As programmatic rises on Roblox, in-game studios are feeling the competition

But while Roblox has welcomed developers to set up shop on the platform, the marketing dollars that brands spent on immersive integrations largely went to studios rather than to the platform itself. Roblox’s programmatic video ad business, which launched in May of this year, represents a much more direct advertising revenue stream for the company, so it’s no surprise that Roblox has encouraged marketers to explore the opportunity over the past year through a series of strategic partnerships and agency roadshows.

“For Roblox, in particular, I don’t believe that they really have any choice at this point other than to offer it as an option, given their financial situation and given the fact that there would be a very negative reaction from the market if they were to say that they’re ruling programmatic out of the gate,” said Gareth Sutcliffe, the head analyst covering the games industry for the market research service Enders Analysis.

In addition to building out its programmatic offering, Roblox has encouraged brands and third-party developers to set up shop on the platform via initiatives such as the Roblox Partner Program. The company’s leaders believe that a consistent stream of new content is beneficial to the platform.

“As we continue expanding ways available for brands to connect with their key audiences on Roblox, growing economic opportunities for our community developers remains a very important focus area,” said Roblox head of advertising strategic partnerships Ashley McCollum. “Our developer community’s success and expanding high quality immersive content are both instrumental for the long-term health of the Roblox platform.”

As Roblox’s programmatic business picks up steam, the leaders of Roblox studios acknowledge that its rise could divert some brands’ spending away from building custom worlds, at least in the short term. However, Roblox studios are broadly in favor of the rise of programmatic ads on the platform because they believe it will encourage more brands to pay attention to the range of different marketing opportunities on Roblox.

“Yes, there is a risk that some brands might decide to do a big programmatic campaign that might not optimize for their objectives,” said Ricardo Briceno, chief business officer of the Roblox studio Gamefam. “But the bigger benefit is being there in the first place. I think there’s a much bigger risk for brands to not go on Roblox because it is too ‘new,’ too hard, too intimidating. This lowers those barriers.”

For established Roblox studios with portfolios of pre-existing popular games, programmatic ads represent a promising new revenue stream as well, though one less lucrative than building full-service branded worlds. Briceno told Digiday that his company has had to step up its efforts to educate marketers about the strengths and weaknesses of both options.

“Once brands start to execute with a much lower barrier to entry, they’ll start getting more familiar with the platform and better understand the nuances of how to activate,” he said. “And I think there will be more integrations, because now that you have your foot in the door, you’ll understand it better.”

Although Roblox developers anticipate some friction between immersive integrations and programmatic advertising on the platform in the coming year, they believe the ecosystem will eventually settle as brands get smarter about the best ways to take advantage of both options. After all, other creator platforms such as YouTube are brimming with both targeted ads and more customized branded content, and many brands regularly take advantage of both. 

“It’s also very clear from working with top agencies and brands that the types of advertisers and budgets for building an immersive experience are pretty different from media buying or programmatic budgets,” McCollum said. “These separate budgets work together, not against each other.”

As Roblox continues its push to evolve from a video game to a platform for all aspects of virtual life, the friction between its immersive integrations and programmatic ad business is a growing pain that highlights marketers’ relative inexperience with the platform. Ultimately, the most effective path forward will likely be for brands to invest in both options.

“In the near future, there will be so many different ways to activate; it gives everyone more options,” said Nic Hill, the co-founder and head of interactive at Roblox Partner Program member Sawhorse Productions, who cited the example of his company’s recent “Beetlejuice Beetlejuice” experience, whose promotional campaign included Roblox Portals and other programmatic ads. “That is one thing to keep in mind: I’ve seen the most success when brands leverage everything in a campaign.”