If you ask its CFO, Criteo seduced investors mostly through its attractive business model, adhered to perfectly until critical size led to its IPO.
Benoît Fouilland. Criteo is doing performance marketing and our model is based on pure performance: our single objective is to allow our clients’ e-retailers to increase their sales. All the companies choose us only pay on results since we are compensated by clicks that generate additional sales. The traceability of our benefit is therefore very transparent. Our solution is complementary with that of Google, which is more focused on search. Thanks to marketing performance, our clients do not need to budget their communication in advance and have a direct return on investment.
Leaders League. A word on your IPO on Nasdaq in 2013 ?
B.F. Nasdaq investors were confident in our business model, and we reached $ 251 million. Today, we have more cash to grow. However, it also brings light to our performance. Being listed is similar to living in an aquarium. Our size, which is now critical, allows us to leverage our interconnected network. When large clients trust our services, service providers and partners are more predisposed to do the same. In our ecosystem there are a lot of other small companies that base their technology on ours.
Leaders League. How are the smaller companies doing to extricate themselves from the competition?
B. F. Over the last fifteen months lots of them have been acquired. Sociomantic, the company whose technology is closest to ours, has been take-over by Dunnhumby, a Tesco subsidiary. More recently, Twitter acquired Tellapart for $ 533 million. Our thought is that our direct competitors suffered from a lack of critical size, and thus became targets for companies for whom digital marketing is not the core-business.
Leaders League. Why haven’t you turned on the acquisition mode yet?
B. F. We know when to use the strategic leverage of external growth, as we have completed four acquisitions since our establishment. However, we are very selective in our target, which needs to be really complementary to our business. It could save time to adjunct a talented team, such as Adquantic in 2014, to broaden or products range (Tedemis with targeted emails).
So why haven’t we acquired a competitor such as Tellapart? First, there is no point to integrate a technology we perceive as lesser than ours. Secondly, we cannot buy their client relations since we are in a performance business where clients are free to choose the best offer. In fact, the only thing we can pick from among our competitors are their talents, and you can easily understand that we are not the most important bidder in that case.
Criteo Key figures :
2014 turnover : € 745 million (+68 % vs 2013)
2014 net result : € 35 million (vs € 1 million in 2013)
7,190 clients (+2,000 in 2014)