The ad tech world loves a good disruption narrative, and for the past few years, that narrative has centered on the impending death of the third-party cookie and the scramble to find alternatives. Criteo, a company built on the back of retargeting, the quintessential cookie-dependent advertising tactic, has been in the crosshairs of this narrative. But amidst the noise of testing, phasing, and predicting cookie apocalypse scenarios, something remarkable has quietly emerged from Criteo's recent earnings call: retargeting, the presumed dinosaur, is not just surviving, it's thriving.

While much of the focus has centered on the growth of Retail Media and the rapid adoption of Commerce Audiences, Criteo's Q1 2024 earnings transcript reveals a subtle but significant shift in the performance of its retargeting business. After years of decline, Criteo reported slight growth in retargeting during the quarter. This seemingly minor detail has largely been overshadowed by the excitement surrounding the company's other ventures, but it holds the potential to be a game-changer.

The retargeting revival is attributed to a combination of factors, most notably the integration of cutting-edge AI technology and the company's strategic partnership with Meta, allowing advertisers to leverage Facebook and Instagram's vast inventory for retargeting campaigns. The impact of AI-driven performance enhancements was particularly significant, contributing a double-digit million dollar increase in Contribution ex-TAC in Q1. This suggests that Criteo is not simply clinging to an outdated tactic, but rather reinventing it through the power of AI.

The implications of this retargeting resurgence are profound. Firstly, it challenges the prevailing narrative of cookie deprecation leading to the inevitable demise of retargeting. While it's true that the third-party cookie will eventually fade into oblivion, Criteo's experience suggests that retargeting can adapt and thrive in a cookieless world, provided it's powered by sophisticated technology and strategic partnerships.

Secondly, the retargeting revival strengthens Criteo's position as a comprehensive Commerce Media powerhouse. While Retail Media and Commerce Audiences represent the future of the company, the continued strength of retargeting adds a layer of resilience and stability, offering advertisers a full-funnel solution across multiple channels and formats. This integrated approach is particularly valuable in a volatile advertising market, where advertisers are increasingly seeking partners who can deliver consistent performance across diverse environments.

Criteo's Financial Performance

Let's break down Criteo's Q1 2024 performance and the potential impact of the retargeting revival:

Reference: Criteo Q1 2024 Earnings Call Transcript

Looking beyond the headlines, Criteo's data points to a potentially lucrative hypothesis: AI-powered retargeting might not just be a stopgap solution, but a long-term growth driver. As Criteo refines its AI engine and expands its partnerships, it's conceivable that retargeting could regain its former glory, albeit in a reinvented, cookieless form.

Let's consider the potential impact of a 5% growth in retargeting for Criteo in 2024. Assuming retargeting contributes approximately 45% of Criteo's overall Contribution ex-TAC, which is expected to reach $1.075 billion this year, a 5% growth in retargeting would translate to an additional $24 million in Contribution ex-TAC. This might seem modest compared to the anticipated 20% growth in Retail Media, but it represents a significant turnaround for a business segment widely assumed to be in terminal decline.

The Impact of AI on Criteo's Revenue

The following chart illustrates the potential additional Contribution ex-TAC generated by a 5% growth in retargeting, assuming a total Contribution ex-TAC of $1.075 billion in 2024.

Furthermore, the revival of retargeting could have a cascading effect on Criteo's overall business. As advertisers witness the continued effectiveness of AI-powered retargeting, they're more likely to entrust Criteo with their full-funnel marketing needs, driving increased adoption of Commerce Audiences and Retail Media. This reinforces the company's value proposition as a one-stop shop for Commerce Media, further strengthening its position in the rapidly evolving advertising landscape.

While the long-term trajectory of retargeting remains uncertain, Criteo's Q1 2024 results offer a glimpse of a future where AI plays a pivotal role in reshaping the advertising landscape. This quiet revolution, hidden beneath the cookie deprecation headlines, might just be the catalyst for Criteo's next chapter of growth and innovation.

"Fun Fact: Criteo's name is a play on the Greek word "kriterion," meaning "a standard by which something is judged," reflecting the company's commitment to delivering measurable results for advertisers. It seems they're living up to their name, even in the face of industry upheaval."