Commentary

Criteo Pushes Toward New Video, Prospecting And CRM Products

While Criteo surpassed analysts' estimates in Q3, it's already looking toward new products to fuel its growth.

Criteo yesterday reported revenue ex-TAC (traffic acquisition costs) grew 32% to $177 million in the three months of 2016 to Sept. 30. Analysts had predicted revenues of $173.5 million in that period. Net income increased $154% to $14.7 million, while adjusted net income per diluted share rose 173% to $0.48, versus the $0.37 per share predicted analysts.

The stock jumped on the news with a 10.61% increase to $40.49 just before noon ET yesterday.

CEO Eric Eichmann characterized the company’s performance as a record quarter with “record revenue growth per existing clients and from mobile.”

Criteo is focused on integrating HookLogic technology into the Criteo environment, and is working on new video and prospecting products, set for the second half of the year. “We don’t have a video product today or a prospecting product—just retargeting,” he said. Criteo is also now testing a CRM onboarding product with its clients.

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Asked about what role performance marketing companies like Criteo may play in ad fraud, Eichmann said that clients are the only judges of campaign performance. “We report post-click sales on a 30-day basis. Post-view is wrong. We have to generate a click. We optimize on sales and post-click sales,” he said, acknowledging that it’s hard to get people to click on anything.

“Our engine is built to optimize on sales, not on views or clicks. It’s hard to fake sales from users. It has to be a user who has clicked on one of our ads.”

Eichmann stressed that Criteo isn’t trying to optimize clicks. “We’re optimizing sales. Companies could judge us on whether we generated a view and people bought something. But the proxy for engagement is a click. In the end, we need to generate the sale. If the sale is generated from a view, we don’t take credit for it,” he said. “We have to generate sales but we measure post-click 30-day sales. If we generated a click that didn’t lead to sales, we did nothing for the advertiser.”

He said that advertisers can use any measurement they want -- Visual IQ, Google Analytics, Omniture, and others.

The bottom line is, Criteo gets paid on a click basis but is judged on a sales basis. If advertisers ask for CPC (cost-per-click) and they see how many sales were generated and what they spent, if they don’t achieve the sales they want, then they decrease the CPC. “Advertisers can go elsewhere if we don’t meet their sales goals. People judge us on sales. You can’t fake a sale,” Eichmann said.

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