Another Strong Quarter For Criteo, But Questions Loom Around Apple’s Safari Tracking Changes

Updated with Q&A with Eric Eichmann, CEO of Criteo

Criteo continues to soar high above the scrum of ad tech stocks. The company had a characteristically strong Q2, growing revenue ex-TAC by 32% to $220 million.

Yet, “uncertainties” lie ahead, notably around Apple’s recent reveal that, come September, an update to its OS will include a feature affecting all Safari web browsers, called Intelligent Tracking Prevention.

The update promises to “reduce cross-site” tracking by third parties that use cookies and other web-based data to target ads, in the name of consumer privacy and user experience.

That tracking change could put a considerable dent in the attribution models for vendors like Criteo, which retarget users cross-platform and which rely on cookie data to create links between the desktop and other devices.

Although Criteo was mum when Apple first announced the change in early June, CEO Eric Eichmann addressed the blind spot that Intelligent Tracking Prevention could create during the company’s Q2 earnings call on Wednesday.

“Intelligent Tracking Prevention will make it harder for third-party providers to access data around Safari users, which could have broad-based impact on the ecosystem,” he said.

Although Eichmann claims Criteo has a “proven track record” of successfully adapting to technology disruptions (read: header bidding), the company’s Q4 outlook remains murky.

“There’s still quite a bit of question marks on our side,” he said. “If you think about cookies and the broad impact they have, not just on targeted ads, but the browser experience, it’s easy for you to break a lot of things.”

For example, some publishers rely on cookies to power authentication around their services. And it will be incumbent upon digital platforms and tech partners to rejigger controls around opt-outs in a more tracking-restricted environment.

“What Apple is trying to do is to provide a good experience around consumer privacy, which we support, but we think there needs to be an identifier (like IDFA) that works across all environments, including Safari,” he said.

“There are a number of ways to store data that don’t rely on passing of cookies, which we’re evaluating,” he added. “But, [given the] uncertainty, it had made us approach Q4 with more caution.”

Criteo also unveiled an ecommerce data coop recently, which lets its clients pool anonymized data based on purchase intent.

AdExchanger spoke with Eichmann about Criteo’s Q2 highlights.

AdExchanger: How can your commerce data coop compete with what Amazon offers to advertisers?

ERIC EICHMANN: We have a relationship with over 16,000 advertisers that contribute their data to this pool of assets that power our network. The second thing is, we’re a technology company and we’ve been focused on driving performance advertising through data. We’ve always been agnostic. Since we wanted to find as many consumers as we can, we looked to buy as much as we could on Facebook, or Google. As they began to close access to their environment, we spent less.

Can you elaborate?

We used to spend about 12% on the Facebook Exchange. We now spend about 7%. Although we’re happy with 7%, we’d rather access more inventory because we buy on a performance basis. On the Amazon side, you’ve seen them taking more share of commerce, with their move into physical stores with the acquisition of Whole Foods. As much as we all talk about commerce online, it’s still less than 20% of overall commerce, so about 83% of commerce still happens in physical stores.

What impact does that have on marketers?

I think Amazon recognized that a lot of commerce still happens offline and wanted Whole Foods to distribute items but also to have a physical presence. That’s one thing we believe existing retailers should do. They think of their stores as liabilities when they should be thinking of them as assets. The ability to retarget offline customers to make them into online customers – that’s a product we are now testing with different retailers and this could be a way for them to become bigger online by utilizing their offline assets.

Where are you with your header bidding product?

Header bidding has proven to be good for us in the long run because it gives us more access to inventory and removes inventory out of the system that doesn’t have much value. Our technology, which either works with wrappers like Index or uses our own wrapper, is delivering 20-40% more yield for publishers who’ve deployed it and has allowed people to spend more – at least, certainly with us.

You’ve expressed more interest in video. What can you do today, and what are your limitations?

[Video] performs as well as display, but it’s more expensive, so it limits our ability to buy it. There’s quite a bit of video that goes unsold, and we just haven’t developed enough relationships to lower the floor yet.

We’re not your typical video buyer, which buys a number of impressions up front and does a negotiation. We only buy it if it works. Traditional video platforms didn’t have a lot of elastic demand. We’re elastic demand and we’re hoping that by talking to all the supply sources we can, that we can negotiate lower floors that give us access to more inventory. Then, ensuring there’s enough demand to fulfill it.

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