How Criteo is playing within Google’s Privacy Sandbox

What’s a cookie cost? About $30 million–$40 million, if you’re the ad-tech company Criteo.

During an earnings call last week, Criteo CFO Sarah Glickman told investors that the company “expected signal loss of approximately $30 million and $40 million in the second half of the year,” following Google’s move to begin phasing out third-party cookies.

That figure isn’t entirely surprising: In 2021, the IAB estimated that the ad-tech ecosystem could lose up to $10 billion by 2025 thanks to the deprecation of third party cookies, a vital tool for advertisers.

Criteo, for its part, told investors in 2022 that it expected to lose between $140 million and $160 million in 2024 and 2025 due to the death of the cookie. (For reference, Criteo posted revenue of $1.9 billion in 2023.)

Criteo—which operates both a demand-side platform and a supply-side platform, primarily within retail and commerce verticals—is leaning heavily into Google’s post-cookie alternative, Privacy Sandbox, and has spent years testing the tools from Google, meeting with the company on a near-weekly basis, Nola Solomon, SVP of Criteo’s global go-to-market strategy and commercialization, told Marketing Brew. At the ad-tech firm, there are around 100 employees loosely dedicated to testing the tools, she told us.

“We’ve been preparing for these changes for a very long time, since Privacy Sandbox’s infancy,” she said.

Testing, testing

Criteo has visibility into both sides of the ad-tech equation because it operates both a supply and demand platform. It’s also big—the company spent more than $4 billion last year on behalf of “roughly 18,000 advertiser clients,” Solomon said, and has worked with clients including Albertsons, Adidas, Walmart, and Michaels.

In practice, that means when Google removed cookies from 1% of Chrome users, Criteo saw the effects across what Solomon estimated was around 100 million weekly impressions.

Criteo’s tests are focused on determining advertisers’ return on ad spend and how the loss of cookies could impact publishers’ ad revenue. If return on investment decreases, it could create a cascading effect where advertisers reduce their budgets or move them toward other channels, she said.

Their conclusions will be provided to the CMA, who are anxious to avoid such disruptions. Google can’t kill off cookies entirely until the UK’s Competition and Markets Authority (CMA), which opened an investigation into Google in 2021 over suspected anticompetitive behavior over its cookie phase-out, gives its blessing.

In late January, the CMA provided an update, saying that it was still concerned about various parts of Google’s proposal, including that Privacy Sandbox tools could be “less interoperable than solutions based on third-party cookies.” The CMA also noted that Google has committed to implementing these changes in a way that “minimizes the impact on revenue to the extent possible” for publishers and advertisers.

The Interactive Advertising Bureau’s Tech Lab, of which Criteo is a member, has expressed its own concerns about Sandbox, publishing a report in early February describing “significant challenges” for advertisers and publishers.

Criteo, meanwhile, will play both sides.

“The challenges that are mentioned in the IAB Tech Lab report aren't surprising for Criteo. But it also does not change our strategy and our approach,” Solomon said. “We’re going to continue working with Google and the rest of the industry, including the IAB Tech Lab, to maximize the welfare of the whole online advertising ecosystem.”

Zoom out: Though it still has its hand solidly in the cookie jar, Criteo has made investments in retail media networks, which do not rely on cookies. Criteo’s CEO, Meagan Clarken, told AdExchanger that half of the inventory Criteo is bidding on no longer has a third-party cookie attached. Five years ago, that figure was 95%, she said.