Criteo gives up on Chinese domestic market

Kelvin Cheng, managing director of Criteo China, confirmed with Campaign China that the company is exiting the domestic market.

Criteo, which specialises in retargeting, entered the Chinese market three years ago with the goal of building infrastructure serving both advertisers and publishers, launching a local data centre and setting up two offices.

The data centre ambition, fulfilled in January 2016, was meant to lay a foundation for Criteo to accelerate the growth of its ecommerce business in China then. The centre was connected to China Unicom and China Telecom, two of China's major ISPs at that time, so local clients could benefit from low latencies to Criteo's platform. Offices in Beijing and Shanghai also materialised.

However, "facts have proved that the dynamics of China's local and external business environments are very different," according to the company's official response in Chinese. "Criteo's conditions for building a high-performing business do not exist in China, which limits our growth potential. At the same time, we have established a booming export business that continues to grow and succeed. In view of this, Criteo has decided to refocus the team completely on our export business, and from the end of May 2017, no longer serve the Chinese domestic market."

The company stressed that Criteo did not withdraw from China but rather is redirecting resources to helping Chinese ecommerce clients advertise in international markets outside China.

Criteo's global CEO Eric Eichmann, in a Q1 2017 results earnings call on 3 May, revealed the company needed to "put certain things in place to be able to test that market".

China, being an in-app centric market, dictated that Criteo connect to in-app inventory, but that was not an ecosystem nor a marketplace that was developed, said Eichmann.

The difficulty faced in China is a structural one, he added, as Criteo is "having a hard time" integrating its solution fully with advertisers. Chinese advertisers seem to be "most skeptical about having us see the sales that are generated from our campaigns," he explained. "If we don't know whether we are driving sales or not, it makes it hard for our technology to perform."