It seems that today CRTO is already suffering from the bad news that IOS9 makes ad blockers a real possibility for iOS developers to make and iOS customers to install and use.
http://9to5mac.com/2015/06/10/block-ads-ios-9-safari-iphone/…
Maria
11 Likes
CRTO is getting hit by this news today.
There’s a small article on Seeking Alpha about it as well.
I’m viewing on my mobile or else I would link the article.
I’m wondering if others much more attune to their business can expound.
Thanks,
A.J.
CRTO is down over 9% as of 8:30 PDT. Of all the perceived threats to their business an Apple announcement was not anticipated (by me anyway) as holding the potential for serious damage.
I guess that that’s the way it always goes. As an investor I performed my due diligence as best as I was able. I felt very confident that CRTO was in a strong competitive position. My perception was that CRTO was pretty much unassailable, at least in the near to mid term.
And then, from way far out in left field, Apple makes a revision to their browser and boom CRTO takes a huge hit. I imagine the market will consider this an over-reaction after a day or two and CRTO will recover a to a large extent - at least that’s how I am viewing it at present. I’m not selling.
But it does kind of shake one’s confidence when something like this happens. It’s a strong reminder that it’s always the stuff that you don’t even know you should think about that can play havoc with your investments.
10 Likes
I found a similar article: http://9to5mac.com/2015/06/10/block-ads-ios-9-safari-iphone.
I posit that the majority of FruitPhone users won’t know how to (or care to) mess with those kinds of settings, and so the impact to Criteo’s line of business will be minimal, at least for now. Also, IOS9 uptake would have to be mainstream before it impacted anything, and that’s at least a year out (from release to adoption critical mass).
IMO, this may pinch a little but doesn’t detract from the overall picture. If anything, this is typical of the media (many of which appear to be Apple fanboys) believing that whatever Apple does the rest of the world must follow, which isn’t true.
I bought more at $45.50 – being greedy when others are fearful. This doesn’t fundamentally change the CRTO story, IMO.
2 Likes
I am competent enough to put in an ad blocker on my devices but have never bothered. So I agree with hlygrail, few will bother. People today are surrounded with ads. accustomed to them, they are just part of life. Some even like them.
If this is the reaction to IOS9 then relax. It’s merely a catchup to where every single other browser is already. Infact, in current and previous versions, you can disable cookies and effectively render targeting ads ineffective.
You can also currently download chrome or firefox and use adblock on those apps on your iphone.
I love how all the news articles are saying that this is Apple’s strategy to hurt Google. Google has allowed you to block their own ads using their own browser (chrome), for years.
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Would you have to block all ads or select which ones you don’t want when they show up? I like some of the ads that show up for me and have actually bought that way.
Htownrich
1 Like
Here are my initial thoughts:
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First, this only affects mobile Safari. Apps aren’t impacted, and I suspect a lot of mobile ads are served through apps. For example, CRTO has a relationship with Facebook, and I have to think that the vast majority of mobile users are using the Facebook app and not the web browser. So those are unaffected.
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As others have said, a lot of people won’t bother. Ad blockers have been around forever on the desktop, and most people don’t bother (I don’t).
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I’m sure CRTO has a lot of experience dealing with ad blockers on the desktop, and my guess is that many of those strategies will also work for mobile (or at least give them a good head start on mobile). So this could actually be a boon for them, as it could make ad campaigns more complicated to execute efficiently and thereby push advertisers to use the expertise of services like CRTO rather than trying to go it alone.
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Ultimately, we probably won’t know for a couple years what the actual impact will be. It’ll probably be a year before see initial impact (if any), and then probably another year before we see (1) how effectively CRTO has dealt with it, and (2) how advertisers react to the new challenges.
Neil
Long CRTO
9 Likes
One more followup: if this does begin to have a real impact, I strongly suspect we’ll see websites force mobile users to use their apps so that they can continue to serve ads (since apps are unaffected). At the end of the day, these sites need to support themselves somehow, and ads are what pay the bills for many of them. A lot of them already want you to use their apps anyway, so this would just be the final straw for a lot more.
