Criteo
Criteo CEO JB Rudelle
- Criteo reported $2.3 billion in 2018 revenue, a 0.2% year-over-year increase while fourth-quarter revenue declined 1% year-over-year.
- Europe's GDPR law and Apple's stance on web tracking were massive challenges for the ad-tech firm in 2018 but CEO JB Rudelle said, "we feel that the worst is behind us."
- Amazon continues to ramp up its own programmatic-like ad network that competes with Criteo but Rudelle said that retailers are pushing back against Amazon's move into the space.
2018 was a tough year for French ad-tech company Criteo.
Two main challenges threatened to shake up Criteo's business: Europe's General Data Protection Regulation law and Apple banning third parties from tracking and targeting web cookies for more than 24 hours with a feature called Intelligent Tracking Prevention (ITP).
Those two moves were blows to Criteo's core business of retargeting digital ads to consumers after they look at specific products on retailers' websites and apps.
Faced with those challenges, Criteo's fourth-quarter revenue decreased 1% year-over-year to generate $670 million. The decline is an improvement over the third quarter year-over-year dip of 6%, but Criteo's Q4 revenue is particularly concerning because retailers tend to pump money into retargeting during the holidays. For all of 2018, Criteo's revenue grew a scant 0.2% to $2.3 billion.
Read more: Europe's looming privacy law GDPR may hand an advertising opportunity to two unexpected players
CEO JB Rudelle, said the company did better than expected in the quarter, though he acknowledged the headwinds of the past year.
"We're entering 2019 with a good velocity where we feel that the worst is behind us," he told Business Insider, speaking ahead of the earnings release. "We had a difficult year last year. The guidance we've been giving for 2019 is pointing to the right direction, with a modest but positive growth for the first quarter and acceleration further down the road."
Amazon is growing its ad business, and it could actually be good for Criteo
Amazon continues to grow its
In getting brands' ad dollars, Amazon is taking share from big retailers like grocery or department stores that typically get ad dollars when they run digital promotions for brands that sell products in their stores or sites through shopper-marketing programs. For example, retailers like Walmart and Target have long had media businesses that that place brands' ads on their own and other websites.
But matching Amazon's resources and power is hard for retailers, which has opened a new group of customers to Criteo. The firm reported it had 19,500 retailers and brands as clients during the fourth-quarter of 2018, up 7% year-over-year, with client retention rates around 90%.
Criteo is talking to most of the big US retailers about how they can fend off Amazon and better monetize their audiences to brands, Rudelle said.
One trend Criteo saw in the fourth quarter was an uptick in European retailers offering heavy discounts on Black Friday, adopting a tradition among US retailers that slash prices during Thanksgiving week.
"Two or three years ago, there was no Black Friday in Europe," he said. "We expect that this is going to be a lasting phenomenon in the coming years to the point where Black Friday is even bigger than the pre-Christmas peak."
GDPR was a blow to marketers' data, but it's getting 'smoother'
In May, the European Union rolled out GDPR, a sweeping law that requires publishers and advertisers to get explicit permission from consumers to collect their data to use in serving and targeting ads.
Ad-tech companies like Criteo and publishers scrambled to establish privacy and data policies that met the requirements of GDPR, causing some US-focused publications like Tribune Publishing's Chicago Tribune and USA Today to block their websites or offer ad-light versions of their websites in Europe.
Eight months into the law, Rudelle said that the fourth quarter was much smoother regarding GDPR than Q3. "We are getting into more of a steady mode where most players are now implementing the guidelines."
A fraction of marketers used tactics like wiping out European versions of websites or loading sites with multiple forms to collect data consent, Rudelle said, calling those tactics "a bit too aggressive and not necessarily user-friendly."
As to the impact of Apple's ITP, Criteo has adjusted by shifting focus to on in-app ads and away from the mobile web advertising that Apple was targeting.
"It was a big wake-up call to realize that we should not be too dependent on cookies, because suddenly a player like Apple could change the rules of the game in quite a brutal way," Rudelle said.