tier a nation belongs to by simply looking at a list of countries by Per-capita income.
But, as stated above, it’s is not always this simple. Some high Per Capita Income nations do not fall into the category of Tier 1.
This is often because they are too small (Kuwait, UAE, etc.). Other times, a country might be high-income, but only a tiny minority of people have access to this wealth.
Both of these things make running campaigns within these GEOs difficult and often not worth the time and effort.
So while it is mostly a matter of per-capita income, it’s essential to realize that certain high Per Capita Income countries are not Tier 1 countries by that fact alone.
Conclusion
GEO and tier are two very useful means of targeting customers and directing campaigns in digital and mobile advertising. In digital advertising, it is often just as easy to launch in your home country as it is on the other side of the world.
Because of this, a means of organizing and sorting desireable geographic locations is crucial.
Likewise, because it is so easy to launch in various countries, advertisers often want to target all regions that fit specific criteria. This is where Tiers come in.
For a company pushing a mobile app purchasable through an app store, there is no reason to sell it in the United States alone. Apple’s App Store and Google’s Play Store facilitate the purchase on their own, so there’s no reason to leave money on the table by only targeting a portion of Tier 1.
That is unless the app requires a lot of exterior infrastructure. But if it is a simple mobile app, such as a casual puzzle game or the like, then there is really no reason not to launch everywhere that you think you can afford it (and for which you have localizations).
Quick Recap
GEOs and Tiers are two things that you’ll be working with a lot if you’re in the digital advertising industry.
GEO – This is a designation of geographic location that generally refers to countries. The national designations used are the two-letter country codes as specified by the ISO 3166-1 alpha 2 standards.
More broadly, however, GEO can refer to any geographic location, not just national. If you’re only launching a campaign in New Jersey, then you might say that New Jersey is your GEO. The US isn’t your GEO since you are not targeting the whole country.
Tier – This is a means of sorting national GEOs by their value to digital advertisers. In general, there are three tiers. Tier 1 being the best most desirable, and Tier 3 being the worst and least sought after.
The national GEOs are primarily sorted by national wealth and per-capita income, but the criteria vary with each advertiser. Some nations might be considered Tier 2 with one advertiser, but Tier 3 with another. Though all of the major countries are very consistently sorted. For example, the US and UK are always Tier 1, the Democratic Republic of Congo is always Tier 3.
Lastly, it is worth noting that some providers use a 4 or 5 tier system, rather than the more typical 3 tier system. So be on the lookout for that.
Mobinner is an advanced, high-performance Demand-Side Platform. We have been helping customers acquire users, build brands, and drive conversions since 2017.
