One thing I’d definitely add about CRTO is that they seem to be building a nice moat: the more internal data they gather from various companies, the better their algorithms are going to be, and the better service they can provide. It’d be very hard for someone else to just walk in and somehow gather all that data from those companies – it’s private, sensitive stuff – so that’s definitely a moat in the making IMHO. The more CRTO can grow, gather data, improve their algorithms and therefore the effectiveness of their service, the more clients they’re likely to win, and that translates into even more data that can be used to improve their algorithms in a virtuous cycle.
Neil,
It may work out the way that you say.
But I’d like to make a counter argument.
The SWKS business is built on a lot of knowhow that is impossible to replicate in a short time period and without billions of dollars of investment including the licensing of lots of IP. Its customers are working on multiyear projects with SWKS and will be very difficult to grab away. Also, a new competitor will have years of heavy loses until then get enough scale to be profitable.
The SKX business is build on a brand of growing strength and tens of millions of dollars of investment in distribution. A decline in its business is possible but not as likely.
CRTO’s business is the most susceptible to be taken away. Technology moves very quickly, and a new approach may be developed by someone else. Losing a customer can be as fast as a phone call moving away the marketing budget from CRTO to another company.
I argue that SWKS is the safest franchise, SKX is the second safest, and CRTO is the least safest.
Chris