Criteo is preparing for the end of third-party cookies. That’s what you do. But third-party cookies aren’t dead yet.
“Our ability to attract and retain customers for our clients does not have to rely on third-party operating system signals,” Criteo CEO Megan Clarken told investors earlier this week during the company’s first-quarter earnings call.
“However,” Clarken said, “we will use them while they exist.”
And, she told AdExchanger after the call, “if tomorrow we don’t have access to them, then we’ll have to use something else.”
What sort of “something else”? Criteo has been testing what it refers to as “more privacy-enabled, controllable and reliable signals.”
For example, over the past few months, Criteo has run hundreds of live tests for acquisition and retention on iOS to recover lost traffic and maintain ad spend in identity-challenged environments, namely Safari.
The purpose isn’t necessarily to replace one-to-one retargeting, which has long been Criteo’s bread and butter, but to come up with a variety of options for driving qualified traffic to merchant and retailer sites, Todd Parsons, Criteo’s chief product officer, told AdExchanger.
“And we can do that at least grossly as well as we could before ITP happened,” Parsons said, referring to Intelligent Tracking Prevention, a feature in Safari that blocks third-party trackers by default.
Apple implemented the first version of ITP back in 2017, effectively starting marketers on their cookieless journey long before Google announced plans for deprecating third-party cookies in Chrome, the deadline for which was pushed from 2022 until the end of next year.
Parsons stressed that its tests are still early and Criteo isn’t rushing. The goal isn’t just to demonstrate that it’s possible to get performance in cookieless environments but that it’s doable at scale, he said, which is what Criteo is focusing on next.
Criteo saw a roughly $20 million revenue impact during the first quarter, mainly as a result of iOS changes and foreign exchange exposure in Europe tied to the war in Ukraine. That’s in line with the roughly $55 million iOS impact Criteo had previously predicted for the year (emphasis on the roughly).
But Clarken doesn’t characterize it as a revenue hit so much as a lost revenue opportunity.
“Rather than a loss of revenue, what we’re saying is that if iOS still had its signals, then we would be $55 million better than we are,” she said.
Total revenue for Q1 was $511 million, with the contribution from retail media up 48%. New solutions (which is the category that includes Criteo’s commerce platform and other retail-media-focused offerings) account for around 30% of the business today.
Retargeting makes up the rest.
But that’s not the same as saying 70% of Criteo’s business is still reliant on third-party cookies, said Clarken, who noted that when she joined Criteo as CEO from Nielsen in late 2019, the main problem was that Criteo’s new solutions weren’t outpacing the decline in retargeting.
“Our focus is on at least maintaining the retargeting business while growing the new solutions piece, and we’re executing against that,” Clarken said. “But, more importantly, this is about a platform play rather than breaking out retargeting versus new solutions, because all of these capabilities are part of the platform and part of this larger story about the retention and acquisition of customers for our clients.”
The agency biz
As part of its commerce play, Criteo, which hired longtime GroupM vet Brian Gleason as CRO in February, is also focusing more on its agency partnerships.
In Q1, a third of Criteo’s overall business (roughly $200 million in activated media spend) came through agencies, compared to 30% in the year-ago quarter.
Agencies are looking for simple, efficient ways to buy across retailer sites from a single platform, Clarken said. And so even Publicis, which is building its own retail media stack in-house – it bought ecommerce software company Profitero this week and already owns retail media platform Citrus Ads – is a competitor today but could be a frenemy-esque partner at some point down the line.
“They’re using retail media for their own clients, and we’re agnostic,” Clarken said. “So there’s potential for us to bring our platform to life for [Publicis] should they identify any needs we can service for them that they can’t source themselves.”