The holidays are a busy season for retailers looking to juice revenue by running ads promoting inventory-clearing sales. But for Target, this year the holidays are also a time for running other brands’ ads.
Since October, Target has been operating a private marketplace powered by supply-side platform PubMatic. The digital marketplace allows brands to retarget their customers on Target.com, according to sources with knowledge of the private marketplace. PubMatic declined to comment, but Target all but confirmed the news in an emailed statement.
"Target.com has featured advertisements from various brands and marketers for several years. This fall, we began piloting a program that we believe will help Target deliver more relevant ads on Target.com to help us better serve both our guests and advertising partners," a Target spokesperson said in the email.
Target’s private marketplace operates similarly to others that retailers like Best Buy and Amazon have developed recently. For example, a user may visit Target.com and check out its high-def TVs. As that user navigates to other parts of Target’s site, a brand like Sony or Samsung could run ads aimed at that user promoting their TVs—provided they are sold by Target.
But the ads don't have to pertain so closely to a specific product category. Adweek encountered a Subaru ad running on Target's DVD and Blu-ray players page; a peek at the page's site code revealed that the ad was sourced through PubMatic.
Target’s sales team works directly with media buyers and uses PubMatic’s real-time bidding platform to execute the buys, sources said.
While it’s not exactly a blockbuster program Target is running, it could be a solid side-business. If nothing else, it's another example of a highly trafficked, once ad-free Web property suddenly offering up its valuable real estate to brands (think eBay and Amazon).
One source pointed out that retailers generally operate on low-profit margins—in the 2 to 3 percent range—but harnessing a retailer’s audience and the corresponding first-party purchase intent data could sprout a business that accounts for 5 to 10 percent of overall company revenue and delivers a profit margin more like 35 percent. Target could bank even more money should it flow in its own customer data to aid the retargeting, though it is not currently doing so, per sources.
Jay Habegger, CEO of retail-retargeting firm OwnerIQ, told Adweek in October that advertisers’ spending on retail retargeting could balloon to the hundreds of millions of dollars in five years.