Whether we like it or not, the Internet age is fueled by advertising, which is increasingly spreading into forms of entertainment you might not expect.
It all started on social media, where advertisers saw the opportunity to target ads based on what people were actually interested in and clicked on, thanks to Facebook’s tracking technology and social media dominance . Subsequently, streaming, once touted as a refuge from traditional ad-laden TV, has turned to free ad-supported tiers and even paid advertising tiers to boost profitability, partly in response to demands from Wall Street .
Now, video games are joining the world of ubiquitous advertising, with Roblox announcing this week that it will take a step forward in serving targeted video ads to many of its millions of users later this year.
The hugely popular Roblox digital platform allows approximately 71 million users a day to create their own worlds and games. Now it’s working to launch video ads on virtual billboards aimed at gamers ages 13 and up. Users playing or walking around the virtual world will encounter video billboards, just as they might in the real world.
However, unlike the real world, the ads will be much more targeted, thanks to the help of ad tech company PubMatic, which this week partnered with Roblox to bring programmatic ad buying to video billboards.
Courtesy of Roblox
Roblox is betting that it will stand out in the competitive advertising landscape because of its sought-after audience of young gamers and because it is making it easy for advertisers to add it as a channel via PubMatic.
“Roblox stands out to advertisers as a platform where they can reach highly engaged Gen Z audiences who might not otherwise be easy to reach,” said Stephanie Latham, vice president of global partnerships at Roblox, in an email to Fortune. “We are excited to enable more brands to engage this community seamlessly and at scale through programmatic partners who are already buying.”
Previously, the company has partnered with advertisers interested in creating their own virtual worlds, including a Walmart-branded experience complete with free virtual outfits for player avatars and a taco truck that showcased a recipe incorporating Great brand ingredients Company value. In 2023, it also introduced static image advertisements and “portal ads” that invite users to teleport into a brand-sponsored experience.
Through its new targeted video billboards, Roblox hopes to increase its share of the video game advertising market, which is estimated to grow 13.4% to $8.5 billion this year. Wall Street Journal reported, citing data from eMarketer.
The increased advertising push may be timely for Roblox, as its shares are down 8% year to date and a whopping 70% from the pandemic-fueled high in November 2021. In December, one of its investors, Sahil Alvi, asked the company to make changes to regain investor confidence. The company is not profitable.
Roblox’s advertising push is just the latest example of a new phase in advertising. Any company with first-party customer data is suddenly looking to capitalize on it with advertising, said mobile marketing expert Eric Seufert, whose 2021 prediction that “Everything is an ad network” has proven increasingly accurate.
“These platforms realize they have a valuable asset that wasn’t competitive with what Facebook offered before. But now it is,” Seufert said Fortune.
Video game companies have recently faced backlash from gamers upset by the growing financialization of video games, which includes everything from paid loot boxes to expensive NFT gaming equipment.
However, Roblox’s Latham said it has been testing its video ads since last year and wants to make sure they are “engaging and seamless.” By adding more marketing content, he noted, video games only take cues from the rest of life.
“Knowing that advertising will naturally exist in 3D immersive spaces – just like in other parts of people’s lives where they interact with their favorite brands – we are focused on creating solutions that enable brands and creators to launch innovative advertising products on Roblox that people like them,” Latham said.