Criteo has revealed new insights into how Apple’s data lockdown affected advertising, how the company is testing post-cookie ad targeting with Google and how it is developing a stronger relationship with Meta.

In its financial results this week, Criteo said it took a $16 million hit to revenue in the second quarter, partially blaming Apple’s anti-tracking policies. Still, Criteo is in the middle of its post-cookie transition, and just closed a $250 million deal to buy IPONWEB, a U.K.-based ad tech firm, which helps Criteo fill out its buy- and sell-side ad technology.

Criteo’s updates about its strategy reflect broader trends in ad tech, moving off cookies, forging new partnerships and pushing into areas like retail media.

All of this comes amid an economic downturn that is hitting advertising budgets.

What the numbers show

The “loss of signals, including iOS,” led to the $16 million revenue hit to Criteo’s retargeting business, Sarah Glickman, Criteo’s chief financial officer, said. “Signals” are data that help marketers track when ads lead to sales and other outcomes. Criteo’s legacy ad retargeting business relies on third-party cookies and other signals. Apple already deprecated cookies on Safari and implemented anti-tracking measures on iPhones, and Google is following suit on Chrome, just more slowly.

Criteo’s total second-quarter revenue fell to $214.5 million from $220.2 million a year earlier. Its retargeting revenue dropped to $144.1 million from $165.5 million a year earlier.

“The use of cookies is sort of saturated through our client base,” Criteo CEO Megan Clarken said in a call on Wednesday with Wall Street analysts. “They use it for all sorts of things, and so it’s very difficult for us to have them stop doing it, unless we can show them either drop-dead dates when they can’t use it anymore, or a reason to move.”

What is Criteo doing about it

Instead of retargeting based on third-party cookies, Criteo is building deeper relationships with retailers and brands to collect first-party data. First-party data often comes with more direct consent from consumers.

Criteo’s acquisition of IPONWEB shows how it is developing a “closed-loop” ad platform, with demand from advertisers and ad supply from online retailers, brands and publishers.

Criteo is building its retail media business through direct relationships with companies such as Best Buy, Walmart, Walgreens, Lowe’s and CVS. Retail media networks have surged in popularity as more companies see the value of data from commerce. Criteo also works with newcomers like Flipkart and Deliveroo.

“We anticipate that it will bring all sorts of clients, clients that aren’t traditional retailers, to us,” Clarken said, “as they look to expand their potential into media and being able to offer advertising on their platforms.”

Criteo and Meta make up

Criteo execs had a lot to say about plans to get back on Facebook and Instagram, owned by Meta. In 2018, Criteo was ousted from Meta’s business partnership program. Last month, French regulators pressured Meta to open to ad partners, alleging that some of its practices were anti-competitive. This parted the way for Criteo to rejoin Facebook and Instagram. Criteo already has marketing partnerships with TikTok, Disney and others.

“Facebook would like to do a lot more with us in terms of how we might use the relationship to reach their audiences and to bring commerce experiences into Facebook,” Todd Parsons, Criteo’s chief product officer, said on the earnings call.

Post-cookie tests on Google

Parsons said Criteo is working with Google’s Privacy Sandbox, a program that is designed to ween advertisers off cookies. Last week, Google postponed the timeline for killing cookies in Chrome until late 2024. Google said marketers needed more time to test new technology like Topics API. With Topics API, Google shares a select few interests collected about consumers when they browse the internet. If Topics API works, those few interests would be enough to target ads without sharing personal data. Meanwhile, Google’s FLEDGE attempts to run ad auctions “locally” on consumers’ devices, so data isn’t shared by participants in the auctions.

Parsons said Criteo was testing Topics API, “which is running across all of our advertisers and publishers, so we’re collecting a lot of topics through that.” Criteo also is testing FLEDGE, “which is most interesting to us, at least from a core business perspective, because it's retargeting oriented,” Parsons said.

How advertising is holding up

Advertisers are adjusting their budgets as the economy slows down. “We’re seeing some impact of strategic, large customers pulling back on spend,” Glickman, Criteo’s CFO, said.

“July was slightly worse than June and June was slightly worse than May,” Glickman said. “We’re not seeing, you know, a landslide downward.”

Advertisers are focused on performance, and tracking immediate results from ad campaigns. That could play to Criteo’s new strengths in areas such as retail media.

“I mean, we see $40 billion in annual commerce outcomes run through our pipes,” Clarken said.

“During this time it is all about performance,” Clarken said, referring to the broader economy. Criteo has “clients that are trying to make it in this economy, who want to pivot, who want flexibility to go to performance, from brand advertising to performance, or back again,” Clarken said.