December 2, 2023

Walmart, Target and Macy’s are pumping money into their ad selling units, part of an industry the Boston Consulting Group expects to account for 25% of digital media spending by 2026.

Retailers often rely on ad technology companies to help support these new businesses, and France’s Criteo has led the group as the biggest name in the field. Ecommerce advertising helped save Criteo’s business, which was hit hard by the death of third-party cookies.

But a growing group of newcomers like CitrusAd, PromoteIQ and Kevel threaten to upend its dominance. In 2020, CitrusAd made a play for one of Criteo’s longtime customer Macy’s and managed to convince the retailer to try CitrusAd’s technology against Criteo’s, a bread that just ended. Sam’s Club, who also used Criteo, has recently taken its advertising business internally and is now using completely different technology partners.

While these companies offer similar products, they offer transparent business models designed to undermine Criteo, and automation that makes buying and selling digital advertising easier. PromoteIQ and Kevel also provide technology that gives retailers more control over their media business than they would with Criteo.

Adtech companies fight for retailers

Industry experts are looking at CitrusAd, which was acquired by ad agency holding Publicis Groupe last year and merged into data arm Epsilon, Criteo’s direct competitor. Over the past year, CitrusAd has hired several senior Criteo CEOs including Colleen Cassin and Christina Fonseca to build relationships with consumer-packed brands and retailers.

“CitrusAd and Criteo are competing hard to attract more retailers because they want to grow the network and the number of brands they appeal to,” said Jeff Coleman, Vice President of Market Channels Group at advertising agency Tinuiti.

CitrusAd is going after the major Criteo retailers. For example, Criteo has long sold search ads to Macy’s, but Macy’s began testing CitrusAd for the same service in 2020. And Criteo only recently prevailed: A Macy’s spokesperson said the retailer is wrapping up its tests with CitrusAd, and that Criteo remains its lead partner.

CitrusAd and Criteo have signed up for new retailers. Recent CitrusAd customer gains include Albertsons, GoPuff and Cub Foods. Criteo’s recent wins include Deliveroo, Best Buy and Michaels.

Retail adtech companies charge retailers and advertisers for managing the buying and selling of ads. According to ad industry experts, one of the ways CitrusAd earns customers is by showing the fees it charges retailers. They said both advertisers and retailers complain that Criteo does not disclose its fees when it runs a campaign.

CitrusAd used [fees] as a guillotine to try to cut it off,” said one of the executives from the e-commerce agency.

Criteo’s head of revenue, Brian Gleeson, said the company is moving ahead with its pricing model: Retailers pay a set fee to use Criteo’s technology, while Criteo takes a portion of the ad sales its team sells. Insider hasn’t been able to find out how much either company charges.

But retailers still want more transparency regarding Criteo’s fees. For example, Target ad firm Roundel tests both Criteo and CitrusAd. Experts said it’s rare for a retailer to work with competing ad technology companies. These experts believe Target is working with both companies to determine which company gets the higher fee. The target did not respond to a request for comment.

It’s a bit of a hunger game to get rid of fees,” said a second e-commerce agency executive. “No product is really special – once people find out that one is less expensive than the other, they will all go there.”

Adtech companies introduce new products to retailers

But Criteo and CitrusAd are racing to differentiate their technologies.

Gleeson said Criteo’s technology has moved beyond search ads to include display ads and ads that appear outside the retailer’s website. Joe Doran, Epsilon’s chief product officer, said CitrusAd can also run off-site ads.

“That should make it more competitive with Criteo,” said Andrew Lipsman, principal analyst at the research firm and sister company to Insider Intelligence’s Andrew Lipsman.

Both companies are working to give advertisers real-time campaign data and precise control over their campaigns.

A third executive at an e-commerce agency said CitrusAd is way beyond Criteo in developing these tools. For example, an advertiser can set up a campaign through CitrusAd that promotes one product on one retailer’s property. It’s more complicated to replicate the same campaign through Criteo, the person said.

Gleeson at Criteo said brands often want to reach shoppers across multiple retailers.

Not all retailers outsource their advertising work, which creates more competition with Criteo

Criteo is also facing competition from the retailers themselves. Some retailers do not want Criteo or CitrusAd to run their advertising business and license the technology to create their own advertising business.

For example, Sam’s Club and Albertsons move their ad units internally, using ad technology startups like Microsoft-owned PromoteIQ and startup Kevel. Home Depot and Kroger use PromoteIQ technology to support their advertising business. Retailers can also manage their advertising business using Kevel’s pay-as-you-go program.

Kevel CEO James Avery is betting more retailers on their ad companies, which is one reason the company bought Velocity in June, a technology company that helps retailers manage e-commerce data such as purchase information.

“We’re seeing companies want to own their platforms and keep more advertising money with their sales and account managers,” he said.

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