Neil
Long CRTO
1 Like
Here are some quick numbers for Google (not CRTO, they are harder to come by for my quick calculation) for rough comparison. These are 2014 numbers in millions except percentage, 2015 is expected to be ~11% higher.
Total Ad Revenue 59624
Mobile Search Revenue 11800
iOS Search Revenue 8900 (part of mobile search rev)
iOS Safari Search Rev 4400 (part of iOS search rev)
iOS Safari Default Search Rev 2200 (part of iOS Safari search rev)
So iOS Safari Default search revenue is about 3.7% of Mobile search revenue. IF 20% users blocking search ads may result in a roughly 0.7-0.8% Mobile Ad Revenue reduction.
Cautions: Take these numbers with a pinch of salt, these are the result of a quick scan. Criteo’s business model is likely different from Google, and is possibly more heavily influenced
==
Sources:
http://marketingland.com/report-google-had-12-billion-in-mob…
https://investor.google.com/financial/tables.html
==
I have lightened up on CRTO and am watching closely.
-vanGobi
7 Likes
Update from an email from their IR folks (with some paraphrasing):
The company believes, along with Apple, that user privacy is important and also that advertising is an important part of the mobile ecosystem. They fully expect to continue to provide a solution for their clients that complies with Apple policy, allows consumers to control their ad preferences while supporting an important economic backbone of the Internet.
Other points from the email
- Apple historically has found ways to support advertising while protecting user privacy (3rd party cookies, IDFA, iAD).
- Ad blocking tools have been supported on the desktop Safari for years, so this isn’t really very new.
- These tools are also already available on Android.
- Most likely developed to limit scripts and aggressive ad formats (e.g. Background scripts that go straight to app store, etc, pop-ups, pre-roll videos, slide-ins,…) which Criteo doesn’t do
- Will still require an “app” to be installed that enables this feature.
I am back in my full position, plus a small position in my trading account.
-vanGobi.
7 Likes
Good info. Hope at least some of you captured the quick 3% gain from 44.50/45.00 to now (47.25). The day-traders are clearly buying in the last half-hour.
In a few weeks when CRTO is approaching $60 we’ll wonder what all the noise was about. 
1 Like
Nice analysis Neil
One more followup: if this does begin to have a real impact, I strongly suspect we’ll see websites force mobile users to use their apps so that they can continue to serve ads (since apps are unaffected). At the end of the day, these sites need to support themselves somehow, and ads are what pay the bills for many of them. A lot of them already want you to use their apps anyway, so this would just be the final straw for a lot more.
So what’s to stop AAPL, or someone else, from developing an app, or something else, that prevents ads from popping up in an app? E.g., what if this catalyst today then leads to an app that blocks ads in the Facebook app, or the BuzzFeed app, or SportsCenter app, etc?
Seems to me that’s the likely next step, assuming it can be done.
Also, I really have to disagree with the sentiment here that people will just “not use” the Safari ad-blocking app.
1 - Apple has an amazing ability to get ppl to use their stuff. If they want to push for ad-blocking, folks on iPhones will use ad-blocking.
2 - Ad-blocking is already popular! For example, The most downloaded extension for desktop Safari is called AdBlock. Ad-blocking usage grew 70% YoY from June 2013-2014. The data just doesn’t seem to show that ad blocking features is not already popular, welcomed by consumers, etc.
Would love to hear more. It’s encouraging that the shares “recovered” somewhat from a 14% drop to settle at about a 7% drop, but nonetheless fundamentally this news to me is quite troubling for CRTO.
Dom
Long CRTO
12 Likes
I just want to thank everyone for their fantastic analysis and research of this of the during the day. I was too busy to do any in depth research during the day and you guys really came through. Job well done.
