Greg Coleman is President of Criteo, a personalized advertising technology company.
As part of its "State of..." series of articles with industry executives, AdExchanger.com sat down with Coleman to discuss his company, his views on the space, and the state of Criteo today.
AdExchanger.com: How would you summarize your experience at Criteo since you arrived six months ago?
GC: I was originally on the board of advisers at Criteo a year before I joined, so I had a good idea of what the company was doing, but not pure visibility into everything.
So the first thing that the company was looking at was to make the following sentence come true: “Can we make display ads work like search?” And today, the company's mission statement is "Making display ads perform better than search."
A driving factor here - and in my seven‑and‑a‑half years at Yahoo - is to try to figure out how to make display advertising perform well. After leaving the Huffington Post, after we sold it to AOL, I was looking at a number of different opportunities. And the opportunity at Criteo seemed to be "all steak, no sizzle." Certainly, in the United States, we were a brand that was fairly invisible. Yet, we were famous in Europe.
One of the things that we really needed to overcome was an inordinate amount of noise from ad networks, trading desks and demand-side platforms. Everybody claims to be special, but very few companies are. So, if I was going to go into the world of performance, I didn't want to do that with anything that remotely resembled mediocre.
So what we found is that the average click‑through rate on a banner ad on the Internet is around 0.07%. And the average click‑through rate here at Criteo is around 0.75% - an order of magnitude greater than the Internet at large. When clients see the first wave of results, they think something is the matter with the numbers. We're finding now that marketers who have tested and rolled out with us, are our biggest supporters.
Given your background at Aol, Huffington Post and Yahoo!, is there a different mindset when you moved to Criteo and into direct response (DR)? How has that transition been from thinking about brand to thinking about DR?
Where I had an advantage is during my time at Yahoo, I managed both the display sales team and the search sales team and had a very good sense of the company. When we bought Overture, I had to manage that team and learn about it. It's very different than when you're managing for search than when you're managing for performance [display]. You start thinking about things like attribution models because if a client has a flawed attribution model, no matter what you do, it could either help you or hurt you. Sometimes the clients don't know, and we find ourselves in a world where we are making recommendations.
We have to take a leadership position in this performance display world because people have a hard time believing or understanding that display can really be a strong performance vehicle. It's still hard and what people know is they can buy big ad networks. They can buy inventory cheap and pray for some heartbeat of a click‑through, and that's how most of the business is done right now.
There's nothing wrong with that. Living in the performance world has made me act differently, learn differently and go deeper into the innards of how we're measured and stack up against other companies.
One of the big things that's happened over the last couple of months is that it doesn't matter whether it's a text link or a display ad. If your brand is dependent upon performance, there are a couple of dials you hand out.
Is there something in performance display for the brand marketer who is driving awareness versus the strict DR type of campaign?
Yes. And that will come in a few months. I've been focusing on our core model, which is Cost-Per-Click. But if you recall, I said our click‑through rate is 0.75% and that means that roughly 99.25% of our ads are not clicked.
Today, we ask for no acknowledgment of the benefit that we give because people are seeing those ads. What we're working on right now ‑‑ and again this just goes into overall attribution – we may find that the branding effect or the fact that people saw an ad makes them go into the store or makes them go back to the website at a different time. But, we're not going to change any way in which we operate right now. What I think it's going to mean ‑‑ and every client has their own attribution model ‑‑ is that clients can probably pay more on a CPC basis and make the buys deeper if they know that they are getting some real value from those people that didn't click.
So to answer your branding question, it makes such logical sense if you believe advertising works. If I'm buying shoes and I see these great shoes around but I don't click, I'm influenced somehow. That's how we're going to be approaching it. It's much more about measurement than doing anything about how we operate.
Will the creative element change?
It can't because in our case, when somebody buys us, they're essentially buying us for performance. I don't know which 99 percent are not going to click. So for me to try to create a more branded experience when our whole model is centered around performance, the ads are always going to be designed with performance first. You can do that in a way which still makes for a good brand experience, but the day that we try to create more beautiful‑looking ads in the so‑called branded context is the day we've changed our model, and we have no intention of doing that.
If you're going to build for performance, build for performance, and we'll measure the byproduct of those performance ads as it relates to the branding impact or the purchasing impact at another point in time.
So, we're not going to get into the pure branding business.
