Wednesday was one such victory for Criteo, regardless of just a few troubling tendencies.
The corporate reported income of $495 million for the second quarter, which was down year-over-year from $551 million. However Criteo’s web revenue did tick up from $15 million to $18 million.
“July was barely worse than June and June was barely worse than Might,” Criteo CFO Sarah Glickman advised buyers, referencing the influence of some advertisers pulling again spend – not due to diminishing gross sales, however as a result of they’re taking a extra conservative method in anticipation of an financial downturn.
On high of that, platform privateness modifications, primarily Apple’s ATT and different iOS-related alterations, lowered income by an estimated $16 million – with greater losses forecast for Q3 and This fall of this 12 months.
The good things
Wait … didn’t this text begin out by say Q2 was a win for Criteo?
It was. As in, the wins outshone the dangerous information.
For instance, Criteo gained an anticompetition case in opposition to Meta final quarter and is within the means of being reinstated to the Fb and Instagram associate program and advert platform. It’s been greater than 4 years since Criteo final had entry to Fb stock, and opening up such a big addressable pool of provide might convey a fast floodtide of progress.
Criteo additionally accomplished its acquisition of IPONWEB. The deal, introduced in December, is a key a part of Criteo’s revamped pitch as a full-funnel advert tech platform that features each a DSP and SSP.
The acquisition was anticipated to shut in Q1, however the warfare in Ukraine difficult issues and induced a delay. IPONWEB was based in Russia and has a big contingent of product folks based mostly within the nation.
Criteo restructured the deal to excise IPONWEB’s Russian subsidiary from the acquisition, and introduced the deal worth right down to $250 million from $380 million, with one other $100 million in doable incentive-based payouts over the following 18 months.
“We consider that our strategic acquisition of IPONWEB will speed up our technique of making the world’s main commerce media platform,” mentioned Glickman, who additionally pointed to the worth in bringing collectively an SSP (which Criteo will get from IPONWEB) with DSP capabilities. (Each Criteo and IPONWEB every have their very own demand-side platform).
“The SSP was central to our funding thesis in getting along with IPONWEB,” mentioned Criteo’s Chief Product Officer Todd Parsons.
Criteo has plans to cross-sell the IPONWEB MediaGrid SSP by way of its personal DSP.
Retail margin beneficial properties
To grasp why Criteo locations such significance on cross-selling IPONWEB to spice up its commerce media enterprise, contemplate Criteo’s retail media phase. That enterprise earned $54.67 million in Q2 2022, down 14% from final 12 months. Criteo’s advertising options phase, which incorporates legacy retargeting, was down 10% and totaled $440.42 million.
Not very spectacular at first blush.
However Criteo makes use of a metric it calls ex-TAC contribution – the web revenue (or loss) generated by income after accounting for site visitors acquisition prices. (It is sensible to do that, as a result of Criteo’s retargeting enterprise buys advertisements and costs by price per conversion. Baked into the price is the understanding that some advertisements it buys will probably be a waste.)
And should you have a look at Criteo’s income by way of the lens of contribution ex-TAC, though the Advertising and marketing Options group was nonetheless down 8%, retail media was up 36% year-over-year.
The purpose right here being that retail media is a really high-margin enterprise. By including provide and demand by way of IPONWEB and probably consolidating one other SSP out of the pipeline, Criteo can proceed driving worth from that margin if the entire progress slows and even ticks down once more.
Uncrumbling the cookie
Criteo can also be getting ready for post-cookie promoting, in fact. Its plan is to be a pacesetter amongst unbiased corporations utilizing the APIs in Google’s Chrome and Android Privateness Sandboxes, in accordance with CEO Megan Clarken.
However who’re we kidding. The delay and delay once more of the demise of the third-party cookie is a present to Criteo particularly, which may proceed to retarget successfully on Chrome.
Even so, Criteo is testing non-cookie IDs and focusing on methods, Clarken mentioned, albeit in environments that don’t have knowledge indicators the place advertisers are alrrady “flying blind,” together with Safari, Firefox and Apple iOS.
However past testing post-cookie options on the margins – and utilizing third-party cookies for so long as they do exist – Criteo is just not making any main modifications.
Though that’s not fully by Criteo’s alternative.
“Using cookies is type of saturated by way of our shopper base, and so it’s very troublesome for us to have them cease doing it, until we are able to present them both a drop-dead date after they can’t use it anymore or a purpose to maneuver,” Clarken mentioned. “And whereas Google continues to maneuver the date that first half, the drop-dead date, is out of our attain.”
That mentioned, some advertisers have validated that post-cookie merchandise can work higher than, nicely, flying blind.
And as consumers get extra expertise and a style for a way these ways work, Clarken mentioned, they will get a way of “precisely what we are able to do as soon as Google does truly flick the swap.”
