Update: A Criteo spokesperson has contacted Digiday claiming that it is now recruiting for an EMEA lead for client solutions.
Headquartered in Paris, France, Criteo can legitimately lay claim to the mantle of Europe’s leading ad tech company with the publicly traded outfit hunting for its first chief executive for the region since early 2022.
However, claims of this (ongoing) search come as the scale of the challenge to Criteo’s traditional business model of ad retargeting becomes apparent with the French data regulator proposing a $65.4 million (€60 million) fine just last week.
The company challenges such charges, originally made by Privacy International in 2018, which assert that Criteo and a host of its industry peers failed to comply with GDPR requirements – the CNIL still has to discuss the ruling with fellow EU regulators before an official ruling is made.
“We look forward to further dialogue [sic] with the CNIL as well as to defend our case to the ultimate arbitrator of a final decision,” responded Ryan Damon, chief legal officer, Criteo, in a statement.
Although, last week was not full of bad news as it also saw the company make public a welcome boost with the news that Criteo’s $250 million takeover of IPONWEB received the green light. The move, first proposed in December 2021, hit complications earlier this year related to IPONWEB’s (now former) operations in Russia following sanctions imposed on the state after its invasion of Ukraine.
New leadership for a new company chapter?
Sources, who requested anonymity due to commercial sensitivities, told Digiday that recruiters for Criteo have spoken with potential candidates over a potential EMEA CEO role with such conversations dating back to early 2022.
In an email exchange conducted prior to the August 5 announcement of the CNIL’s proposed $65 million fine, Megan Clarken, a former Olympian appointed to lead Criteo’s operations in late 2019, declined the opportunity to comment directly on these claims. Instead, she responded, “We are confident we have a strong global leadership team in place that is bringing great value to our clients.”
Digiday understands Criteo is still searching for a candidate to head up its European operations which will soon be burnished with one of the most coveted teams in ad tech in the guise of IPONWEB’s engineering team.
Accompanying the August 3 announcement of the IPONWEB purchase was further evidence of Criteo’s core challenge in its second-quarter results; the erosion of crucial ad tech targeting tools such as third-party cookies is chipping away at its historic key value-proposition — ad retargeting.
Criteo’s revenue for the three months to June 30 was $495 million, down 10% compared to 12 months earlier, as underlying ad tech challenges were compounded by macroeconomic realities faced by the entire industry.
Additionally, during a subsequent Q&A session with Wall Street analysts, Criteo leadership advised that privacy headwinds meant that it could lose up to $20 million in revenue during the remainder of 2022 with up to $16 million due to Apple’s iOS restrictions.
Winning over Madison Avenue
Criteo, a company valued at more than $3 billion in its pomp during 2017 (prior to concerns such as GDPR or cookie-erosion bothering Wall Street) has historically been seen as a retargeting tool for ad tech players.
And while this service, one that is very much reliant on third-party data, has been (and still is) used by thousands of customers, its use among enterprise players, i.e. the big-spending players of Madison Avenue, is limited as many are contracted to use rival offerings such as Google’s DV 360.
As a “trusted architect of the entire ad tech ecosystem” with both a demand-side and sell-side platforms — plus a wide footprint of interconnecting ad tech, IPONWEB’s BidCore, BidSwitch and MediaGrid offerings — will reverse revenue declines and accelerate scaled partnerships, according to Clarken.
Near-term priorities include integrating the technology and teams behind IPONWEB’s BidCore and MediaGrid platforms, an endeavor that will expand Criteo’s direct relationships with premium publishers.
Completing this integration will expand Criteo’s offering into a “full-funnel” DSP, a key component to the advancement of its retail media strategy, or “Commerce Media Platform,” that will offer both the buy-side and sell-side “complete transparency and neutrality” said Clarken.
She added, “Its flexible self-service DSP, BidCore, expands our offering into a full-funnel DSP, important to attract large enterprise marketers and agencies and its customization capabilities will be instrumental to address the needs of clients who may require bespoke deployments as they look to in-house solutions.”
From retargeting staple to retail media aspirant
Clarken is quick to contrast her company’s aspirant retail media ambitions with alternatives as “Criteo doesn’t own any media” — a criticism often leveled at walled gardens such as Google or Amazon.
Such ambitions are crucial to Criteo weaning itself off ad retargeting budgets, a key tool for performance marketers and origin of more than half of Criteo’s revenues according to sources. Hence, the successful execution of its retail media ambitions is crucial to Criteo forging sustainable revenue streams in the post-cookie era when retargeting in its current guise is no longer possible.
Crucial to this will be the rollout of its Shopper Graph, an audience map of more than 2 billion user IDs (both online and offline) that Criteo has amassed through a series of tie-ups with both first parties and ad tech companies across devices, browsers, apps and other environments.
“Building its own Shopper ID graph that marketers can use to target users across its ecosystem will be crucial,” noted one source who declined to be named as they were not cleared to speak to the press. “Their entire valuation is as a [retargeting] media business … essentially it’s an ad network right now, the market doesn’t see them as a technology company, but if they can do that [successfully launch the Shopper ID] it will go some way to its transition.”
Meanwhile, Nathan Woodman, founder of consultancy service Proof in Data and former svp at IPONWEB, further noted how adding $1 billion per year flowing through the Bidswitch platform will bolster Criteo’s negotiating power when it comes to negotiating with publishers.
“Adding this kind of purchasing power to the weight of Criteo will bring the ability to make commitments to premium publishers, and then based on those favored rates you get preferential rates and then you can negotiate which [ad] impressions you want,” he added.
For Woodman, this is crucial as big brands have started looking at media measurement more holistically compared to the click-based conversion approach of ad retargeting, albeit the migration process will be difficult as (in its current guise) ad retargeting simply still works for many longtail advertisers.
“They’re looking at incremental gains, so asking things like, ‘Would these users have converted anyway, had they not been exposed to an ad?’ So, now things like context, and a high-quality media environment become more important, and while Criteo has a good history of showing it can do this, they also have the conversation with the mid-to-long tail of advertisers that just want what works.”
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