Criteo’s Playbook for Growing Its Retail Media Business

Adtech firm Criteo is growing its retail media business as using third-party cookies gets harder….

  • Adtech firm Criteo is growing its retail media business as using third-party cookies gets harder.
  • Retail media is a bright spot for Criteo and has raised its stock price.
  • It’s testing shoppable video formats and a tool that serves ads off of retailers’ websites.

Criteo CEO Megan Clarken has an ambitious goal for her company to be “the Amazon of advertising on the open internet.” 

For many years, the advertising tech firm’s bread and butter has been its retargeting business, which serves people ads for products that they look at online. For example, Criteo might show someone an ad for a pair of shoes after they look at them on a retailer’s website. 

But that part of the business has seen challenges with privacy concerns and government regulations like Google’s Chrome and Apple killing third-party cookies. Clarken has been laser focused on pointing her company toward growth opportunities including retail media, which bypasses the privacy-based hurdles because it is built entirely on retailers’ first-party data.

Her efforts seem to be paying off with positive third-quarter revenue growth for Criteo’s retail media segment ex-TAC, which grew 65% over the last year. Criteo’s stock price hovered low between 2017 and 2020 due to concerns about its business model relying on third-party cookies, and rose almost 25% on November 3 when it reported third-quarter earnings that beat analysts’ estimates.

“Retail media has been a growth engine for us for sure,” she said. “It’s one of the reasons why there’s renewed interest in our stock.” The retail media segment now makes up 14% of the company’s total revenue while retargeting makes up 72% of revenue, according to the company’s third-quarter earnings.

US advertisers will spend $24 billion on e-commerce advertising this year, up from $19 billion this year, according to eMarketer.

Criteo, she said, is well positioned to thrive in this area, since it has the “first-mover advantage” with access to retailers’ first-party data. 

Criteo is also expanding beyond retargeting with audience targeting tools that help advertisers and retailers find specific types of shoppers online and target them with relevant ads based on Ctiteo’s database of 650 million daily active users.

Sherry Smith, Criteo’s managing director of retail media for the Americas, said that grocery brands are particularly seeing high results, with an average of 400% return on ad spend.

Criteo is also working with three retailers to test shoppable video ad formats and a relatively new offering called off site retail media that lets retailers sell ads outside of their own websites and apps that appear on publishers’ sites.

Clarken does not see the e-commerce bubble bursting any time soon, pointing out that COVID-19 led to a significant change in shopping behavior where consumers purchased less from brick-and-mortar stores and instead went online to shop. 

“It’s sticking and will continue to be that way,” she said.