Guide · Markets

Tier 1, tier 2, and tier 3 countries, and what they mean for your ad spend

The terms get used as though they were official designations. They are not. No standards body, no ISO list, no Apple document defines a tier 1, tier 2, or tier 3 country. They are marketer's shorthand for how much a person in a given market is likely to spend and how much it costs to reach them, and knowing that it is shorthand is the first useful thing about it.

Tier 1: what the label actually groups

Three traits travel together in these markets: high income per head, near-universal internet penetration, and normalised digital spending, which means a payment method already attached to the account and no hesitation about a subscription. Countries with that combination behave alike in an ad auction, which is the only reason grouping them is useful at all.

The consensus core is the United States, United Kingdom, Canada, Australia, and New Zealand, then most of Western Europe: Germany, France, the Netherlands, Sweden, Switzerland, Norway, Denmark, Finland, Ireland, Austria, and Belgium. Japan and South Korea belong here too, and most lists now add Singapore and the United Arab Emirates, particularly for developer and productivity tools, which tells you the category matters as much as the passport. Italy and Spain appear on most lists and get argued about on some.

Tier 2: cheaper reach, harder checkout

Tier 2 is the growing middle: a large and expanding middle class, real smartphone penetration, but lower income per head than tier 1. The usual names are Brazil, Mexico, Chile, Colombia, Peru and Argentina; Poland, the Czech Republic, Hungary and Romania; Turkey, Malaysia, Thailand and Vietnam; and South Africa.

This is where the arithmetic often favours a smaller developer. Cost per tap is a fraction of a tier 1 market and intent can be just as strong, so the same budget buys considerably more of it. The obstacle is usually not interest, it is payment: card penetration and default payment methods vary enough that a checkout which converts fine in Britain can quietly fail somewhere else. When a tier 2 storefront shows healthy taps and weak installs, suspect the payment step before you blame the keyword.

Tier 3: volume at a different price

Tier 3 is the broadest bucket and largely a residual one: whatever a given ad platform has not placed in the first two. India, Pakistan, Bangladesh, Indonesia, the Philippines, Nigeria, Egypt, Kenya, Ethiopia and much else besides. Grouping economies this different under one label tells you more about the convenience of the label than about the markets.

Reach here is extremely cheap, and revenue per user is correspondingly lower, so the strategy has to change rather than scale. A subscription priced for the United States will not carry across unchanged; regional pricing, a lower tier, or an ad-supported model is usually the difference between volume that pays and volume that just fills your dashboard. Judge these storefronts on revenue per install, never on install count.

Why tier 1 costs more

Apple Search Ads is an auction, and an auction prices demand. Every competitor with a budget wants the same users in London and San Francisco, so their bids become your cost per tap. You are not paying more for a better impression, you are paying for scarcity of attention in a room everybody else is also standing in.

The counterweight is conversion value. A user in a high-income market is more likely to arrive with a payment method already on file and fewer reasons to hesitate at a subscription screen, so the higher cost buys a higher expected return. That is the whole trade, and it is why the tiers persist as a rough planning tool even though nobody can point to the document that defines them.

The economists' version

Marketers talk in tiers, economists talk in income. The World Bank groups countries by gross national income per head into high, upper-middle, lower-middle, and low income. The high-income group overlaps heavily with what advertisers call tier 1, which is not a coincidence: the same conditions that produce high income produce the consumer confidence and payment infrastructure that make a market expensive to advertise in.

The difference is that the World Bank publishes its methodology and updates it annually, and the tier lists do not. If you want a defensible starting point rather than a blog post's list, that is the one to start from.

Do not map the two onto each other too strictly, though. The income groups measure development and are built to inform policy; the marketing tiers guess at willingness to pay for your particular thing. A country can sit in the lower-middle-income group and still be an excellent market for a cheap-to-run utility, and treating the economic classification as a bid strategy is how people talk themselves out of markets that would have worked.

