NEW YORK, April 2 (Reuters) - While streaming a favorite

TV show as her baby naps, an ad for Enfamil NeuroPro infant

formula pops on a new mother's screen.

She whips out her phone to scan the ad's "quick response"

code. It directs her phone to Target's ( TGT ) website to

complete the $46.49 purchase.

Sales of merchandise at Target ( TGT ) stores have fallen for three

consecutive quarters as Americans seek bargains at rivals

Walmart ( WMT ) and direct-to-consumer retailers PDD Group's

Temu and Shein.

Minneapolis-based Target ( TGT ) projects its comparable sales will

be ho-hum - flat to up 2% - this year.

But Target's ( TGT ) retail media unit, a business through which it

creates and sells ads, grew more than 20% in its fiscal year

ended Feb. 3, Target ( TGT ) CEO Brian Cornell said during Target's ( TGT )

March 5 analyst day in New York.

Overall, product makers and other advertisers are expected

to spend $60 billion total to advertise on U.S. retailers' media

networks in 2024, according to estimates from Emarketer, a

market research company. From Walmart ( WMT ) to Amazon ( AMZN ), and from Macy's

to Home Depot ( HD ), more retailers are betting on revenue from

advertising.

Target's ( TGT ) ad business, which it calls Roundel, generated $1.5

billion in "value," Target's ( TGT ) CEO Cornell said, adding that its

ad business benefited Target's ( TGT ) gross margins more than its

revenue.

With tech companies like Google tightening their grip on

third-party data sharing with advertisers, advertisers are eager

to glean insights from retailers like Target ( TGT ), according to

representatives from four advertising agencies specializing in

consumer goods. Shoppers make more than 250 million visits a

year to Target ( TGT ) stores and its website.

Enfamil and Apple ( AAPL ) are both among what Cara Sylvester, chief

guest experience officer at Target ( TGT ), said was a pool of 2,600

brands that pay Target ( TGT ) to craft product advertisements that

reach certain Target ( TGT ) shoppers, including on social media and

streaming platforms.

Last year, for instance, Apple ( AAPL ) partnered with Roundel on a

holiday campaign for its Apple Watch Series 9, Sylvester said,

adding that the campaign attracted a significantly higher number

of new shoppers, many from outside of Target's ( TGT ) app and website,

than Apple's ( AAPL ) prior campaigns with Target ( TGT ). Apple ( AAPL ) confirmed it

worked with Target ( TGT ) on the ad but declined further comment.

And when Enfamil maker Reckitt wanted to reach young

parents, Target ( TGT ) tapped into its own shopper data to identify an

audience of likely buyers. It zeroed in on Target ( TGT ) shoppers who

either bought baby gear over the previous six months, or

NeuroPro formula over the previous year. It then tapped its

ongoing partnerships with smart-TV device makers such as Roku

Streaming Stick and Fire TV stick to display the ad - with a

scan-to-buy QR code - to the target buyer group.

Nich Weinheimer, executive vice president of strategy at

Skai, a marketing agency whose clients include Philips,

Kellogg, and Sony ( SONY ), said advertisers see Target ( TGT ) as

a prime vehicle for reaching new moms and heads of households

who buy household products and clothing and accessories.

According to Numerator, a research firm that tracks shopper

behavior, Target's ( TGT ) shoppers are primarily white and female, live

in suburban or urban areas, and have a household income between

$40,000 and $125,000.

Target ( TGT ) doesn't hand over its individual shopper data to its

advertising clients, but rather shares aggregated shopper data

without personally identifiable information, a Target ( TGT )

spokesperson said.

Target ( TGT ) investor Huntington Private Bank likes Target's ( TGT )

profitable ad business, and hopes Target ( TGT ) will use the proceeds

from advertising sales to lower its prices on the merchandise it

sells online and in stores.

"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, which holds more than $20 million in

Target ( TGT ) shares.

Enfamil said it spent what it said was a six-figure sum for

the advertisement that ran from mid June though the end of July.

Target ( TGT ) managed the entire campaign, according to a Target ( TGT ) case

study summarizing the campaign's results.

In its summary of the Enfamil campaign, Target ( TGT ) said 15.8

million shoppers viewed the ad. Target's ( TGT ) strategy of marketing

the formula to past baby product purchasers delivered a roughly

31% better return on Enfamil's ad spending than if Target ( TGT ) had

directed the ad only to past NeuroPro purchasers, according to

the case study.

Enfamil said it would continue to work with Roundel on more

ads in the future. But three advertisers told Reuters that

Roundel offers them less control to manage their own ad

campaigns compared to rivals such as Amazon ( AMZN ) and Walmart ( WMT ), both of

which operate much bigger retail media units.

"(Target's ( TGT ) media network) Roundel is an important business

at Target ( TGT ) and we see our curated approach as a key point of

difference in helping Roundel drive value," said Sarah Travis,

president of Roundel, in a statement to Reuters.

Target ( TGT ) launched a new feature in its ad business this year,

which gives marketers more control over their campaigns and

better access to some of its shopper data and marketplace

sellers when the advertisers purchase search ads, she said.

So-called sponsored product ads pop up when shoppers search

online using key words like "best coffee" or "men's bodywash."