For over 20 years Kingstar Media has operated as a gateway to the Canadian market for hundreds of international brands such as Trivago, Zip Recruiter, NordVPN, Vistaprint and many more.
Canada is the ideal country to launch a brand and try out new positioning or new creative. Often considered “The 51st State” and with a population the size of California, it represents a substantial yet less risky test market when compared to the United States.
Canada vs. USA: Market Similarities and Differences
While there are many commonalities, such as language (English), a strong rule of law, a stable political environment, and a high standard of living, there are also key distinctions that make Canada an attractive entry point for brands, especially in the fintech sector.
1. Regulatory Environment: Canada boasts a robust and well-regulated financial sector, similar to the United States. While banking regulations and consumer mindset varies, overall the regulatory landscape in both countries provides a level of stability and consumer protection that fosters trust in financial services. This similarity allows fintech companies to navigate the regulatory challenges more smoothly when expanding from Canada to the United States.
2. Cultural Affinity: Canadians and Americans share a similar culture, which facilitates marketing and messaging efforts. While there are nuances to consider such as linguistics or certain customs and practices, the shared values and lifestyles make it easier for brands to adapt their strategies for both markets.
3. Market size: Canada’s smaller market size relative to the United States makes it an ideal testbed for innovation. Fintech companies can roll out new products and services in Canada, gather user feedback, and refine their offerings before entering the larger and more competitive U.S. market. American businessman (and former Twitter CEO) Jack Dorsey took advantage of this similarity when he initially launched Square, the mobile payment and financial services company, in Canada in 2012 before expanding into the U.S. market. This strategic move allowed Square to refine its product and adapt to the North American market dynamics.
4. Valuing Value: Canadians historically have less disposable income and a higher cost of living than our friends south of the border, meaning they’re more likely to look for value when shopping for a product. Advertising that showcases the value will resonate more with this audience.
5. Regional Targeting: Canada is not a one-size-fits-all market and the marketing efforts need to be tailored as such. Those on the west coast will respond to different ads than those on the east coast, and the french-speaking province of Quebec will need its own in-language advertising as well. A company that works through this process in a smaller market first will have a smoother transition to a global market.
Benefits of Soft Launching in Canada
1. Proximity and Similarity: Canada’s proximity to the United States makes it an ideal location for a soft launch. Companies can easily manage operations, gather data, and iterate their products while remaining accessible to their U.S. teams and partners. Cultural and regulatory similarities further simplify the soft launch process. For example, the UK-based international money transfer platform Wise (formerly TransferWise) first tested its services in Canada in 2016. The positive reception and feedback received during the Canadian soft launch informed TransferWise’s expansion plans, including its entry into the United States.
2. Reduced Risk: Soft launching in Canada minimizes risks associated with entering a massive and highly competitive market like the United States. It allows companies to fine-tune their strategies, work out any operational kinks, and ensure product-market fit without committing extensive resources upfront. Canada’s leading robo-advisor, Wealthsimple, did exactly that, and after establishing a strong presence in Canada, expanded into the United States, building on its Canadian success.
3. Diverse Customer Base: Canada’s diverse population, representing various demographics and income levels, offers a microcosm of the U.S. market. This diversity enables companies to gain insights into how their products resonate with different customer segments, helping refine their U.S. market strategies accordingly.
Canada’s unique blend of similarities and differences with the American market, coupled with the benefits of soft launching, makes it an ideal country for brands to launch and refine their products or services before expanding into the United States. Fintech companies, in particular, have embraced this strategy with impressive results, leveraging the Canadian market as a stepping stone for their international ambitions. By carefully navigating these opportunities, companies can maximize their chances of success in the North American market and beyond.