A real epoch of advert tech has handed.
Criteo’s retargeting income was lower than half the corporate’s complete earnings in Q3, a primary for the corporate, CEO Megan Clarken advised traders in the course of the firm’s earnings name on Thursday.
Criteo’s internet revenue ticked up a smidge – from $6.5 million in Q3 2022 to $6.6 million final quarter – and headcount is down 1%.
However the market doesn’t seem to care about Criteo’s retargeting-related milestone. Shares had been down greater than 10% after the corporate reported its numbers. That’s as a result of Criteo’s retail media and IPONWEB companies are passing retargeting because it’s on the way in which down, having decreased 7% in a 12 months.
The brand new pitch
Criteo has been reframing its enterprise away from retargeting for the higher a part of a decade.
In 2017, after The Commerce Desk went public, Criteo pushed to be seen as a DSP. It was mar tech after that, adopted extra lately by a pivot to commerce media.
However Clarken elaborated on a few of Criteo’s differentiators within the commerce promoting market.
For one factor, in an overcrowded discipline of retail media options, Criteo is a longtime identify and infrequently thought of a key associate for the open internet. As an illustration, Clarken cited Criteo’s integration with Shopify Plus, the place it’s the one open web promoting associate alongside Google, Meta, Pinterest, Snap and TikTok.
Then there’s Criteo’s core advert tech edge. Its id graph, in keeping with Clarken, has extra hashed emails than some other different ID supplier. These hashed emails (Criteo calls them HEMs, however who wants one other acronym?) are the “interoperable match keys” that can repay most “as soon as the business strikes past third-party alerts.”
Criteo can also be the most important and most dedicated identify apart from Google Adverts that’s working with Chrome to check the brand new Privateness Sandbox promoting and measurement APIs.
The pushback
One motive traders are nonplussed by the subordination of Criteo’s retargeting income is that it’s a extra worthwhile kind of income for the enterprise.
Criteo’s beneficial properties in retail media, and significantly with the most important retailers, are typically extra SaaS-type tech licensing agreements which can be primarily based on principally mounted charges. And Commerce Max, Criteo’s retail media DSP product, which launched publicly in September, is self-service, so the take-rate is smaller there, too.
Criteo is “evolving our pricing fashions,” Clarken stated, to fulfill the wants (which is to say, the calls for) of recent massive retailer purchasers.
These massive retailer purchasers could assist safe Criteo’s footprint within the commerce class, however they aren’t prepared to surrender a share share of development in an area with a lot potential. To keep away from sharing a rising portion of their advert companies, the large chains can insist Criteo take a hard and fast fee, with preset incentives to achieve sure development numbers.
“These are the issues that we’re working via as we’re comparatively early within the stage of build up this market,” Clarken stated.
One other sticking level is that whereas Criteo’s management by way of Chrome Privateness Sandbox product improvement is among the firm’s three primary pillars for short-term development, that funding can also be a threat.
“Frankly, we wished to ensure we had been clear with all of you as we go alongside this journey,” Criteo CFO Sarah Glickman advised traders in reference to why the corporate wasn’t offering particular steering for 2024, aside from to say it’s decreasing development ambitions for subsequent 12 months.
“The uncertainty contains Privateness Sandbox,” Glickman stated, because it’s unclear how the merchandise will fare as third-party cookie deprecation rolls out to basic Chrome customers starting subsequent 12 months (to not point out that Google has delayed the deadline twice). We’re now greater than a 12 months previous the unique deadline for third-party cookie elimination, and Criteo hasn’t been rewarded for its continued funding within the product toolkit, since third-party cookies are nonetheless ample.
The dynamic just isn’t not like how an athlete trains day by day, even twice a day for years on finish to realize one thing that will – and even could not – occur years and years later, Clarken advised traders.
That’s one thing Clarken is aware of; she was a seemingly surefire Olympics-bound observe and discipline athlete from New Zealand earlier than a knee harm despatched her on a unique profession path (which is to say, changing into an media exec).
The identical goes for the Privateness Sandbox, she stated. “And it’s the identical story with our positioning because the advert tech supplier for commerce media. It’s eye on the prize.”