1 Like
Dom,
So what’s to stop AAPL, or someone else, from developing an app, or something else, that prevents ads from popping up in an app? E.g., what if this catalyst today then leads to an app that blocks ads in the Facebook app, or the BuzzFeed app, or SportsCenter app, etc?
I’ll put my developer hat on and my knowledge of iOS application space. By design, apps running on your phone in iOS cannot be blocked by other apps. Each app runs in its own sandbox and is protected and cannot be interfered it. They are also limited to what they can do as well - it is a two way street. Some features of the phone are denied access, for example and may not be turned on. The only way around that I know of to get around it is to jailbreak your phone, and the people who actually jailbreak are a tiny fraction of the population.
I wouldn’t worry about an app blocker app, at least for now. It would take a significant change to the iOS platform and associated frameworks and would be itself a completely different model and a huge departure from the protections put in place from the beginning.
Best,
–Kevin
14 Likes
Hi Dom,
Apple has an amazing ability to get ppl to use their stuff. If they want to push for ad-blocking, folks on iPhones will use ad-blocking
This isn’t an Apple thing. Apple has simply made it possible for 3rd-party developers to do. Before it was impossible. But Apple is not, itself, making or pushing any kind of ad blocking software.
So what’s to stop AAPL, or someone else, from developing an app, or something else, that prevents ads from popping up in an app?
That’s not how app development works on iOS: apps can’t interfere with other apps, and it would be a disaster if they tried. If Apple wanted to go that route formally, they’d just declare that apps cannot show ads and then call it a day (and reject any apps that do show ads since all apps must be approved by Apple). But they’re not going to do it – there would be a revolt, and my guess is that it’d probably also attract attention from anti-trust authorities.
Ad-blocking is already popular!
Maybe. It’s not really clear to me if it is or not. But again, if it does begin to cause real problems, I think websites that depend on advertising to support themselves will just force users to switch to their apps instead (where will they continue to run ads). Also, keep in mind that CRTO is already very successful in the current environment – so if ad blocking is already very popular, then they’ve clearly figured out a way to run successful campaigns despite it. As I said, this could actually be a boon for CRTO if advertisers think it’s too hard or risky to run campaigns on their own.
nonetheless fundamentally this news to me is quite troubling for CRTO.
My gut feeling is that the impact to CRTO will be very minor, but you might be right. I don’t think we’ll really know for a couple of years.
All of this is just my personal opinion, of course.
Neil
Long CRTO
9 Likes
So what’s to stop AAPL, or someone else, from developing an app, or something else, that prevents ads from popping up in an app? E.g., what if this catalyst today then leads to an app that blocks ads in the Facebook app, or the BuzzFeed app, or SportsCenter app, etc?
There are so many businesses out there on the internet that provide free content or services in exchange of ad displaying. If ad gets completely blocked then this business model will become dead. Facebook or Google will either disappear or will charge a fee for service.
Before internet, people payed for newspapers or magazines. People watch TV but also have to tolerate ad. Or they pay for Netflix to avoid ad.
If Apple blocks all ad, who is going to provide the content that Apple users consume on iPhone or iPad? Without the rich content that is either free or inexpensive, who needs an iPhone or iPad?
Advertising is not going to go away, but the format may evolve.
7 Likes
Fast-growing but often “misunderstood” digital ad services provider Criteo (NASDAQ:CRTO) says that it will see its total addressable market reach $20 billion by 2018 as it expands further in Asia, rolls out new ad offerings and picks up new segments including travel and real estate, according to an industry report.
After a recent analyst day presentation where Criteo detailed its expansion plans, Pacific Crest Securities analyst Evan Wilson said in a research note Wednesday that the company’s story “seems plausible” and added, “Clearly, there continues to be a big growth opportunity ahead.”
Read More At Investor’s Business Daily: http://news.investors.com/technology/061015-756636-criteo-ou…
I still haven’t figured out exactly what Criteo does , specifically how they do it, specifically how they do it , and what is their edge ,but this page from their web site is helpful.
http://www.criteo.com/what-we-do/technology/
We believe the era of unmeasurable and unproven marketing is over. Unlike the majority of the market, we only use a transparent cost-per-click model, and we use post-click sales attribution as the measure of effectiveness. Across all of our advertising products, ROI is transparent, easy-to-measure and directly linked to revenue.
