With Amazon.com Inc. increasingly dominating the online and offline retail business, ad tech company Criteo SA is looking to position itself as the vendor that can help retailers fight back.
Criteo is the ad tech sector’s star performer, having built its business on a technique called “retargeting”—serving ads to people who have already visited a retailer’s website to remind them to return and make a purchase.
The company says it has grown its customer base to 11,000 retailers, giving it information on $550 billion in annual commerce sales.
Now Criteo is encouraging retailers, publishers and brands to pool their data together to stand a better chance of getting new and existing customers to purchase their products outside the Amazon ecosystem. The idea is that with more accurate data covering consumers’ offline and online shopping habits, retailers and brands can better target ads at people who are most likely to make purchases.
Amazon’s increasing power has sent shock waves across the entire retail industry. About 55% of U.S. online shoppers start their product searches on Amazon, according to e-commerce startup BloomReach, and the company is making inroads in brick-and-mortar commerce with its $13.7 billion acquisition of Whole Foods.
Nike, which had held off selling its wares directly on Amazon for years, capitulated in June and entered into a partnership with the company to make some of its products available on the site and to minimize the prominence of third-party sellers hawking its shoes and athletic wear.
Amazon helps companies get their products in front of a wide range of consumers, but it also controls the web experience and has a goal of offering the widest assortment of goods at the lowest prices, which doesn’t always sit well with companies looking to build their brands.
“Amazon is creating a means to disintermediate brands if they wish to,” said Criteo’s president of brand solutions, Jonathan Opdyke. “You need to work with them as it’s a huge channel, a huge access point, but if you over-index you could be digging your own grave. The need for diversity is important.”
Criteo is hoping that by working together, retail rivalries can be set aside for the benefit of the wider industry, by using targeted online ads to persuade consumers there are more places to shop than on Amazon.com.
The Criteo Commerce Marketing Ecosystem, as it will be called, will give its clients the option to share anonymized, or “hashed,” aggregated data sets of customer email addresses or other customer relationship management (CRM) data, plus purchase and other “event” information from their physical stores, websites and apps. Criteo says it doesn’t store any personal data that allows for individuals to be identified.
Those clients will then have the ability to join a data pool with Criteo’s other opted-in customers to receive data back that could soon expand their ad targeting options, beyond the people who have previously visited their websites. Criteo is looking to build a product similar to Facebook’s “Lookalike Audiences,” for example, to be able to segment groups of potential customers who have shown interest in similar products and product categories as their existing customer base.
Criteo says, in the more immediate term, the new platform will also help a handbag brand, for example, better understand if an ad it served to a consumer online for a certain product contributed to that person purchasing that item on a department store’s website, app or in a brick-and-mortar location—cross-device, anonymized data they may not have had access to before on their own.
“Brands over time want the ability to work with a third party,” Criteo CEO Eric Eichmann said. “They are more comfortable with a distributed set of retailers than just one single brand.”
Still, the idea will only be successful if Criteo manages to get enough of its customers on board who are willing to work together. Mr. Eichmann declined to comment on how many customers Criteo would need for the platform to work effectively, but said once the company manages to sign up big brands, he is confident the rest will follow and create a network effect.
Brands and retailers also tend to store and sort their data in different ways, so Criteo will need to put its algorithms to work to match it all up in order for the information to be used effectively.
Martin Kihn, an analyst at technology research firm Gartner, said Criteo’s challenge in making its data collective work is that it is competing with the likes of Google and Facebook, which offer a wealth of targeting and measurement capabilities based on their databases of first-party login data. They are also both increasingly looking at ways to link online advertising to offline sales.
But Criteo also has an advantage, Mr. Kihn said, because the ad tech company has relationships with around 18,000 publishers, many of which are reluctant to cede too much control to Google and Facebook. Many publishers like working with Criteo because it’s an alternative to what the ad industry often refers to as the “duopoly.” The ad tech company has become skilled at creating shopping ads that generate clicks and, therefore, high ad rates, Mr. Kihn said.
The Commerce Marketing Ecosystem is currently in development. Criteo’s executives said they expect to share more details about the platform, plus the company’s ambitions to be more than just a retargeting firm during its next quarterly earnings call, which is planned for Aug. 2.
Criteo is one of the two standout performers in the public ad tech market, alongside The Trade Desk, a demand-side platform that made its debut on the stock market last September.
Criteo reported revenue of $517 million in the quarter ended March 31, a 30% increase from a year earlier.
This article, by Laura O'Reilly, originally appeared in The Wall Street Journal on July 27, 2017.
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