Criteo named that APAC revenue excluding traffic acquisition costs (TAC) fell by 2% at constant currency (CC) due to the strengthening of currencies in Korea and India, offset by weakness in Japan. According to Benoit Fouilland, the CFO of Criteo, 280 new clients were added which brings the total client count to 19,000 at a 90% retention rate.
“In line with our prior view, we expect to see an improvement in net clients addition from the second half of 2019, following the release of our self-service tools earlier in the year,” said Fouilland. “10% of our live clients used at least 2 of our products compared with only 1% a year ago.”
Excluding TAC, he said that revenues from the combined strength of Customer Acquisition, Audience Match, Sponsored Product, and Storetail grew by 82% at CC to over 7% of the total business.
“In-App revenue ex-TAC grew 67%,” he said. “Going forward, we expect to include Manage results in this category.”
Channel Strategy 2.0
Jean-Baptiste Rudelle, the co-founder, executive chairman, and CEO of Criteo, said that the growth for Q4 2018 would come due to upgrades in tools to include the self-service model.
He said that while Criteo has operated as a managed service, switching to a self-service model means that more agencies will not only become Criteo customers but so will their clients and the agency is, in turn, a channel partner.
“So we believe that this self-service capability is going to help us expand our relationship into [the] agency, which is especially important in 2 areas: One, when we go up the funnel additionally, agencies have more budgets there,” said Rudelle. “So it’s going to help us in this capacity. And also, as we are expanding the monetization space to our brands, it’s also an area where our collaboration with [the] agency will be very important to the success. So
absolutely, this is part of the key initiatives we are taking to expand our reach.”
Pricing Strategy 2.0
Having mentioned in the previous quarter that Criteo would potentially include impressions based pricing model into its mix, Rudelle confirmed that the company would start monetizing on driving website visits as well as sales.
“Because when you are interacting with a user, who’s never been in contact with your brand, it’s sometimes a bit unrealistic to expect the user is going to convert directly into sales,” said Rudelle. “And usually, the first step is to bring this user to the website and start to a first visit, which is a whole consideration model.”
With this shift, Criteo is responding to the impact of Apple’s ITP and the EU’s GDPR on revenue restrictions by expanding its monetization model up the funnel instead of the bottom of the funnel (BOFU) approach it has adhered to since inception.
“[Google and Facebook] are also charging on CPM,” he said. “So we thought that it’s much more efficient to be consistent with the rest of the industry.”
In order to roll out this new pricing model, to a sales team that has primarily closed business on the Criteo Customer Acquisition product based on conversion clicks, Rudelle said that training will need to take place first adding that advanced sales managers are creating the first case studies for the new model.