About the .75% click‑through rate, some people might say that since you’re retargeting and showing an ad to the consumer shortly after they've expressed intent by visiting a product page, for example…. well, of course, performance is going to be better. How would you say Criteo is differentiating beyond just the simple re‑targeting pixel, if you will?
Let me answer that in a broad way. Number one, we now have like 1500 clients worldwide. Most of the competitors in the space perform at less than 50% of the click‑through rate that I just talked about.
The holy grail of marketing is serving the right ad at the right time to the right person. One of the things that our team of engineers is really focusing on is the “when”, the right time. They see the element of retargeting and when to reserve or when to retarget as not obvious. It's not all about recency. It's about science.
We buy on a CPM basis from publishers. We sell on a CPC. We better be right in terms of understanding what inventory to buy.
If you asked me, "What's one of the greatest or the most important differentiator?" I would say it's that part - when to retarget.
Beyond becoming an e‑commerce publisher, how should a publisher take advantage of the retargeting dollars that are being spent through companies like Criteo?
Having been on the publisher side all of my life until now, what the publisher is concerned about is within their funnel.
At the top of the heap, they have their direct sales force selling premium CPMs. At the very bottom, most of them have an ad network that is a 75‑cent CPM. What most publishers are trying to do is to say, "I need my premium direct team to go out and get premium value. And, I will have my ad networks selling unsold inventory at those 75-cent CPMs. [Beyond that], I need to create tiers above that ad network and below the premium team to create more value." When I was at the Huffington Post, we tested dozens of companies.
With the exchanges, Criteo spends a lot of money with the Google Ad Exchange, Microsoft, Yahoo, and with Right Media, and so on. Again, while those networks and exchanges take their cut, we ultimately deliver a higher CPM. For a publisher, that's what they should be concerned about.
But if publishers have to rely on partners for things other than their direct, tier one channel - how are they going to do that?
Look, it’s tough with all the noise in the marketplace. When I was at the "Huffington Post," it was exasperating the number of people that wanted to help monetize our inventory. It takes time and energy to review them.
Regarding agencies, at Criteo do you even work with agencies anymore? Do you go direct?
Most of the business that we do is client direct, but there are some terrific digital agencies that we're working with that have been wind in our sails. They understand what we do. We're finding that a lot of the SEM agencies get what we do in a heartbeat, and that makes life easier. We have great relationships with iProspect, 360i and a number of others.
On the other side of the coin, there are some agencies and major holding companies that have their own retargeting product. We can be viewed as a competitor as well.
What would you say are some keys in putting together your sales strategy?
First, I came here with many relationships from years of getting to know marketers. I'm also building a team that doesn't need me on every call.
Essentially what I do is trade my trust with the marketer and say to them, "I came here for a reason. I'll tell you all about my company, but all I want is for you to test me.” A small test, a large test, whatever they think is reasonable. As long as they have their internal act together where they can measure the performance in an intelligent way.
It's not a difficult strategy. Most of those companies in the noise, they have to replace 50‑60% of their business every year. It just churns out. When you're running at a 97% renewal rate as Criteo is, it just continues to build on itself. We are north of a $200 million run rate with 400-420 people in the organization.
What is your take on what's going to happen on all the companies and logos in the ad tech ecosystem? Any expectations on what’s going to happen in the next year or two?
I thought there would have been more consolidation by now and a number of companies just not making it.
Also, the emergence of the [agency] trading desks are in many ways "The Empire Strikes Back." The ad networks came in and they disintermediated a lot of things. Clients were starting to buy directly with the ad networks while agencies were sitting there saying, "Wait a second, why have all of these companies cropped up? We should do that ourselves." That's what I would do if I was an agency and the trading desks are starting to pick up speed. A lot of companies in the ad network world are feeling the pinch from a CPM compression standpoint.
Any thoughts on what's going on with Yahoo! today?
They have a great brand and obviously had some issues that have been well chronicled, too. I don't know that there's going to be an event (merger, sale, etc.), but with the right leadership, you can do a lot of wonderful things with Yahoo! and I'm extremely bullish on their prospects. Now… they have had a horrible drain of talent. In the sales channel, the fact that they've lost so many relationships was incredibly costly. But, it can be built back. It's going to take a couple of years, but it can be done.
Finally, what is the one theme or idea that you want people thinking about Criteo?
We make display ads perform like Search today, and we will make display ads perform better than Search tomorrow.
By John Ebbert