Katy Ansel: Okay, thanks.
Operator: The next question is from Matthew Cost with Morgan Stanley. Please go ahead.
Matthew Cost: Hi, everybody. Thanks for taking the questions. I guess on the guidance for 2024 and kind of like the expectation step down for 2025, how much of it is macro versus micro? So you talked about an expectation to outpace the market in 2024. Are you expecting to outpace the market to the same magnitude you did before or just the market will be weaker? What’s the mix there? And then I have a follow up. Thank you.
Sarah Glickman : Yeah, first of all, we’re not giving guidance for 2024. But of course, as always, we’ll discuss guidance in our early 2024 call after year-end. Our expectations is that we will continue to outpace the market on media spend. And we’re focused on short, medium, and long term, and in particular, medium to long term. For 2024, most of the challenge is the macro, I would say, slowdown from the beginning of Q4 last year that was pretty significant. So the starting point is significantly different. That would be the key item that’s changed the focus on the ambition to meet where we wanted to be by 2025. Yeah, we’re making a market. We’re spending time getting the product right. We feel fantastic about our launches.
We feel good about the economic terms that we set with our clients. We feel terrific about the pricing model we have for performance advertising and for retail media. And frankly, we wanted to make sure we were transparent with all of you as we go along this journey. So the uncertainty includes Privacy Sandbox. We feel very good about where we will be for next year internally; it’s a major dynamic shift for our industry. And that’s all going to happen in 2024 from testing to deprecation. That’s the biggest disruption the advertising industry’s seen in the past 20 years. So there is, of course, some uncertainty as it relates to that.
Megan Clarken: Yeah, I’ll just weigh in again because I want to reiterate the long-term story here because it’s just so critical. We’re in this for the long term and our strategy remains the same. You’ll see that we continue to win retailers. And from the biggest retailers to the smallest retailers, we’re winning them. We’re significantly ahead when it comes to features and capabilities and how much we’re doing for those retailers. We respond to them every single day to make sure that we’re in lockstep with them in their journey and that we’re growing with them. And so this is a long-term market play of which we find ourselves in a terrific position. During this, we have to continue to work with those clients to evolve the economics to make sure they’re long-term, sustainable, focused on the right things, they drive profitability for us.
And that’s what you’re seeing in the short term. But we continue to see a massive, a total addressable market for us where we now see closer to the market, the size of the market that’s available to us. And we’re driving headlong towards our leadership position in that. So think out to the long term as much as you can.
Matthew Cost: Got it, thank you. And then just on Commerce Audiences, it was definitely another strong performance there this quarter. I think you mentioned in the slide deck, no incremental signal loss impact in the quarter. So I guess, what is motivating people to lean in to Commerce Audiences even as kind of Retargeting is declining somewhat year on year? Is it just preparing for signal loss next year? Why are people doing it so aggressively now when Retargeting is, you know, it’s not getting any worse in Q3?
Megan Clarken: Well, it’s a new tactic for us. We’ve talked about it for a little while. And it’s a newish tactic for us. And as I said before, we’ve wanted to expand beyond Retargeting to offer solutions that go up a funnel. And our clients are looking for those, that optionality to be able to move their dollars around depending on what objectives they’re trying to meet. Commerce Audiences, as we said when we were doing our event last year, is sort of based on audiences that are shopper audiences, that are commerce-based audiences as opposed to people who may be searching their family tree or doing different activities but not close to the point of sale. And so having those, that capability for targeting is a very powerful one. But let me not speak to it. Let me pass it across to Todd, who’s the architect of Commerce Audiences. He can talk it through.
Todd Parsons: Yeah, thanks, Megan. I can’t add that much, but I can say that the growth is really pretty simple. If you think of how growth marketers are doing business, they’re splitting their attention between acquiring new customers, the best new customers who are shoppers based on real commerce data. And then they’re looking at ways to retain those customers and drive more lifetime value. In the past, Retargeting really fell into more the latter bucket, and Commerce Audiences fall more into the former. If you look at how spends is cut across those two activities, today about 30% is still going to retention style marketing, and about 60% or 65%, a little bit more, are going to growth on the acquisition front. So what you’re seeing in this growth is, to Megan’s point, we brought a new capability to customers that are already thinking a you’re seeing this growing as rapidly as you are, and we expect it to continue.
Matthew Cost: Thank you.
Operator: The next question is from Matthew Thornton with Truist Securities. Please go ahead.
Matthew Thornton: Yeah, hey, good morning, two questions if I could. First, on the Retail Media shift that you’re seeing with your top client, more of a self-serve model, is there any way to think about what percentage of Retail Media is still tied to a more full-service, take-rate-take model, and thus still could shift to more of a self-serve model? That would be the first question. Second question, and maybe this one’s for Todd, the Privacy Sandbox has been open for testing. You’ve been working with Google for a while now. So my question is, have we learned anything about just the usability or the efficacy that informs or incrementally informs your opinion for 2024? I would think that there’s probably some learnings and either gaining confidence or loss of confidence as you think about 2024. But again, I’m just kind of curious if there have been learnings on that front? Thanks so much.
Sarah Glickman: Yeah, I’ll take the first part of that question. I mean, in terms of the Retail Media model with our economic model with our clients, we feel very good about the economic pricing that we have across the board. We’ve renewed most of our clients over the last 12 months, and we continue to renew. We’ve also seen already a shift to large brands being sold by the client versus by Criteo, and our Commerce Media platform capability being self-service already leans more into a platform pricing model. So ultimately, we anticipate the growth to continue in terms of scale and in terms of that mix of, I would say, SaaS-like fees plus volume-based fees plus value pricing for other services that we’re delivering. And that’s where most of our contracts already are and are continuing to shift.
It’s going to be around the scale and continuing to bring in new capabilities with increased fees coming in over time. It’s really the scale play along with that new economic pricing model. Then I can hand over to Todd on your Privacy Sandbox question.
