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Roblox Opens for Ad Business — Will Other Metaverse Platforms Follow?

Here’s what marketers need to know about the metaverse-aspiring game and its new ad platform

Image credit: Roblox via The Verge

Roblox, which we have identified as one of the leading MMO (massively multiplayer online) games developing “proto-verse” platforms, is officially open for business. For brands that are curious about entering the metaverse, it is time to get your 3D brand assets ready.

On Friday, Roblox announced a sweep of new updates to the game at its annual developer conference, among them a new immersive ad platform that will offer turnkey solutions for brands to reach its millions of Gen Z-skewing audience; The company claimed in July 2020 that half of the U.S. kids under the age 16 were playing.

According to Matthew Ball, market analyst and author of The Metaverse, Roblox currently has 55 million daily active users and 260 million monthly active users, who spend a total of 4.7 billion hours on Roblox every month. While the game has a reputation of skewing towards younger kids and teens, Roblox says 60% of its users are now older than 13.

Roblox currently has 260 million monthly active users, who spend a total of 4.7 billion hours on Roblox every month.

Roblox already allows creators to place in-game billboards and sponsored objects if they pay for its in-game currency Robux, but its new ad platform would allow brands to advertise in spaces across multiple games. There’s even an immersive ad format called “portals” that will transport players from their current experiences to branded spaces, which will launch sometime early next year.

What Brands Need to Know about Roblox

It is important for marketers to understand that Roblox is not a single-narrative, linearly progressing game, but rather an open-world platform that enables users to create their own games, which Roblox calls “experiences.” Some estimate that there are over 40 million user-generated “experiences” available on Roblox, although only about a hundred of them get steady, sizable visitors.

Roblox is not a single game, but rather an open-world platform that enables users to create their own games.

Some adventurous brands have already worked with developers to create custom experiences; some high-profile examples include the Gucci Garden, the Spotify Island, and the American Eagle Members Club. Some Roblox players reportedly paid thousands of dollars for virtual Gucci products.

In particular, the American Eagle experience is noteworthy for the cost-effective approach it took. Instead of building its own experiences from scratch like Gucci and Spotify, the fashion brand partnered with Livetopia, an existing role-playing game on Roblox with over 1.5 billion visits to date, to create a virtual “Members Always Club,” where players can hunt for digital apparels based on its latest spring collection. The experience has reportedly seen 30 million unique visitors since its launch in March, which Roblox says exceeds visitor numbers of other retail brands in the space.

Still, some brands may prefer developing their own branded experiences. To that end, there are some Roblox-specific creative studios, such as Roforco, that are popping up to help brands activate. Still, the entry barrier was considerably high.

Now with this new comprehensive platform, however, Roblox has opened its in-game ad floodgate, allowing brands to advertise across different Roblox experiences through interactive billboards, posters, and other surfaces. Right now, the company is only working with a group of selected companies and developers to test the new ad system, which will allow experiences creators to drop 3D ad units into their own experiences — such as a billboard in a sports stadium or on top of a cab in a game — and get a cut of the ad revenue.

With this new comprehensive platform, Roblox has opened its in-game ad floodgate, allowing brands to advertise across different Roblox experiences

In addition, the same brand-safety concerns still apply in the metaverse, if not more pronounced. Roblox says it plans to move with “extreme conservatism” with immersive ads: brands will only be able to reach players 13 years old and up, and Roblox will disclose when experiences contain ads.

Roblox recently upgraded the quality of its in-game graphics, which made the objects in its game a bit more realistic and life-like. Looking back, that upgrade was also paving the way for more branded assets and virtual goods, which typically have a higher fidelity rate than the “blocky,” Minecraft-esque aesthetic that Roblox used to have. Interestingly, creators will get to choose whether they implement this graphic upgrade in their own experiences, as some may prefer the old-school, retro look.

The Race to Metaverse Ads is On

Now that Roblox has opened the floodgate for in-game ads, it will be interesting to see how its metaverse competitors would respond. Meta’s Horizon Worlds has so far leaned into monetizing via creator tools that allow users to sell virtual goods and VR experiences through its Meta Quest Store, with no plug-and-play ad units for brands so far. Of course, that has not stopped brands from getting onto the platform. QSR chain Wendy’s, for instance, recently collaborated with creators to launch a branded space where users can interact with a host of mini-games and win rewards. And given Meta’s main revenue source and its robust digital ad capability, however, it would seem safe to presume that similar ad solutions would be coming to Horizon Worlds sooner than later.

Other leading MMO games like Fornite and Minecraft have so far leaned into custom experiences for brands, ranging from live concerts, movie tie-ins, and special launch events, such as the one that Coca-Cola hosted in Fornite to announce a new Coke Zero flavor. In-game items have also proved to be a great way for brands to sneak their way in; Disney has partnered with Fornite and added many in-game skins and outfits based on its beloved IP characters to the game. However, now that Roblox has gone one step further and introduced an ad platform, the pressure is on for the other MMO games to respond.

Gamers notoriously despise in-game ads, especially the ones that disrupt the play experience, but the MMO games have a unique opportunity to introduce ads onto their platform in a relatively non-intrusive manner. Considering that most of our real-world surroundings are not devoid of billboards and storefronts, it seems only natural for a metaverse-aspiring platform to introduce ads into their virtual environment.

MMO games have a unique opportunity to introduce ads onto their platform in a relatively non-intrusive manner.

Right now, the platforms are hand-picking brands to work with and test what advertising will look like in their games. In the long run, however, the success of these ad platforms may depend more on creators than the brands themselves. In the creator-led metaverse, be it Roblox or Horizon Wolrds or Creative Mode on Fortnite, creators of in-game experiences are the new media channels, and brands will have to find the right audience fit and work with those creators to attract players to their own experiences.

In the metaverse, creators are the new media channels, and brands will have to work with those creators to attract visitors to their own experiences.

Of course, revenue-sharing would be a powerful incentive for creators to get on board, and having a variety of popular in-game experiences will be crucial to user growth and retention. Right now, Horizon Worlds takes a 25% cut of any sale from creators after app store fees. In comparison, Currently, after app store fees and Roblox taking its own cut, creators are left with around 30 percent of revenue from in-app purchases — significantly lower than on other platforms. The company has not shared details on how the ad revenues will be shared with creators.

More interestingly, as Ball pointed out, today, nearly all of Roblox’s revenue comes from in-game micro-transactions, and 91% of that happens on mobile, which means Roblox has to fork over 30% of that revenue over to Apple or Google. But all the ad revenues generated through this new platform will not be shared with the owners of the mobile OS duopoly. Perhaps this will leave Roblox to offer its creators a bigger cut of the ad revenue to keep them happy, but can it beat its competitors on building a robust, ad-supported creator economy on its platform without undermining the play experiences? Only time will tell.

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Richard Yao

Richard Yao

Manager of Strategy & Content, IPG Media Lab