With the launch of e-commerce on Monday and video ads today, Roblox has made its ambitions clear: No longer content to be a hub for gamers, the company is looking to transform itself into a destination for every aspect of digital life, including advertising.
Roblox has expanded access to its video ad inventory to all advertisers as of today, following a six-month beta test that began in November 2023. Marketers can buy video ads through Roblox's self-serve ad manager tool, and the company has also partnered with PubMatic to enable brands to programmatically buy video ads on Roblox in the near future.
“Advertisers are always looking for new ways to show their brands in a different light, and I think this is something that's pretty new and very different,” said Kyle Dorsman, chief revenue officer for the Americas at Pubmatic. “They're already big believers in video and they're investing heavily in video assets, so finding new ways to get them in front of consumers and a different, kind of unique, highly engaged consumer demographic is super exciting for them.”
Roblox's video ads take the form of screens embedded within Roblox's virtual world, much like the billboard and portal ads that already appear within the Roblox experience. The full-scale introduction of video ads is part of Roblox's broader effort to get brands to treat Roblox as a more legitimate advertising platform rather than a testing ground for their innovation budgets.
“I'm really looking at video ads as a way to remove friction,” said Stephanie Latham, vice president of global partnerships at Roblox. “There's huge pent-up demand from the market for a way to reach millions of highly engaged Gen Z users. They want to test it as part of a larger strategy for Roblox, but this is a first step with a very low barrier to entry to see what's possible if we truly engage with our audience.”
Not just ads
Roblox will expand beyond advertising in 2024. In the same way that platforms like Amazon and Facebook have evolved beyond their origins as online marketplaces and social media channels, and in the same way that Elon Musk has tried to turn Twitter into an “everything app” over the past year, Roblox is in the midst of a transformation out of its established role as a digital playground and into a platform for every element of its users' virtual lives.
Roblox executives want the platform to be not just a place where kids log in to play with their friends after school, but a vast virtual world where everyone uses it to socialize and do business: a metaverse.
“The reality is that these audiences move seamlessly between the digital and real worlds, and all of the steps Roblox has taken are a natural and very welcome evolution of blending those worlds together,” said Ricardo Briceno, chief business officer at Roblox development studio Gamefam. “Commerce is a great example, and all of these ad formats are really important as well, but they're just building blocks that give brands a more integrated and authentic way to be present on Roblox.”
While video ads and e-commerce are a natural evolution for Roblox, they're just the beginning, not the end, of the company's expansion into a full-service platform, and Roblox still has a long way to go if it wants to join the ranks of giants like Amazon and Facebook.
Test and learn
One potential source of friction as Roblox expands its service is that it still openly treats some of its most recent updates as experiments, from an e-commerce pilot with Walmart to an ongoing beta test of a feature that rewards viewers of video ads with free bonuses and items.As video ads roll out in earnest, some experienced Roblox users have decided to avoid them until some of the early issues are ironed out.
“We don't want to be a guinea pig,” said Marcus Holmstrom, CEO of Roblox studio The Gang, which has used video integration within Roblox experiences to promote movies such as “Godzilla vs. Kong.”
To make up for those potential growing pains, Roblox has been hiring from other major digital platforms. Earlier this month, it hired Ben Fox, former chief product officer for Yahoo's ads business, as vice president of partnerships operations, and David Vespe, a former director of engineering at Google, to lead Roblox's ads engineering team.
“Our developers are looking for more ways to monetize and generate revenue, and our brand partners are looking for more ways to reach their audiences,” Latham said. “So we feel like this is a great opportunity for us to provide value to all aspects of the community.”
Roblox's evolution into a platform didn't happen overnight. Building a metaverse platform has been part of the company's plan since its inception, and this week's launch of e-commerce and video ads is just a reflection of those long-term plans. Roblox has already established a vibrant virtual economy for both brands and creators, but this week's updates will help the company bridge the gap between the virtual world and the real world of brands and marketing.
“Roblox has had a vision for a metaverse platform for many years,” said Kiran Alumbaugh, president and COO of Roblox and Fortnite creative studio y255.
