romain niccoli, chief product officer & co-founder · romain niccoli, chief product officer...
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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.
3 | Copyright © 2016 Criteo
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
Personalized creative
Unique user value
predictionCreates
Product
Recommendation
Personalized creative
Unique user value
predictionCreates
Product
Recommendation
Personalized creative
Unique user value
predictionProduct
recommendation Personalized
creative
Unique user value
prediction
4 | Copyright © 2016 Criteo
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…
5 | Copyright © 2016 Criteo
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
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1
Customer Targets
2
Universal Catalog
3
Kinetic Design
4
Smart
Header Bidding
Some examples of significant releases in our Engine roadmap for 2016/2017
7 | Copyright © 2016 Criteo
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
8 | Copyright © 2016 Criteo
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
9 | Copyright © 2016 Criteo
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
10 | Copyright © 2016 Criteo
1
Customer Targets
2
Universal Catalog
3
Kinetic Design
4
Smart
Header Bidding
Some examples of significant releases in our Engine roadmap for 2016/2017
11 | Copyright © 2016 Criteo
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
12 | Copyright © 2016 Criteo
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
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1
Customer Targets
2
Universal Catalog
3
Kinetic Design
4
Smart
Header Bidding
Some examples of significant releases in our Engine roadmap for 2016/2017
14 | Copyright © 2016 Criteo
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
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Kinetic Design will bring many opportunities to optimize performance
Infinite number of
unique banners
generated by EngineImproved performance
Scalable solution
to a manual problem
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1
Customer Targets
2
Universal Catalog
3
Kinetic Design
4
Smart
Header Bidding
Some examples of significant releases in our Engine roadmap for 2016/2017
17 | Copyright © 2016 Criteo
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)
• Criteo bids $1.5
• Bidder X bids $0.9
• Bidder Y bids $0.3
Clearing price:
$1.5
1st price auction
(after header bidding
-33% market correction)
• Criteo bids $1.0
• Bidder X bids $0.6
• Bidder Y bids $0.2
Clearing price:
$1.0
1st price auction
(after header bidding – smart bidding)
• Criteo bids $0.61
• Bidder X bids $0.6
• Bidder Y bids $0.2
Clearing price:
$0.61
1 2
3 4 2nd price
prediction
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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