romain niccoli, chief product officer & co-foundercriteo.investorroom.com › download ›...

Romain Niccoli,Chief Product Officer & Co-Founder

Investor Day, September 2016

Engine Innovation

2 | Copyright © 2016 Criteo

Safe Harbor Statement

This presentation contains “forward-looking” statements that are based on our management’s beliefs and assumptions and on information

currently available to management. Forward-looking statements include information concerning our possible or assumed future results of

operations, business strategies, financing plans, projections, competitive position, industry environment, potential growth opportunities,

potential market opportunities and the effects of competition.

Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,”

“believes,” “could,” “seeks,” “estimates,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar

expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other

factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or

achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our management’s beliefs and

assumptions only as of the date of this presentation. You should read the Company’s most recent Annual Report as filed on Form 10-K, on

February 29, 2016, including the Risk Factors set forth therein and the exhibits thereto, completely and with the understanding that our

actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these

forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-

looking statements, even if new information becomes available in the future.

This presentation includes certain non-GAAP financial measures as defined by SEC rules. As required by Regulation G, we have provided a

reconciliation of those measures to the most directly comparable GAAP measures, which is available in the Appendix slides to today’s

“Financial Update” presentation. In addition, certain financial information contained herein with respect to years ended prior to December 31,

2013 has been derived from our audited consolidated financial statements that were prepared in accordance with IFRS and presented in

Euros. Financial information contained herein with respect to quarterly periods has been derived from our unaudited condensed

consolidated financial statements.


Technology

Our Engine solves highly complex problems in real time

Creates

Product

Recommendation

Personalized creative

Unique user value

predictionAdvertiser 2

Advertiser 3

Advertiser 4

Advertiser 5

For each user

Internal advertiser

auction

Publisher/platform bid

Custom ad serving

Advertiser 1Creates

Product

Recommendation


Unique user value

predictionCreates

Product

Recommendation


Unique user value

predictionCreates

Product

Recommendation


Unique user value

predictionProduct

recommendation Personalized

creative

Unique user value

prediction


Engine innovation has always been a significant growth driver

Release year Release name Revenue ex-TAC impact

2013 Conversion Optimization +20% uplift

2014 Revenue Optimization +8% uplift

20151st generation

Dynamic Creative Optimization +10% uplift

Note: the uplift in Revenue ex-TAC corresponds to the increase in Revenue ex-TAC for Criteo on a representative sample of clients, where clients use the

corresponding new Engine feature on 50% of their user pool and do not use the corresponding new Engine feature on the other 50% of their user pool, pursuant to a

proven 50/50 A/B test methodology

Some examples of significant Engine releases over the past few years…


Some examples of significant releases in our Engine roadmap for 2016/2017

1

Customer Targets

2

Universal Catalog

3

Kinetic Design

4

Smart

Header Bidding


1

Customer Targets

2

Universal Catalog

3

Kinetic Design

4

Smart

Header Bidding



Technology

We constantly tune our Engine to meet advertisers’ objectives

Click

optimizationConversion

optimization

Past Present & Future

Revenue

optimization

$

Gross Margin

optimization

%

Further

optimizations

Our advertisers’ ultimate objective

Maximize gross margin

Advertisers have an incentiveto spend more with us

We get closer to advertisers’ ultimate goal through an iterative process


We are improving performance while simplifying advertisers’ lives

We let advertisers bid on a cost-of-sales target instead of a CPC

Target COS Result

Maximize advertiser ROI by automatically

adapting to seasonality and trends

Align advertisers’ long-term and

short-term interests with Criteo’s

Bidding decision is based

on user value against a

cost-of-sales target

Note: Cost-of-sales target means the marketing expenditure advertisers are willing to spend with Criteo as a percentage of the revenue generated by Criteo on a post-click basis


The logical next step is to go all the way to advertisers’ gross margin target

We are building a new generation of the Engine optimizing for gross margin

In development for 2017*

Objective: Maximize our clients’ gross margin

Engine feature Result

Advertisers maximize gross margin for

each product in catalog and optimize

target ROI

Bidding decision based on user

value against a gross margin

target per product

Gross Margin

Optimization

* Estimated


1

Customer Targets

2

Universal Catalog

3

Kinetic Design

4

Smart

Header Bidding



We enrich all products with universal metadata and match them between advertisers

Image Color Brand

Product 1

Product 2

Product 3

Enriched Catalog

Image Color BrandGoogle

Category

Product 1 MajeCocktail

Dress

Product 2 Blue NikeFootball

Shoe

Product 3 Dior Sunglasses

Universal Catalog

id Image Color BrandGoogle

CategoryRetailers

Universal

Product 1Maje

Cocktail

Dress

House of Fraser,

ASOS

Universal

Product 2Blue Nike Football Shoe ASOS, Sears

Universal

Product 3Dior Sunglasses Fnac, Best Buy

Original Catalog

We are building a product graph of all products across our advertisers

4bn products

in client catalogs

The largest

product database

Bigger than

Amazon and Alibaba


Universal catalog is a new powerful asset for Criteo

Leveraging

cross-merchant data

Linking products with

attributes, users and

other products

Objective: Uncovering deeper

relationships among products

and consumer preferences

We will use this key asset for

• Remarketing

• Prospecting

• Search

• Other new initiatives

Benefits to advertisers:

• Understand consumer

intent across advertisers

short- and long-term

• Build relevant user profiles


1

Customer Targets

2

Universal Catalog

3

Kinetic Design

4

Smart

Header Bidding



We are constantly evolving our creative capabilities

Template-based

personalized design

Perfectly branded

personalized ads

in any size

Template-free

Kinetic Design

enabling an infinite

number of unique ads

20162015 2017


Kinetic Design will bring many opportunities to optimize performance

Infinite number of

unique banners

generated by EngineImproved performance

Scalable solution

to a manual problem


1

Customer Targets

2

Universal Catalog

3

Kinetic Design

4

Smart

Header Bidding



We are leveraging machine learning to adapt to header bidding

2nd price auction

(before header bidding)

• Criteo bids $1.5

• Bidder X bids $0.9

• Bidder Y bids $0.3

User value = $1.5 CPM

Clearing price:

$0.9

1st price auction

(after header bidding – near term)




Clearing price:

$1.5

1st price auction

(after header bidding

-33% market correction)




Clearing price:

$1.0

1st price auction

(after header bidding – smart bidding)




Clearing price:

$0.61

1 2

3 4 2nd price

prediction


Longer-term, we have many additional opportunities to optimize our Engine

Continue to improve the display to conversion ratio of <0.05%

Optimize the whole consumer journey, from immediate transaction to

customer lifetime value

Account for new key variables as mobile ubiquity continues to drive commerce

Note: the average display to conversion ratio is calculated over the January 1, 2016 – September 11, 2016 period and corresponds to the average click-through rate multiplied by the average conversion rate.

Powerful sustainable scale effects

Innovation applicable across all marketing channels

The World’s

Performance

Marketing Platform

romain niccoli, chief product officer & co-foundercriteo.investorroom.com › download ›...

Documents