French performance marketing company Criteo came out swinging yet again in its quarterly showing on Wednesday despite a 7% dip in its share price when the market opened.
Revenue, excluding traffic acquisition costs, rose 36% to $166 million in the second quarter, with mobile ad revenue generating half of it for the first time.
Criteo added 900 net clients in the second quarter, and 66% of its advertiser base now contributes anonymized CRM data to power its device graph, Universal Match.
“Forty-seven percent of our revenue is based on matched users,” Criteo CEO Eric Eichmann told AdExchanger. “That’s the dominant metric for us because it evaluates our most valuable users, and it gives you a sense of the revenue we generate from matched users.”
Here are some of the highlights from Criteo’s earnings call and AdExchanger’s interview with Eichmann.
Header Bidding
After Rubicon Project admitted to investors it had been slow to enter the header bidding race, investors brought the question straight to Criteo management.
What is Criteo’s header bidding strategy, given Google’s recent shake-up and with multiple demand sources now competing simultaneously within a publisher’s container?
Eichmann told investors: “We believe some high-value users may become more pricy as a result of these changes in auction pricing. What used to be second-price auction dynamics are becoming first-price auction dynamics. With more people in first-look environments, they are able and willing to bid for those users.
“But we think our scale, data and technology gives us more insight into the value of those users long-term. We’ve seen changes like this in the publisher ecosystem before and we adjust to changes quite rapidly and quite well because we’re a sophisticated buyer. It might have an impact in the short term, but in the long term we think it will be a positive for us.”
The SteelHouse Suit
Eichmann told investors: “We launched a legal action against SteelHouse recently where we alleged they perpetrated a click fraud scheme – taking credit for online sales attributable to Criteo as well as traffic coming into a site. Obviously proper attribution is the client’s responsibility ultimately, but we need to ensure the rules of the game are fair. It’s an ongoing investigation so we can’t comment beyond that, but we think it’s important to have an environment that’s fair and transparent for clients.”
Its Supply Partners Google And Facebook
Eichmann told AdExchanger: “We are positioned in a way where we access all supply sources. Today we have a tight integration with Google, collaborate very closely with them and whenever there is a new feature, we’re one of the first to get access to it.
“We also have a tight collaboration with Facebook. We’ve been working with Facebook for over three years, first on FBX and more recently on Dynamic Product Ads. We have a customized integration with them to drive sales for our clients. We have about 6,000 clients connected to Facebook through our platform and that are driving sales that way.
“In addition to that, we have about 500 clients that are ready to be deployed and about 4,000 clients connecting to Instagram. Obviously, the Facebook revenue numbers are very impressive. Facebook has an extraordinary audience that spends a significant amount of time on their property, and that makes up a large part of the value Facebook brings.”
Mobile Growth
Eichmann told AdExchanger: “One of our fastest-growing areas for app inventory is APAC, particularly markets like China, which see more than 50% of ecommerce revenue coming from mobile devices and app environments. We see mobile app commerce generating up to three times the conversions as mobile web and our app business grew sixfold from last year.”
Criteo’s Position In The Ad-Tech Ecosystem
Eichmann told AdExchanger: “The challenge for us, of course, is to continue to innovate on our platform to drive more sales. Our clients, at least over 75% of them, spend on what we call an uncapped budget basis, which means as long as we meet their ROI needs, they’ll spend as much as they can through our channel. We have different dynamics.
“It doesn’t mean we’re insulated from other dynamics you see in ad tech, but we have built a business based on technology driving sales. Making that relationship between spend and sales very clear for clients provides us a very stable basis to work off of.
“Yes, changes on the supply side, like header bidding, are changing publisher inventory dynamics from a second-price auction basis to a first-price auction basis. We have a buying team that’s always looking at how to optimize the bidding we do on all platforms.”
Interview edited for clarity and structure.
