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The Continued Rise of Walled Gardens, and how Google put the final nail into the Criteo coffin…

Anton Lipkanu   
May 29, 2019  4min. read
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GML (Google Marketing Live, the main Google marketing event of the year) took place last week in San Francisco. Besides the Katie Perry concert, standard technology updates, and the “One more thing I am excited to share with you”, the only message that rang loud and clear across all stages all week was user privacy.

Not surprising, all the vendors in our AdTech world are constantly pushing this message to their audiences. It is a topic we have heard about for a while, “consumers want to control who is accessing their data!” No matter what, why or how or for what reason their data is collected and used, they want to be in driver’s seat, not the AdTech companies.

This all started back in 2017 when Apple announced the first version of Intelligent Tracking Prevention or ITP. This was followed up by numerous Facebook privacy scandals, which cost the world’s largest social network millions of dollars in market capitalization, and the appearance of several new consumer-first platforms, such as Brave Browser. Brave Browser is a free and open-source web browser that blocks ads and website trackers.

Why are the current changes in the AdTech world so important now?

Google, the largest player not only in the AdTech market, but also in the browser market, with a 60% share as of April 2019 announced new changes to the Chrome browser on Tuesday May 7th at its annual I/O developer conference, the week before GML. Google announced coming changes to the way its Chrome browser handles cookies and addresses fingerprinting.

New tools in Chrome will allow users to block or clear third-party cookies more easily. The company also announced a browser extension that will show more information about parties involved in ad transactions and tracking.

But there is a caveat, not good or bad, but a reality for all the marketers to consider. Google makes 90% of its profit from advertising and would be the last company to proactively narrow their revenue stream. Instead, Google is making a strategic move to allow themselves to capitalize on the new reality and put the Criteos of the world out of business.

How? The right AdTech. The devil is in the details, and Google is, among others, claiming from the stages at GML, we should be aiming for the non-personalized world and think back to the 2000s when we used contextual ads as the only way of reaching consumers. But my gut says that by end of 2019 Google will be one out of few, if not the only, platform able to do proper retargeting.

Google is not the 3rd party on your website.

Let me explain:

Imagine Ashley, who uses a Mac with the Safari browser and goes to MySimpleWebsite.com. She does not leave her email or phone number, and the only way for marketers to retarget her are her cookies.

The MySimpleWebsite.com team uses a Criteo pixel on their website, and it means the cookie is now stored in the Criteo.com bucket on Ashley’s Mac. But Ashley never visited Criteo.com, and this cookie is considered a 3rd party cookie. At the end of the day, Criteo now has 24 hours to retarget to Ashley before Apple blocks their cookie for the sake of privacy unless she visits Criteo.com over those 24 hours which she never would.

In simple terms, that is how ITP works now, and it is no surprise Criteo stock went down on the day when the latest version of Safari 2.1, was announced.

Criteo Stock Price March 26 2019

If I take this one step further, Criteo stocks also went down on August 1st after they announced lower revenues because of the changes in the retargeting space.

Criteo Stock Price Aug 1 2018

Overall, Criteo is now trading at around $20, 2.5x lower than 2 years ago, the level they were holding for a while.

Criteo 5 year stock chart

But back to Google…

While Ashley is never going to visit Criteo.com, she is 99% likely to visit one of Google’s properties.
MySimpleWebsite.com may have analytics.google.com or tagmanager.google.com installed on their website.
Ashley may have a Gmail account (mail.google.com), an Android phone or Google Pixel, she may use maps.google.com while commuting, and YouTube to share a funny video while she is at happy hour with friends.

All those properties combined allow Google to sit uniquely in the 1st Party bucket. Moreover, they do not only keep their cookies but enhance the data that Ashley left on MySimpleWebsite.com with her anonymized Google searches, YouTube watch history, and billions of other digital breadcrumbs.

Now it does not look surprising at all that Google put all their forces towards finding a solution to ITP when Apple first announced it, and now they are pushing similar updates to Chrome. Those two browsers combined make up 73% of the US consumer browser market, and if other systems cannot support those two browsers, they will be become irrelevant. Just like what is currently happening to Criteo.

Overall, it opens up a bigger question of the monopolies, sitting at all corners of the AdTech industry.

Advertisers, publishers, and consumers all want to have their cake and eat it too. The advertisers and publishers want to make money and provide better experiences at a lower cost, while consumers want their privacy protected while having enjoyable experiences with advertisers.

For publishers, this would include staying relevant and cheap or free for consumers, while getting paid by advertisers for the inventory and data they provide.

For advertisers, it is about having access to targeting data and controls, driving ROI across screens, devices, and users.

For consumers this would include feeling safe and in control over data they are or are not sharing to get those enjoyable experiences from advertisers.

There are only a few companies in the world such as Facebook (covering for your casual, social intent), Google (consideration intent), and Amazon (purchase, historical intent) that are able to check all those boxes. Altogether this pushes me to think that Walled Gardens are set up to continue to grow, and we, as marketers, should be ready for it.

Finally, I wouldn’t be surprised if the next announcement from Amazon after their recent deal with Adobe to build direct-to-consumer stores powered by Amazon’s commerce and fulfillment tools and the recent rumors swirling around their desire to acquire Sizmek’s ad server, would be about acquiring either Mozilla, or Opera, or both to create an exclusive Amazon browser.

Stay tuned to our blog for more to come on this ever evolving AdTech story…