Roblox Seeks Major Ad Revenue Growth Through Self-Serve Platform

Tim Cross 16 February, 2023 

For all the excitement around metaverse marketing in some corners of the industry, opportunities for brands are still relatively sparse.

Few platforms with metaverse-like qualities actually have much in the way of user engagement. Meta Horizons is reported to have around 200,000 monthly users, a long way off its target of one million by the end of the year, while competitor Decentraland claimed just over 55,000 monthly users back in September. Fortnite meanwhile has a massive player base, but brand opportunities are limited to costly, large-scale activations which aren’t accessible to most advertisers.

Roblox, a videogame where the majority of content is user-generated, looks like the exception. It has a large player base, up to 65 million average daily active users. And it’s working to grow out a fleshed out ad offering, with plans to launch a self-serve ad platform later this year.

Beyond Branded Content

Like Fortnite, Roblox already runs large-scale brand collaborations, which generally centre around in-game experiences and equipment. For example in December, Roblox launched ‘Beyond the Yellow Brick Road’, an activation promoting Elton John’s ongoing farewell tour. This involved an in-game concert which users could visit, and Elton John-themed clothing which users could buy and wear via their in-game avatars.

Roblox also already runs a few different ad formats, which any user can buy to promote anything they’ve created in-game, be that a server, in-game clothes, or other items.

Currently, revenue from this paid ads business is small – small enough that Roblox says it isn’t yet worth reporting on ad revenues. But the company is hoping to quickly grow this business as it seeks more ad spend from brands.

One of the opportunities which Roblox sees is to encourage more brands to use these existing ad products. While most of the Roblox brand collaborations which have picked up press attention have been the result of formal partnerships, it’s possible for any brand to hop on the platform and create content – as is the case for any regular Roblox user.

Thus, Roblox hopes to encourage more brands to create branded content and experiences within its platform, and then to use Roblox’s paid ad offering to promote those creations. It will also evolve its self-serve ad tools to enable this.

“We are in the very early innings of advertising right now,” said Roblox co-founder and CEO Dave Baszucki on a call with investors this week. “We have our eyes right on the target of making this a self-service platform above and beyond the early experiences we’re doing with brands. And we believe there’s a huge market for on-platform advertising for brands if you want to bring people to their experiences to engage.”

But Baszucki also suggested there is room for growth beyond ads for in-game content. “When we look at other platforms and whether it’s print or online, web or video, and we look at the level of engagement on those platforms relative to on Roblox, obviously, the opportunity is really, really large,” he said, suggesting that Roblox believes it can compete for ad budgets with other forms of media too.

Either way, Baszucki said he doesn’t expect it will be long until ad revenues start making a notable contribution to Roblox’s business. When asked how long it will be before Roblox will start reporting ad revenues, he replied: “We are working with a select number of brands as part of our early experiments with advertising. I think any contribution that would show is essentially shouldn’t be considered right now. We’ve got our eye on the prize of self-serve this year, at which point you’ll start to see the contribution.”

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About the Author:

Tim Cross is Assistant Editor at VideoWeek.
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