Because we only charge for clicks, not impressions, our attention is focused squarely on the things that are most important to the advertiser – namely conversion and sales.
What’s more, we do this at a global scale,
Advertisers are only charged when customers click on the ad
,http://www.criteo.com/why-criteo/
it’s hard to argue that post click sales are what counts.Maybe this is what makes them unique.
both Google and Facebook have these capabilities. The reason they allow third parties such as Bidable, Adroll and Criteo access it is that there is more demand to be had from all players rather then closing it off. From a customer perspective, advertisers want to do retargeting across more then just Google or Facebook controlled inventory…
from a comment at
http://www.quora.com/Why-doesnt-Facebook-or-Google-make-thei…
“One of the top priorities at the CMO level now is understanding how people switch from one device to another,” said Rudelle. “Our cross-device system can be used across any publisher in a very robust and privacy-centric way and we feel we’ll be among only a handful of players in the world who can make this happen because of our scale at the publisher level and we’ll continue to push a lot on mobile and more in-app.”
It’s a tall order for Criteo, whose cross-channel rivals include Google, Amazon, Microsoft, Apple and Facebook. But Criteo says its purchase of Tedemis, a French email-marketing platform, prepared it further by matching mobile devices to email log-ins.
Retail remains a very email-centric medium, said Criteo President and COO Eric Eichmann. “We’ve found that browsing and purchasing data is still most relevant because it comes back to shopping intent data,” he said.
http://adexchanger.com/ad-exchange-news/inside-criteo-examin…
I must admit the world of advertising puzzles me. I see car ads all the time but am only going to buy a car once every X number of years, When I do I go straight to consumers Report and look at reliability. If the car brand isn’t reliable you could expose me to all the ads in the world , I am not going to consider it.
The company making the last car I bought doesn’t advertise at all, at least not any advertising it pays for. No doubt it works better for impulse purchases, though every year I tend to buy more generics.
2 Likes
People watch TV but also have to tolerate ad. Or they pay for Netflix to avoid ad.
While this may be true:
I watch at least 2 Netflix cds per week and each cd has approximately 10 minutes of “trailers” from other movies. Can’t comment on streaming content as I live in boonies and internet too sloooooow.
Also, I remember my parents buying a “HUGE” satelite dish the size of an RV that was in the front yard. The user could pick several satelites and point the dish to each which meant FREE tv and I believe most with no ads.
Now we have Dish and Directv with most of the 400 plus channels litered with ads. So point being revenue flow via capitalism is going to prevail.
Mark
Long CRTO
1 Like
In a worst case scenario, this is Apple against the entire mobile publisher and advertiser ecosystem; not Criteo itself. If browsers start negatively impacting publishers’ abilities to monetize their mobile content, it may trigger a backlash where certain sites are “not optimized for use with Safari.”
It’s easy for Tim Cook to rail against the ad biz. That’s not where Apple’s bread is buttered. But if Cook pushes his campaign too far, these guys are saying, it could come back to bite him.
http://fortune.com/2015/06/11/apple-ad-blocker-criteo/
I dislike ads which is why I use Netflix. But ads are ubiquitous, you can’t get past them on a DVD, they are even there when you go to a movie. Many “free” sites depend on ads . So they are necessary evil, especially for consumers who would find it tough to afford many things without ads paying most of the cost. Thus blocking ads may actually be a move against the poor. Since voluntary tools are already there for blocking ads isn’t that a Big Brother kind of move? I love my Apple devices , use Safari , and own some AAPL but I am not happy about this move.
True not many people use Safari, most of those that do use it don’t use ad blockers, it doesn’t apply to apps, and it will take a long time to implement.
. But perceptions are everything in the stock market and it does’t take much to turn that around,.