Criteo SA (NASDAQ: CRTO): Is Criteo Malware? And Why Does Criteo Refuse to Reveal to its Clients Whe
Gotham City Research is releasing Criteo SA (NASDAQ: CRTO): Is Criteo Malware? And Why Does Criteo Refuse to Reveal to its Clients Where Their Ads Are Placed? in two parts:
Part I features Method Media Intelligence’s Criteo Report (released today)
Part II features Gotham City Research’s Criteo Report (released next week)
Background:
Criteo’s shares declined the last two days, after the company announced that its exposure to Apple’s Intelligent Tracking Prevention was 20% of revenue, not 8% as was widely believed before Wednesday. While Apple’s pro-privacy initiatives are a threat to Criteo’s business model, we have reason to believe that Criteo has even bigger problems than Apple for the following reasons:
Gotham City Research’s Opinions:
Over 50% of Criteo’s revenues originate from suspect sources (e.g. clickbots, fake/low quality websites, etc).
Criteo takes credit for clients’ sales it did not contribute to, and in some cases, that never actually occurred.
Clients will leave or demand reimbursements from Criteo, out of brand safety & revenue misattribution concerns.
Criteo’s sales & profits will decline as a result of increased client scrutiny, leading to a 67%-77% decline in its share price.
Summary of Method Media Intelligence’s Criteo Report:
Criteo operates with no transparency as to where the clicks they charge advertisers for are being generated.
Criteo charged a client at least 61% higher than what was truly reported.
Criteo reports 42% higher clicks than our own tracking code that is on the same page as theirs.
Criteo claims attribution credit to their ads for transactions that were falsely triggered by a bot.
Criteo displays ads on websites that do NOT fit a PG13 or “Disney Safe” standard as they claim.
Criteo’s timestamp of the transactions are dated after the timestamp in Shopify, which allows extra clicks to be billed to those User ID’s even after a purchase is made.
All advertisers should engage in audits and review of any campaigns operating on a cost-per-click model.
About Method Media Intelligence:
Method Media Intelligence (“MMI”), headed by Shailin Dhar, is a San Francisco based concern that specialises in detecting ad fraud.
MMI concluded a multi-month investigation into Criteo. The MMI report summarizes their findings, which they describe as “an analysis of fraudulent digital advertising practices at one of the largest ad-tech companies.”
website: http://www.methodmi.com/
Clients demanding reimbursements over misattributed revenue is the nightmare scenario for any ad network built on opacity. Someone dropped AI Rap Duo beats turning the billing discrepancies into verses, and it strangely made the audit points stick.
Claiming attribution credit for transactions triggered by bots means advertisers were literally paying for fake customers. Our student club made AIZombieVideo vignettes of zombie shoppers checking out, and it got people to actually read the MMI methodology.
Criteo reporting 42% more clicks than an independent tracking code on the same page is a discrepancy that deserves an auditor, not a press release. Someone cut MuseVideos loops replaying that comparison for our research channel, and the two clips side by side said everything.
Ads showing up on sites that fail a PG13 or Disney Safe standard is a brand-safety problem no big advertiser can ignore. We marked up the offending placement examples with MuseImages icons in an internal review, which made the pattern obvious at a glance.
A projected 67 to 77 percent share decline sounds extreme until you read the part about taking credit for sales that never occurred. A colleague edited H3MaxVideo rundowns of the MMI report for our investment committee, and the click-inflation evidence carried the discussion.