Criteo puts faith in acquisitions and in-app as transformation takes shape
Criteo is bullish about its efforts to transform its business and boost revenues as it continues to weather the after-effects of major changes in the industry, like GDPR and restrictions on data targeting, with new products and acquisitions.
The French adtech outfit had promised in late 2017 it was working on a “sustainable solution for the long-term” to rely less on platforms and redesign its “platform architecture” so it is not at the mercy of external browser settings. To do this, it said it was looking to diversify from web advertising to in-app and email.
Giving an update to The Drum in Chiang Mai at the recent Criteo’s Exec Summit, Alban Villani, the regional managing director for the demand-side platform in South East Asia and the Pacific, claims things are turning a corner after the company saw its revenues dip 1% year-on-year in 2018.
“We decided that 2019 was going to be a transformation year. What it means is that we are obviously still looking at the numbers, we're still looking at growing the business and we are,” explains the Frenchman.
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“The only question is we also need to focus a lot on the products that we are releasing. I wouldn't say we are a huge company but we are a big company now because we are bigger than a startup, so when it comes to transformation, this takes time.”
“This takes a lot of processes, we started at the end of last year and, especially in the last six months, we have accelerated.”
One of the major acquisitions that Criteo made was Manage and adding the Silicon Valley mobile adtech firm’s in-app solution to complement its existing app business.
Criteo also launched a product called App Install to allow marketers to reach and acquire new, re-engage lapsed, and re-target existing customers on one platform.
“We have re-enforced in-app targeting and are progressively launching the app-install business across the world after acquiring Manage,” explains Villani.
“This allows us to go after something that was quite untapped for us because we have been focusing on the conversion part for the longest time. We are very famous there, but if we stayed there, there were limited ways for us to grow beyond the organic growth of the markets like Indonesia and Vietnam.”
“So now with the new products, we are opening up completely new streams of revenue, and it's very exciting for the team. The only thing is that we need to train the team, so this takes time.”
Increased focus on relationships
The new focus on in-app targeting means Criteo does not need to rely on cookies to collect first-party data and track consumers to try and realise the promise of reaching the right person, with the right ad, at the right time.
Villlani says this means Criteo can focus on working with brands to make sure they have a relationship with marketplaces like Lazada, because advertising on marketplaces for brands is turning into a bigger opportunity every year. He notes most of the searches are starting on marketplaces and not on Google anymore, which shows the power of the e-commerce ad environment.
“They come to us all the time for ways to collect first-party data because they have received this type of service from other companies,” he explains.
“We just don't want to do this. That would be very easy money, and we are not in this game, because privacy has always been at the heart of what we were proposing, and that's the reason why we have such a great relationship with our partners, whether they are publishers or online retailers.”
He adds: “Once they have this relationship, obviously the data can be shared between the brand and the marketplace. What we don't want to do is to share things with the brand just because they have money, without asking anyone else. That's not something that we're going to do anytime soon.”
Marketplaces are developing in-house solutions to help its sellers drive traffic to their products, like PropertyGuru, Carousell and HappyFresh, which previously told The Drum they have or are building an in-house ad and media-buying model.
Villani says Criteo is seeing more marketplaces in-housing in the region, but not as many as Europe or in the US, because marketplaces in this region are still heavily dependent on retargeting platforms like Criteo to acquire high volumes of traffic by tapping into a large publisher network.
“It depends on how it's done and if the purpose of it is to say we are going to build a closed environment,” he explains.
“Nobody's going to have access to what we do, and willing to keep control of it, even if it means lower performance, then there is nothing much we can say. I mean, it means that they are ready to compromise on the number of conversions, on their growth, just because they are starting to be a little bit bothered about the data.”
However, with the threat of in-housing looming, it means Criteo needs to be smarter in the way its work with marketplaces, explains Villani, and find a way to address the concerns of the brands, like advertising in a smarter way on marketplaces.
“They want to aggregate some kind of data or information of their users. And marketplaces, on the other hand, they want to make sure that they give off a better relationship with the brands,” he says.
“What we are trained to explain then is, 'okay. Here's our added value, and here is what we do when it comes to data privacy.' So we are educating the market in terms of the platform and what we have built, the system, the secure system that we have built behind, to show them that our purpose is not to take their data and sell it to someone else somewhere around the world.”
He adds: “Honestly, I'm not too concerned about it because I do see that most of the marketplaces are reasonable when it comes to this. They do have in-house teams working on it. Sometimes, they have a full-stack solution, but they still work with us.”
Criteo is also positioning itself to be an in-between for brands and marketplaces. That means working more with agencies, which are already acting as in-between, as they might not have the type of solution that Criteo offers.
Villani points out that historically, in the north of Asia, Criteo has worked with ad agencies since the beginning, because its the only way adtech firms work there with great success. In the south, he says the company is following a model that is closer to its roots, where it does not need to work with an agency.
“Because we provide everything that a partner or retainer needs without the need for a middle man. Now when it comes to the relationship with the brands, and especially if you tap into the awareness segment, it becomes a different project. You need some expertise and that's where the agencies can come on board and can help us drive with their expertise better campaigns,” he explains.
“We have a solution. We have a platform. What we need is we need their expertise with the branding expertise. I feel the agencies so far are welcoming this idea, and we are signing more and more deals with them individually.”
The challenges ahead for marketplaces
Villani says Criteo is worried about the disconnect between online and offline because it is like there are two different worlds, completely different sets of tools, different objectives, and different people.
He asserts brand marketers should have a holistic view of their marketing budgets, and how they discuss with their users or prospective users, but he hasn’t seen solid solutions for this yet.
“This keeps me up at night because I started asking myself this question maybe four years ago. I know that China has developed a lot of things there. I know that Europe and the US now put a lot of money there. But it's still not reconciled,” explains Villani.
“It is still not fully omnichannel yet, so I'm expecting to see more coming there. We do have a store solution. I'm trying to see what can be done with it in our market in Asia. I'm quite hopeful.”
Lazada and its rival Shopee have invested heavily in the livestreaming feature on their apps to bridge the omnichannel gap, while Alibaba’s new retail strategy aims to digitize some operations at physical stores to provide a more seamless experience for customers.
It is also working with luxury brands to launch 3D online virtual stores on the e-commerce giant’s luxury shopping experience, Tmall Luxury Pavilion. While Villani says these initiatives are promising, he feels that more can and should be done.
“I think it's a good start for livestreaming, VR and AR. Good way to test and understand the behaviors on both sides, but it's not a final solution. We need something more,” he explains.
“I think the final solution will come from the CRM reconciliation. We need to find a way to have a super graph across offline and online. And really make sure that you can follow the person everywhere with their consent, obviously. There are still lots of obstacles.”
Villani reiterates that even though Criteo's transformation is taking quite a bit of time, he says the company bullish about the market and the industry, and is focused on bridging the omnichannel gap.