All in all, while there are practically unlimited options available to you, we've found the best place to start is generally with casting a wide net, and then tightening up down the line after you've analyzed the conversion rates. Focus on one variable at a time, adjust & repeat. Find out what's working and what's not, and then slowly tighten the audience to your preferred countries and regions. Which can change drastically artist to artist. So definitely keep your personal goals in mind when deciding where you want to focus your ad spend, but be open to including some that you might not have initially. You never know where you might have a die hard fanbase waiting for you. If you have any questions about anything in this article, feel free to reach out to us via Text or WhatsApp @ +17407398435 or check out some of our other articles.
Country Tiers Guide
Understanding Country Tiers
There are 195 countries in the world, 184 of which Spotify has a presence in. With so many countries available to us, it's crucial to understand which ones are worth investing money into and which ones are not when it comes to efficiently scaling your marketing efforts. While over the long term, many of these decisions will come down to your specific goals, a great place to start is by simplifying the process & breaking down all countries into three main tiers. Typically known as Tier 1, Tier 2 & Tier 3.
The main differences between these tiers mostly comes down to their Spotify payout rate & general advertising reach costs. For example, Tier 1 countries, while being the most expensive regions to run ads in, are more likely to provide us a higher royalty rate per stream than Tier 2 & Tier 3 countries. Although that may always seem like it's a worthwhile trade off, it may not be depending on your overall goals & budget. So without further ado, here's how we typically break down the tiers.
Tier 1 (High Royalty, High Cost); Typically > $0.0035+ Royalty/Stream:
Countries Within T1: United States, United Kingdom, Denmark, Iceland, Norway, Monaco, Finland, Switzerland, Ireland, Liechtenstein, Sweden, New Zealand, Luxembourg, Andorra, Netherlands, Australia, Austria, Germany, France, Belgium
Tier 2 (Medium Royalty, Medium Cost): Typically $0.0018 - $0.0035 Royalty/Stream:
Countries Within T2: Canada, Cyprus, Israel, Hong Kong, Estonia, Malta, Singapore, United Arab Emirates, Spain, Czech Republic, Italy, Lithuania, Greece, Hungary, Romania, Slovakia, Uruguay, Portugal, Brazil, Mexico
Tier 3 (Low Royalty, Low Cost): Typically < $0.0018 Royalty/Stream:
Countries Within T3: South Africa, Poland, Saudi Arabia, Taiwan, Malaysia, Thailand, Peru, Chile, Ukraine, Philippines, Morocco, Paraguay, Indonesia, Turkey, Argentina
How Our Agency Uses Tiers
Depending on our clients’ goals and preferences, more often than not we're using multiple combinations of these tiers. While you can simply break them all up and never combine them together, often times we've found that's not actually the best decision. Especially when we're talking about the higher tier countries. Like with anything in life, every decision has a pro & con and which tiers you use is no different. Each tier has their own benefits and drawbacks & it's important to not only understand what those are, but also understand how they work together.
As mentioned previously, while T1 countries may payout the most per stream, they're also some of the most expensive countries to run ads in. Especially the United States. Advertising platforms at their core are just one big marketplace with many advertisers bidding on the attention of their users. So you have to think, if you're only targeting a country like the United States, you're actually competing with every single other advertiser targeting the same people. The inverse also holds true here, while T3 countries are usually some of the cheapest countries to run ads in because they're less competitive markets, they also tend to have the lower payout. In most cases, you'll find Spotify has done a pretty good job of making everything even out. If the US is 2x more expensive to advertise in than Brazil, the US' royalty rate will likely be close to 2x higher. With that out of the way, now we can discuss more about why in practice, it's usually smarter to use combinations of theirs tiers together rather than segmenting them out 24/7.
So let's say you run a campaign for your song and you want to have a big focus on T1 countries. If you were to run an audience build that solely consists the T1 countries, it's very likely this would be a lot more expensive than it would be if we ran a campaign that only targeted T2 countries right? While in most cases, we obviously do want to have a focus on the high tier countries, we also want to keep costs as low as possible so we can get the most out of every dollar you're investing. So instead of just breaking those two tiers up, we can actually combine them together. Now we have a much broader audience that's targeting both T1 & T2 countries, and generally speaking, the broader the audience, the cheaper the reach. So that means, we can still target our priority countries, while simultaneously increasing our overall audience to bring our costs down. How this looks in practice is typically something like. "T1 Only Audience" = $0.50/click, "T2 Only Audience" = $0.30/click. "T1 & T2 Audience" = $0.30/click". You may expect it to be somewhere in the middle right? But in reality, it's usually closer to the T2 Audience costs because Facebooks algorithm starts to learn, if we have $10/day to spend and the first $5 brings a $0.30/click in T1 countries, but the other $5 brings a $0.50/click, it learns to instead spend that second $5 on the T2 countries which can maintain that average $0.30/click. This basically boils down to the concept that T1 countries can be equal to the costs of lower tiered countries, but only to a certain extent. Maybe the first 10 clicks are cheap, but the next 10 are more expensive. So by combining these tiers together, we can in essence train the algorithm to only target a country if it's clicks are as cost effective as another.
Now where you have to be careful with this strategy is when you start adding T3 countries into the mix with T1 & at times T2. T3 is usually so much cheaper, Facebook won't be able to find a similar cost level in the higher tiered countries, so it'll end up just spending your entire budget on the T3 countries. So you typically do want to segment the really really inexpensive countries into their own audience to avoid having it steal all your budget.
Conversion is everything!
While the T1 + T2 is just one audience combination that tends to yield good results, there are practically unlimited options. Without getting too in-depth on strategies, some other builds we like to use on occasion is something like putting similar regions together. Like all the South American countries together. While that's basically a mix of T2 & T3, they tend to be closer in costs than they are apart since they're located in the same regions. At the end of the day, with any build you try, you have to be aware of both your goals and the actual results. If Facebook is telling you Brazil is bringing in insanely cheap clicks but you go over to your Spotify and see Brazil barely has any listeners or saves, it probably means Brazil is NOT a good country for you to continue to invest into on this campaign. So while the costs are very important, what's more important is that it's actually working on your end platform. Who cares if Brazil has a $0.10/click if nobody from Brazil actually makes it over to your Spotify. In reality, making sure things are actually lining up is where a lot of our time & effort is focused on a day to day basis.
