Criteo raises end-of-year forecast, expects to see travel growth

Performance marketing platform Criteo has raised its end of year financial forecast and says that it sees good potential growth in the travel vertical, particularly among tier two, mid-sized firms.

Performance marketing platform Criteo has raised its end of year financial forecast and says that it sees good potential growth in the travel vertical, particularly among tier two, mid-sized firms.

The French firm, which floated on the NASDAQ in October 2013, has a significant travel presence with the sector accounting for “more than 10% but less than 30%” of its business, according to Eric Eichmann, its president and chief executive.

He spoke to Travolution as Criteo released first quarter trading results showing the firm’s revenue excluding Traffic Acquisition Costs (TAC), or the cost of inventory bought on advertising platforms, grew 68% to €105 million.

As a result Criteo raised its full year revenue expectations to between €454 million and €460 million excluding TAC, and between €120 million and €127 million adjusted EBITDA, or profit, for the 12 months ending December 31, up some €20 million and €12 million respectively.

Eichmann said Criteo has seen particular success in travel with its new optimisation by value engine, which helps firms to identify the higher spending prospects and target them with advertising. This has seen an average 10% uplift in sales values for clients across the board but an uplift of 20% in travel.

Criteo also expects to see further success from its new cross-channel engine, due to be rolled out at scale towards the end of this year.

Eichmann said: “The UK market is very interesting for us because it behaves more like the US. We have probably not had as much traction in the UK, but we believe there is significant growth to be had. It’s the biggest online digital marketplace in Europe. We see a lot of potential there.

“People we serve in travel, like Booking.com and Travelocity, are very sophisticated when it comes to performance marketing so for us it keeps us honest and pushes us hardest to improve our solutions.”

Eichmann added that travel sees a very high penetration of apps, so Criteo’s work on multi-device and cross channel attribution is of particular interest to the sector.

“We grew in travel significantly last year,” he said. “We did a number of things to improve our solutions for travel to fine tune it, so we understand things like the booking decision cycle that consumers go through.

“It makes a big difference if a consumer is in the early research phase or in the purchase phase. That’s driven a lot of performance.

“Having one at form for cross device reach is particularly important in travel. It’s important to be able to track activity across devices.”

Criteo claims to have a high retention rate of clients and works with all the biggest names in travel, most on an uncapped agreement, so spending will go up in line with return on investment.

Eichmann said revenue growth had come from existing clients spending more as it improved its technology and added to its list of publishers. This has grown by a quarter year-on-year.

He said this was giving Criteo the liquidity to buy the valuable advertising collateral its clients required to give them return on investment for their budgets.

“You can outspend anybody but what matters is if that particular impression will perform or not,” said Eichmann.He added mobile has seen a rapid expansion in available marketing inventory, which as yet is not well monetised and so is relatively inexpensive.

He claimed the advantage of using a scalable third matching solution like Criteo compared to alternatives like Google and Facebook is that the customer data on which profiles are built is anonymized.

“They are a bit more scary given that they have personal information,” he said.

Criteo remains much better established in its home continent of Europe, said Eichmann, where clients often benefit from roll out of new technology first.

The firm’s first quarter results show that the America’s revenues excluding TAC grew by 138% year-on-year and now represents 33% of global revenue, whereas Europe which represents 46% grew by 36%.

Due to growth in headcount and research and development, operating costs are up 60% to €79 million year-on-year. Criteo said it intends to “continue to invest significantly in Research and Development and Sales and Operations in the current year to support our current and anticipated future growth”.

Eichmann said he believed Criteo has now achieved a size that makes it very difficult for new competitors to enter the market and offer equivalent scale and reach, and that it has grown as others in the sector have consolidated.

“For us the more advertisers we have on our platform the easier it is to buy inventory. We now have 10,000 publishers and reach one billion customers a month. You cannot build that in a day. We are the largest investor in technology in our sector. No one else is doing that. It’s hard to keep pace with all aspects of digital marketing.”