Last month, at the annual Cannes Lions advertising conference, Roblox announced the launch of the Roblox Partner Program, which is “designed to scale brand innovation and enable a self-serve, global advertising ecosystem on the platform.”
That advertising ecosystem effectively expands upon Roblox’s existing Immersive Ads product. While Roblox has offered advertising products for a number of years — I first wrote about Roblox’s advertising platform in 2020 in Roblox is the next big games advertising platform — the company’s new Immersive Ads product, introduced in March 2023, allows creators to insert programmatically-filled ad placements directly into their content. Per the website:
The Immersive Ads system allows you to insert ad units into your experience that permit Roblox to programmatically serve ad content from advertisers to your active users.
These immersive ads take two forms:
- A static, non-clickable image that simply conveys information;
- A static, non-clickable image that can transport the exposed user into a separate content “experience” created by the advertiser. Remember that Roblox characterizes any UGC content made available on its platform as an “experience” and not a “game.”
Roblox’s Immersive Ads product is its first to be placed within content. Roblox’s other three ad products are:
- Sponsored Experiences, which allows a creator to promote their “experience” (read: game) across the Roblox marketplace in various “sponsored” ad placements. Sponsored Experience ads are conceptually similar to the latest Apple Search Ads placements in the App Store;
- Sponsored Items, which allows a creator to promote specific in-content purchasable goods for sale in the item marketplace;
- User Advertisements, which allows a creator to promote a number of different items in tower and banner ad placements across the Roblox marketplace.
While Roblox’s audience has aged up over time — a point to which the company draws explicit attention in its earnings presentation each quarter — the platform is still mostly associated with children, applying unique sensitivity to the notion of advertising in its content (and not the marketplace). In Roblox is the next big games advertising platform, I write:
Given Roblox’s audience — over half of all children in the United States play games through Roblox — the company of course needs to treat targeting and data privacy with intense sensitivity and care. And because Roblox operates the entire value chain, it can: it has total agency over the data that is surfaced and exposed to advertisers, since there is no need for third parties to intermediate the relationship between Roblox, developers / advertisers, and customers.
Roblox has instituted a strict set of advertising guidelines for its various ad products. One of those guidelines is that an ad cannot lead to any external destination: an ad may only either convey information or lead to another Roblox experience. In its advertising standards compliance documentation, Roblox makes clear that ads may not compel users to leave the platform — in the case of the example below, even displaying a phone number violates Roblox’s advertising standards:
Two sets of eligibility criteria, for both experiences allowed to serve ads and users allowed to view ads, are applied to the Immersive Ads product:
- Roblox determines whether an experience is eligible to serve Immersive Ads based on “an internal set of eligibility criteria”;
- Roblox determines whether a given user is eligible to view ads based on characteristics such as age (Roblox doesn’t show ads to users younger than 13).
Publishers (that is, creators) that participate in the Immersive Ads program are paid a share of the revenue they deliver on the basis of impressions and successfully completed “portal teleportations.” From the documentation:
Immersive Ads seem to have been designed to allow creators to promote their experiences. But those experiences themselves could take the form of advertising — for instance, the Forever 21 x Barbie collection launched in Mattel’s Roblox experience in May, ahead of the launch of the Barbie movie. But the Partner Program seems designed to expand the Roblox advertiser base outside of creators.
Roblox reported 61MM DAU in Q1 2023, the majority of which — 36.9MM, per the graph above — are over the age of 13 and therefore eligible to view ads. Perhaps more importantly, Roblox reported 14.5BN hours of engagement on its platform in Q1, for an astonishing 219 hours of engagement per DAU for the quarter. I’ve made the case through my Everything is an Ad Network thesis that the challenging advertising environment for walled gardens engendered advertising tailwinds for any scaled consumer app. With third-party data being limited as an input to ad targeting through Apple’s App Tracking Transparency (ATT) privacy policy, first-party data for use in a proprietary advertising platform develops newfound value. This stands in contrast to the dominance of the “Duopoly” in the last decade; during the Duopoly’s halycon days, new ad platforms couldn’t justify their existence to advertisers when Facebook and Google wielded nearly the total sum of conversions data from across the digital advertising ecosystem for their advertising targeting. But the new privacy landscape has eroded the Duopoly’s grip on the digital advertising markets, and new entrants to the digital advertising marketplace have surfaced at a dizzying pace since ATT was introduced.
Roblox possesses the critical ingredients for a successful ad network: substantial DAU, high engagement, and strong appeal with brands. The expansion of the Immersive Ads product is the next logical step along the company’s trajectory to develop a meaningful advertising business.
