Target’s ad business had a good year, but can it become a retail media powerhouse?

For the first few months of 2025, Target has been caught in a media frenzy due to its moves involving diversity, equity and inclusion policies and subsequent boycotting, on top of missing its revenue expectations last November. Media buyers and commerce executives say they don’t expect to put a dent in the retailer’s audience data, making it unlikely to impact its ad business — at least for now.

Ask any media buyer or commerce exec to list the top retail media networks in what’s become a saturated field and they’re likely to name Target’s Roundel in the top five. Still, the retailer is playing catch-up with the biggest retail media players. At this point, there are more than 250 retail media networks across which advertisers have to divvy up their dollars, making Target’s fight for ad spend that much more contentious.

Target has spent the last year seemingly putting up more of a fight than it has in the past, though, rolling out its self-service buying tool with Roundel Media Studio in the summer of 2024. Then in February of this year, Roundel Media Studio moved to a second-price auction mode, where the second-highest bidder determines the sale price of an impression. But again, Roundel is playing catch-up here, given Walmart Connect moved to second-price auction back in 2022.

It’s a good start for Target, according to the seven retail media experts Digiday spoke with for this story. The changes have made it easier for marketers to manage their campaigns with flexibility and speed, as well as better measure campaign performance.

“While they may not outgrow from a scale perspective, they may outperform,” said Hillary Kupferberg, vp of performance marketing at Exverus Media. To Kupferberg’s point, Target’s scale in audience size may not touch that of Walmart or Amazon, according to execs at media agency Crossmedia. However, Target’s audience and ad inventory is unique enough to complement other media buys.

It’s clear that Target’s ad business has had a few wins coming out of 2024 and into 2025. But it’ll have to do more to meaningfully grow its share of the $62.35 billion expected to be spent on retail media in the U.S. this year, according to eMarketer.

“My concern is that now they made a little money,” said Ross Walker, paid media team lead at marketing agency Acadia. “And now they’re patting themselves on the back, like, ‘Job’s done. Let’s go home.’ But they still have a long way to go.”

Target’s gains in the RMN arms race

Even before its most recent developments, Target had its customer data (or guests, as Target calls them) working in its favor. While perhaps not as niche as The Home Depot or Sephora, Target’s audience data taps into a more affluent, high-intent and loyal base, ad buyers say. That first-party data, thanks to the uncertainty around Google’s third-party cookie, is like gold. Target’s Roundel has an audience size of 165 million, according to Mars United’s most recent Retail Media Report Card. In comparison, Walmart’s audience size is 120 million.

Layering on a second-price auction for Target Product Ads (TPAs), its sponsored search solution and its self-service tool with the Roundel Media Studio platform signals the retailer’s intention to dial up its ad business going forward. Notably, Target’s chief guest experience officer Cara Sylvester told AdExchanger earlier this month that the retailer sees a path for Roundel to double in size over the next five years. A spokesperson for Target clarified AdExchanger’s reporting, saying Roundel is a $2 billion business for Target, which plans to double its value for advertisers to $4 billion in the next five years.

Media buyers and marketers point to those two aforementioned tools, self-service and second-price auction, as well as Kiosk, Target’s closed-loop reporting tool, as the catalysts for Roundel’s most recent gains in the retail media space. This year, according to the Mars United report card, the retailer has a few things on the horizon that could help maintain that momentum. Roundel is said to be building out new creative formats on-site, signal sharing with off-site partners and objective-based buying, which uses purchase data and other guest insights to optimize campaigns.

“It’s opened up some scale. It’s opened up some better placements, more effectiveness that we’ve seen on the search side as we’ve been able to take more direct control with Roundel Media Studios,” said Amy Vollet, svp of omnichannel planning and activation at Flywheel.

Still, media buyers say they need more from Target if the retailer wants to be seen as more in line with Walmart and Amazon.

Inside client spending

Clients are spending more on Target’s ad platform year over year, according to three out of the seven marketers and media buyers Digiday spoke with for this piece. Although, it’s unclear how much clients are spending, as the media buyers Digiday spoke with did not outline specific spend figures. Per Walker, Acadia clients’ monthly investments in Target’s ad business range from $30,000 to $50,000, unless there’s a big promotion or product launch, which could cause the investments to be greater, he said. That spend, however, is eclipsed by spend on Walmart and Amazon, Walker added, although he did not outline specific spend figures for Walmart nor Amazon.

It’s important to keep in mind that as advertisers spend more on retail media networks as a whole, Target benefits from those increased funds, as opposed to looking at a situation in which buyers specifically spend with Target.

“The business at Tinuiti for Target has grown, but because of the other retailers. It is rare that I have a client come and go, ‘I just need Target,'” said Elizabeth Marsten, vp of commerce media at Tinuiti. (Marsten did not provide specific client spend figures.)

It’s a similar narrative at Flywheel, Vollet said.

Advertisers are spending more on retail media networks in general. Looking again at the eMarketer data, U.S. retail media ad spend is expected to increase by 88.5% from 2024 to 2028. 

Now, the number of those ad spend checks that will have Roundel written on them is up to the next steps Target takes with its ad business. 

Target’s honey-do list from media buyers

Media buyers have a laundry list of things they want from Target’s ad business before they invest more ad dollars with the retailer. Target still has a fair amount of managed services, its search product development has been stagnant, and marketers are desperate for more upper-funnel ad options to help advertisers better blend brand and performance marketing efforts.

Both Vollet and Martsen said Kiosk, Roundel’s closed-loop reporting tool, is inconsistent in terms of access and user experience.

There’s also a barrier to entry for non-endemic and smaller- to mid-sized brands, per media buyers. Walker said most clients stick to search ads “because the minimums to do on-site display, which is a managed service with Target, are too high for them.”

David Song, founder of strategic advisory services firm Song and Dance Partners, said the firm hasn’t spent any current client dollars on Target’s ad platform, and the company is on the fence about the media buy until a client brand is considered endemic (or ends up on Target’s shelves).

“If we’re not even close to being in-store on Target, I don’t look at them as a network,” Song said, adding that the firm is currently working with a beauty and skin care brand planning to test into Target’s ad offering later this year.

Of course, there’s also the scale. Target has 1,978 stores in the U.S., compared with Walmart’s 4,605, making the latter’s first-party data and reach more competitive than Target’s, execs said.

Even so, in a landscape of more than 250 retail media networks, advertisers want diversification because they’re fearful of putting all their eggs in the Walmart and Amazon baskets. Experts say that could work in Target’s favor.

“The big guys, Google, Amazon, there’s a lot of hesitation of being overly invested in these huge ad techs,” said Kupferberg. “The more partners and areas in which advertisers can diversify investment and see return, it’s beneficial.”