We live in an increasingly shrinking world, and it’s become easier than ever to be an international vendor. Depending on what threshold value you use to calculate “ecommerce” there’s between 110,000 and 24 million ecommerce sites in the world, but only a fraction of them truly serve an international audience.
What does it mean to serve, as opposed to take orders? It means:
Serving a non-domestic market can take a lot of work, but you can’t afford to leave the money on the table. Here’s why:
Distilling the perfect maximum cost per click (CPC) for your products (whether in Search, Shopping, or the Google Display Network) is an expensive endeavor as there will be flux in CPA while you’re finding that magic number. International markets come at an inherent discount, so the flux in Max CPC isn’t as prominent. Not to mention, once you find your magic Max CPC, you’re looking at a significant discount: the average CPC in India is $0.32 but the average CPC in the US is $1.65. Granted, these are averages, and not all clicks will be conversions, but if you can get an 80% discount on your clicks, can you afford to leave them on the table?
The average “breakeven” CPC on US ecommerce is $2.56 (this factors in the client being a client for three years and spending $100 on their first purchase). With these metrics in mind, each customer is delivering you 55% ROI. By contrast, the “breakeven” CPC in Australia is $3.53 with the same first time purchase value, which means the ROI comes in at 114%. Yes, there might be more overhead associated with catering to that market, but given that the average CPC in Australia is $0.85 for every $1.00 spent in the US, profit is still possible. (Figures via the Lifetime Value Calculator.)
Not all international markets are price-point bargains, but they make up for it in their consumer loyalty. For example, Germany is one of the most expensive international markets, but once you earn the business, you likely have it for life.
Nothing drives up the price of your CPC like a crowded market-place, and the US is a very crowded market. With well over 1 million advertisers on Google and 699,000 advertisers on Bing, it can be hard to cut through the noise without paying a pretty penny.
Many of the international markets have a fraction of this advertiser base, which means there’s time to test account structure and cement your brand’s dominance once you’ve proven out the economics. You’ll have more room to scale. Conversely, if you see your competitors advertising abroad, there’s a good chance you can be profitable too – not to mention entering a market will drive up the cost of clicks of those already there, so you’ll win on both fronts.
Navah Hopkins is a Top 25 PPC Expert and international speaker who has been in the digital marketing industry since 2008. She specializes in paid media strategy and helping brands build relationships with profitable partners and customers.
She’s a cofounding member of the Paid Search Association, a group dedicated to empowering the next generation of PPC practitioners, and she continues to give back by sharing lessons learned at conferences and local universities, and in blogs and webinars for SEJ, SEL, Semrush, and WordStream.
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