The other tiers, which are not about money at all

Worth knowing because the collision causes real confusion: the United States State Department's Trafficking in Persons report also ranks countries in tiers, and they have nothing to do with advertising. There, tier 1 means a government fully meets the minimum standards for eliminating trafficking, and tier 3 means it does not and is not making significant efforts. Same words, entirely different subject. If a tier ranking turns up in a document that is not about media buying, check which system it belongs to before drawing any conclusion from it.

Is Russia a tier 1 country?

Not in current practice. Sanctions, payment processing friction, and currency volatility keep it off the lists international advertisers work from, regardless of population size or connectivity. For most developers the question resolves itself: if you cannot reliably collect the revenue, the market's other characteristics do not matter.

The mistake the tiers encourage

Treating the list as a finding rather than a prior. It is a reasonable guess about where to look first, made by people who have never seen your app. Two things routinely break it. The first is category: a tool for developers can find that Singapore or the Netherlands outperforms three countries above them on any list. The second is your own position. A tier 1 market where you rank 60th is an expensive place to buy traffic you cannot hold, and a smaller storefront where you already rank top 10 is often cheaper per unit of revenue.

The practical version: rank the storefronts you already run by what they returned, not by what tier they belong to. If a country outside every list converts, treat it as tier 1 for your business, because for your business it is.

What to do this quarter

• Sort your existing storefronts by return, not by reputation. The list you produce is the only one that describes your app.
• Check where you rank before you raise a bid. Paying premium prices to appear below ten competitors is the most common way to lose money in these markets.
• Watch cost per tap through seasonal peaks. Competition in the US and Australia spikes around holidays and major category launches.
• Localise before you scale spend, and not just the words. Two English-speaking markets can still want different screenshots.
• Re-check annually. Tiers move as infrastructure and payment habits mature, and a list from five years ago is a description of the past.

Where Veldo fits, and what it cannot tell you

Veldo tracks organic rank per storefront across 60+ countries, and pulls your Apple Ads spend, taps, and installs per keyword per storefront, so the "where do I already rank, and what am I paying there" half of this is measured rather than estimated. Verdicts run per keyword per storefront for the same reason: the same term is a different proposition in Germany than in the United States.

Revenue is the honest caveat. Subscription revenue arrives per app per day, not per country, so Veldo apportions it to keywords by their share of that day's spend. That is a defensible estimate and it is how per-keyword ROAS is calculated, but it is an apportionment, not a measurement, and a per-country revenue split inherits the same assumption. Anyone claiming to hand you exact revenue by country and keyword is either using a source you do not have connected or is doing the same arithmetic without telling you.

Common questions

What are tier 1 countries?

A marketer's shorthand for the wealthiest, most mature consumer markets: high income per head, near-universal connectivity, and an established habit of paying for digital goods. No standards body publishes the list, so it varies by who you ask, but the United States, United Kingdom, Canada, Australia, and most of Western Europe appear on every version of it.

What are tier 2 countries?

Fast-developing markets with a large and growing middle class, but lower income per head than tier 1: Brazil, Mexico, Poland, Turkey, Malaysia, Thailand, Vietnam, South Africa and similar. Advertising costs less, conversion can still be strong, and the usual obstacle is payment rather than interest.

What are tier 3 countries?

The broadest bucket, and largely a residual one: anything a given ad platform has not placed in tier 1 or tier 2, including India, Pakistan, Bangladesh, Nigeria, Egypt, Indonesia and the Philippines. Reach is cheap and plentiful, revenue per user is lower, and a subscription price set for the United States will usually not work unchanged.

Is Russia a tier 1 country?

Not in current advertising practice. Sanctions, payment processing friction, and currency volatility keep it off the list international advertisers work from, whatever its size or connectivity would otherwise suggest.

Why do tier 1 countries cost more to advertise in?

Because everyone wants them. High willingness to pay attracts every competitor with a budget, and Apple Search Ads is an auction, so that demand lands directly in your cost per tap. You are paying for scarcity of attention, not for the impression itself.

Should I only advertise in tier 1 countries?

Only if your own numbers say so. The tiers are a prior, not a finding. A storefront outside the usual list that converts well for your category deserves budget ahead of a tier 1 market where you rank badly and pay a premium to stay there.