Criteo on earnings and why you see ads for stuff you've already bought

Although some in the industry might not know what Criteo (pronounced “crah-tay-o”) does, chances are everyone sees ads served from its platform on a daily basis. 

The company successfully cut its teeth on providing retargeting tools for marketers (someone who has left an item in their shopping cart, for example, has likely seen an ad served from Criteo). At its peak in 2017, the company had a market cap of $3.6 billion.

Now, however, it's plummeted to about $1.6 billion, thanks in large part to increasing or looming regulation such as GDPR and California’s Consumer Privacy Act of 2020, as well as a broader industry shift to move away from cookies; think Apple Safari’s ITP and Google Chrome's likely adoption of a similar solution, which Criteo uses for retargeting.

The company posted its first quarter earnings Tuesday morning, and the results suggest that it's still trying to return to its former glory. Revenue increased 3 percent to $558 million when compared to the same time during the previous year, while net income only grew 1 percent to $21 million. The company also cut its short-term outlook, but says that overall it will be back on track by year's end. 

"While making progress on several priorities, we recognize 2019 is another transition year," JB Rudelle, CEO at Criteo, said in a statement. "We are working to make our go-to-market more scalable and drive higher profitability."

Ad Age caught up with Benoit Fouilland, CFO at Criteo, to talk about the company's future--and why it thinks that this reporter likes to collect mattresses. The interview has been edited for brevity and clarity.

In regards to its results, Criteo said, “Some of the new capabilities we are building to achieve our company transformation are going to take more time to yield expected benefits.” What are you building?  
First, some context. The Q1 results are a mixed picture. On one hand, we delivered good results both on revenue and profitably. Nevertheless, we're taking a modest approach for the full year. Historically, this company has primarily been selling one product to address one marketing goal for our clients, which was to convert internet users. But over the last 18 months, we’ve embarked on a transformation.

Which is?
We now want to address a much broader set of marketing objectives for our clients. That includes enriching our product and taking an open platform approach. We also want to help our customers attract new clients and expose their brand to new prospects. That requires a significant change in how we sell our product, and that's where we're experiencing some delays. We’re also developing a self-service channel to address the lower end of the market. There’s more work to do.

Apple Safari's anti-tracking feature, ITP, has been problematic for advertisers, which can't be good for Criteo. What will happen if Google Chrome adopts a similar feature?
There’s been a lot of noise and it hasn’t been triggered by Google. There’s a difference between Apple’s position and Google’s. Regulatory bodies are watching Google across the world and Chrome has dominant market share in that world. We don’t think it's likely, at all, that Google would take advantage of its dominant market position from that standpoint alone. If Google was to make a change we see it doing it in the spirit of regulation and giving more control to the users.

Criteo pays AdBlock Plus to get its ads whitelisted.
From our standpoint, ad blocking is a reality and we have adopted our ad formats.

But ad blockers are run on desktop, and mobile is where the ad dollars are going. Has Criteo thought about cutting ties with AdBlock Plus?
It’s a relatively small relationship, really.

I have a burning question: Why does Criteo think I collect mattresses? I see ads for products I’ve already bought.
Did you check if the ad was from Criteo?

Yes.
Look, we know that's a problem and that it exists. One of the problems is where did you buy the goods? Because if you look at a digital camera and went to several of our clients properties but bought it from someone who isn’t our client, well, we don’t have that data. We only have the data from our clients. We're also not paid to show ads to people; we are a true performance platform.

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