Q2 was relatively ho-hum for Criteo.
Its revenue ticked up by just 1%, although the company, which reported earnings on Thursday, did move from a net loss of $2 million in the year-ago quarter to a $28 million profit.
Criteo’s performance aside, executives dropped a few breadcrumbs about Google’s plan to release a consent mechanism for Chrome – and breadcrumbs are all we’ve got at this point.
Google has shared almost nothing publicly about what the choice tool will look like or how it will work.
But Criteo has a little insight.
“Because we’re close with the Google team,” Criteo’s product chief Todd Parsons told investors, “we have it straight from the top of that team that the objective in user choice design is going to emphasize clarity for consumer trade-offs to opting in or opting out, as well as take a fair and balanced approach to that messaging.”
Parsons was responding to concerns over whether Chrome’s plans for a cookie consent opt-in would mirror Apple’s ATT consent notifications.
“What I do think will be different this time around,” Parsons said, “is that the language consumers are addressed with and the way that they’re educated should be more favorable.”
Apple’s consent language, he later said, “vilified the value of advertising.”
Having settled that, we can return to our regularly scheduled programming about Criteo’s quarter.
The walled garden pivot
Criteo, like other programmatic vendors, is shifting its business away from traditional open web advertising to more closed-off platforms or outright walled garden environments.
A year ago, Criteo was the first open programmatic partner named to the Shopify Audiences partner program, which is Shopify’s hub for ad tech integrations. Criteo today remains the only open vendor, alongside a decidedly walled crowd that includes Google, Meta, Pinterest, Snap and TikTok.
Meanwhile, in Q2 of this year, Criteo landed a coveted partnership with Microsoft Advertising as its “preferred partner” to connect Microsoft demand with Criteo’s retail media supply.
That integration won’t begin to pay dividends until next year, said Criteo CEO Megan Clarken. “But that trust that they’ve given us is a nod towards the need to consolidate the ecosystem, and we don’t take that lightly.”
These wins aren’t necessarily exclusive, but they do help cement Criteo as “the hub of retail media, to complement Amazon,” as Clarken put it.
And since these platforms have their own strong first-party identity data, Criteo can match its ID graph to users in those places, even if the usual walled garden rules apply.
For example, Facebook and Instagram are fully walled gardens, but they’re also important new supply channels for Criteo’s retargeting business, which has returned to growth during the past two quarters after years of slow decline.
How did Criteo manage to revive its retargeting business?
“The growing activation of Meta’s large-scale inventory in combination with open Internet inventory,” Clarken said.
Open partners
But Criteo’s growth is being spurred beyond its partnerships with walled giants. For instance, it has integrated with new supply and demand partners that take a more open approach.
The New York Times was added to Criteo’s publisher roster last quarter, Clarken noted, as was Klarna, the buy now, pay later company that has its own retail media and data business.
Even more important than incremental new premium supply, however, is the new demand coming in from ad agencies. Historically, Criteo’s business has operated as an ad network, with direct publishers on one side and ecommerce product sellers on the other.
But agencies play a quietly critical role for Criteo as it continues its full-body shift into retail media. And that’s because brands place shopper marketing budgets directly with retailers.
A big CPG or grocery store brand has a budget for Kroger, a budget for Target, Dollar General, etc. Criteo’s value prop is to help buyers think of those separate budgets as a block of spend across many – perhaps even dozens of – retailers without having to break out each one.
Criteo’s new retail media-focused DSP product, which it calls Commerce Max, is often the entry point for agency demand. Thanks to Commerce Max, Criteo saw spend from holding companies increase by more than 50% YOY in Q2, Clarken said.
“Retail media, where you’re buying across multiple retailers, is relatively new in the scheme of things, particularly to agencies,” Clarken said. “This is a bridge that’s coming together.”
