Digital Ad Firm Criteo Is Facing New Competition for E-Commerce Ad Dollars

Walmart, Target, and Macy’s are pouring money into their ad-selling units, part of an industry that Boston Consulting Group expects will make up 25% of digital-media spending by 2026.

Retailers often rely on adtech companies to help power these new businesses, and French firm Criteo has led the pack as the biggest name in that space. E-commerce advertising helped save Criteo’s business, which was severely impacted 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 biggest longtime clients Macy’s and managed to get the retailer to pit CitrusAd’s technology against Criteo’s, a bake-off that is just now concluding. And Sam’s Club, which also used Criteo, recently took its ad business in-house and is now using completely different technology partners.

While these firms offer similar products, they pitch transparent business models designed to undercut Criteo, and automation that makes buying and selling digital ads easier. PromoteIQ and Kevel also provide technology that gives retailers more control over their media businesses than what they’d get working with Criteo.

Adtech firms are battling for retailers

Industry experts consider CitrusAd, which was acquired by ad agency holding group Publicis Groupe last year and folded into its data arm Epsilon, Criteo’s most direct competitor. Over the past year, CitrusAd has hired several top Criteo executives including Colleen Cassin and Christina Fonseca to build relationships with big consumer-packaged brands and retailers. 

“CitrusAd and Criteo are competing so heavily to attract more retailers because they want to grow the network and the number of brands that they appeal to,” said Jeff Coleman, group VP of marketplace channels at ad agency Tinuiti.

CitrusAd is going after Criteo’s key retailers. For example, Criteo has long sold search ads for Macy’s, but Macy’s started testing CitrusAd for the same service in 2020. Criteo only recently prevailed: a Macy’s spokesperson said the retailer is winding down tests with CitrusAd, and that Criteo remains its main partner.

Both CitrusAd and Criteo have been on a tear signing up new retailers. CitrusAd’s recent wins include Albertsons, GoPuff, and Cub Foods. Criteo’s recent wins include Deliveroo, Best Buy, and Michaels.

Retail adtech firms charge retailers and advertisers a fee for managing the buying and selling of ads. One way CitrusAd is winning clients is through showing the fees it charges retailers, according to ad industry experts. They said that both advertisers and retailers complain that Criteo does not disclose its fees when it runs a campaign.

“CitrusAd is using [fees] as the guillotine to try and cut them off,” said one e-commerce agency exec.

Criteo chief revenue officer Brian Gleason said the company is up front with its pricing model: Retailers pay a set fee for using Criteo’s technology, and Criteo takes a cut of ad sales sold by its team. Insider was unable to learn how much either company charges. 

But retailers still want more transparency into Criteo’s fees. For example, Target’s advertising business Roundel is testing both Criteo and CitrusAd. It’s rare for a retailer to work with competing adtech firms, experts said. These experts believe Target is working with both companies to determine which firm collects higher fees. Target did not respond to a request for comment.

“It’s a little bit of a hunger game to suss out the fees,” said a second e-commerce agency exec. “There really isn’t a differentiated product — once people figure out that one is less expensive than the other, they’re all going to go there.”

Adtech firms are cranking out new products for retailers

But Criteo and CitrusAd are racing to differentiate their technologies.

Gleason said Criteo’s technology has moved beyond search ads to include display ads and ads that appear off the retailer’s site. Joe Doran, chief product officer at Epsilon, said that CitrusAd can also power offsite ads.

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

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

A third exec at an e-commerce agency said that CitrusAd is further along than 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. The person said replicating the same campaign through Criteo is more complicated.

Criteo’s Gleason said that brands often want to reach shoppers across multiple retailers. 

Not all retailers outsource their ad businesses, creating more competition with Criteo

Criteo also faces competition from retailers themselves. Some retailers don’t want Criteo or CitrusAd managing their ad businesses and license technology to build ad businesses that they manage themselves.

Sam’s Club and Albertsons for instance are moving their ad units in house, using adtech startups like Microsoft-owned PromoteIQ and startup Kevel. Home Depot and Kroger use PromoteIQ’s tech to power their advertising businesses. Retailers can also manage their ad businesses using Kevel’s pay-as-you-go software.

Kevel CEO James Avery is betting on more retailers in-housing their ad businesses, one of the reasons why the company bought Velocidi in June, a tech firm that helps retailers manage e-commerce data like purchase information. 

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