Flush With Funding, Criteo Rebrands Retargeting
ADOTAS – As Criteo recently shifted its headquarters from Paris to Palo Alto, CEO and founder JB Rudelle has become accustomed to the nine-hour flight from Europe to the West Coast. Although he makes it to New York every month or so, his people are based in Palo Alto and Europe, not the Big Apple, though he hopes to open a local office in September.
“Until then, it’s a nice flight,” he comments.
I look at him skeptically, but notice he doesn’t appear jet-lagged or exhausted.
He shrugs in response. “Now you have Internet on the flight — I feel like I’m in my office. I can send emails and everything.”
Entering the U.S. market hasn’t been that daunting considering that Criteo provides service throughout Europe despite a plethora of languages and currencies.
“It’s not as integrated as the U.S.,” Rudelle quips.
While building its European base Criteo had to explain the whole concept of retargeting; in the States, however, advertisers know about the tool but have been disappointed with the results. Around 90% of U.S. advertisers have tried retargeting at one time or another, but although the technology has been in existence for 10 years, no one has been able to scale the business.
Rudelle has found the best way to prove the value proposition — better ROI and big scale — of Criteo’s approach is to let them see the company’s CPC model in action, exhibiting that it’s risk-free and a pure-performance machine.
“We say, ‘What you’ve seen in the past with retargeting — forget it. This is going to be a complete new story,’” he says.
Traditionally retargeting has featured a view-through pricing model, meaning advertisers were charged if a user saw a retargeted banner, didn’t necessarily click on it, but still returned to the retailer.
That’s difficult to justify because there are many natural revisits, Rudelle says, hence why Criteo opted for a pure CPC model, which makes the value of the retargeting far clearer and allows advertisers to compare retargeting campaigns on a benchmark level with search campaigns as both have a post-click conversion rate.
With impressive results from its first six months on the western side of the Atlantic, Criteo seems to have succeeded in rebranding retargeting, closing with numerous large American brands that have been excited by the potential of the CPC model. The company has even piqued the interest of investors, closing a series C round of funding yesterday with $7 million from Bessemer Venture Partners. In total, Criteo has raised $24 million in funding.
Google lately re-awakened interest in retargeting by introducing it as an AdWords feature. Alas, Rudelle says the search giant is merely offering what’s been around for a decade. Criteo does Partner with DoubleClick on cookie targeting, but the service cannot personalize its retargeted ads.
Criteo specializes in luring a consumer back to a retailer’s website with the product he or she was gazing at plus similar and related items that may pique user interest. Rudelle boasts that 100% of Criteo’s banners are personalized “on the fly” based on past behavior — the company serves 4 billion unique impressions as no two banners are ever the same.
On average consumers make five visits to a e-tailer’s site before making a purchase, Rudelle says, highlighting the importance of getting them to return to a specific site. Retargeting provides immediate ROI for an advertiser but also makes higher-funnel campaigns more profitable by increasing their efficiency. In fact, Criteo’s analytics display the effectiveness of complementary campaigns.
However, if a retargeted banner makes upsets a viewer, not only will Criteo lose the consumer but also its CPC business model means that money spent on creating and serving has gone to waste. On a single-case basis it doesn’t sound terrible, but these do have a tendency to add up.
“It is important that it’s the user’s choice,” Rudelle explains. “When users understand the program they are much more comfortable.”
Rudelle considers Criteo ahead of the American market in terms of transparency and user privacy because of its European privacy laws are far stricter. In particular, you’d never believe how rigid the Germans are about online privacy, he says. I respond I’m not surprised considering the tangles Google keeps falling into.
In effect, Criteo has been imposing code of conduct in regards to user privacy for several years that bears a striking resemblance to the measures outlined in the draft privacy legislation recently unveiled by U.S. representatives Eric Boucher (D-Va.) and Cliff Stearns (R-Fla.). In every banner Criteo serves, there is a direct link to a page explaining the information Criteo is using to target and the ability to opt out of any behavioral targeting campaign. Users can mix and match, opting out of every Criteo campaign or deciding which advertisers they would like to receive banners from.
“I’m very pleased to see that the government putting together a new law in the U.S. that does the exact same,” Rudelle says. “Opt out is okay as long as it’s embedded in each banner; if it’s hidden in the corner of a page where nobody goes, that doesn’t make sense. It has to be readily accessible for each user.”
Rudelle is aware that Criteo has entered the U.S. market when it’s a quite fragmented. Although the cost to enter is still low, he sees consolidation is on the horizon for the display arena and imagines only five to 10 players emerging with the others going the way of the dinosaur. The ecosystem changing rapidly as online advertising becomes more and more dependent on technology, he says, which requires heavy R&D investment.
“Not a lot of people are going to be able to keep up with the R&D necessary to be on the cutting edge of this market,” Rudelle explains. “Only the most efficient players are going to survive — the ones truly showing superior ROI for advertisers… Mainstream online advertising is becoming a very tough game. You need huge volumes and scale to be efficient.”
Although display is a large market, by specializing in retargeting, Criteo has found a comfortable niche at the bottom of the funnel and doesn’t plan to expand into the higher levels. Rudelle feels its better to be excellent in one field rather than average in many and sees retargeting becoming a central tenet in many marketing strategies alongside brand-building and search.
“It’s really the last mile,” Rudelle says. “You have all those different marketing campaigns bringing first-time visitors to websites, but 95% are leaving without buying anything…. We re-engage these users by acting as a safety net behind the website bringing those visitors back.”
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