Report: Target Ads Key Sales Driver

Target’s retail media arm, which makes and sells ads, grew more than 20 percent in the fiscal year ending Feb. 3, helping to alleviate the projected drop in merchandise sales at Target stores, reports Reuters.

Roundel, Target's ad business, generated $1.5 billion in "value," said Target's CEO Brian Cornell, adding that its ad business benefited Target's gross margins more than its revenue. Representatives from CPG advertising agencies said that advertisers are turning to retailers like Target that can provide data behind their campaigns.

"Getting more and more into the ad opportunity ... is where the real money is," said David Klink, a senior equity analyst at Huntington Private Bank, a company that holds more than $20 million in Target shares.

Spending from makers and other advertisers on retail media networks is expected to reach $60 billion in 2024, according to Emarketer. The report added that retailers including Walmart, Amazon, and more are also betting on revenue from advertising to bolster profits.

Sales at Target locations have fallen for three consecutive quarters partially due to customers seeking deals at rivals including Walmart, Temu, and Shein, according to the report.  Full Story (Subscription Required)