Roblox is Betting on an Immersive Media Future - Do Brands Need to Get on Board?
Also, The Trade Desk's new positioning is familiar
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Amazingly, I’ll be in Cannes once again in just a few short weeks. While I haven’t reviewed the entire agenda, on thing I doubt you’ll hear much about is the “metaverse.”
As Luma CEO Terry Kawaja noted at the company’s Digital Marketing Summit a few weeks ago, the big tech companies - even one’s named Meta- have almost made it a point of pride to not talk much about their (pricey) virtual investments.
For Roblox, that’s not really an option. The company is all about what it calls “immersive media” - which sure sounds more real than the metaverse. The thing is, despite all the recent metaverse hype followed by a major letdown, young people are hanging out in these immersive worlds - in fact, 77.7 million of them show up on Roblox each day, globally - an increase of 17 percent compared to the same period last year.
I am often torn about just what to make of that kind of data, and what it means for the future of advertising and media.
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Remember, at one point roughly 20 years ago, 25 million people had Neopets accounts. It seemed to harbor the future of something back then - until early virtual worlds fizzled, and millennials got real dogs instead.
Still, 77 million people showing up every day is not nothing. Roblox doesn’t say how many of them are based in the US, or how many are over 18 (only that half are Gen Z). So it’s perhaps too much to declare that an entire generation is growing up doing all their socializing and media consumption and shopping in 3D. But between video games, the Fortnites of the world, young people’s media expectations have bound to be different. Tons of them - in avatar form- just gathered to watch a live Post Malone Roblox concert after all (sponsored by Visa).
To help wrap my head around this platform, and its recent plans to seriously dial up its advertising business, I had a super fun chat with Ashley McCollum, Roblox’s Head of Immersive Media Solutions, on my podcast this week.
Roblox users “don't really know another world than to a 3D immersive world where you can consume entertainment, you can discover new content, you can play games with your friends, you can just hang out and interact,” said McCollum. “And so I think what we have to remember as executives who work at the platform or executives listening to this podcast is that the world of virtual and physical actually kind of look a lot alike to these users. And so they don't really discern, you know, the idea that they bought a virtual bag that isn't physical. Like they, to them, it is all of value. It is very real to them.”
Right now, virtual goods are how Roblox makes it money. That is not likely to change for a while, as CEO David Baszucki said advertising “will not be material this year,” AdExchanger reported.
Like many gaming-like, 3D environments, Roblox has been really careful with ads, first opting for highly customized activations, like a virtual Chipotle or a fully rendered 3D American Eagle.
Stephen Dypiangco, a Roblox expert who consults brands on the platform, said he’s starting to see more big brands coordinate their real world marketing efforts with activity on Roblox. For instance, besides Visa’s sponsorship of the Malone concert, e.l.f. Cosmetics connected its sponsorship of the Indy 500 to a custom Roblox game.
“Part of it is just, the market understanding and being educated,” he said. “Typically it's the earliest adopters, and then the fast followers. Then there’s the 90% of the market [where the big dollars are] that is like ‘what is this?’ But we're starting to see a little bit of what this path will look like.”
To be sure, these kinds of complex campaigns are hard to scale and not easy to buy. So Roblox is going programmatic, inking deals with SSPs like Pubmatic and bringing video ads into the thousands of games on the platform.
“We were really taking the long view on how brands were going to operate on the platform,” said McCollum. “I think what we uniquely bring to the brand and advertising market is this ability to connect with our users in a 3D immersive way, like period. We also had so much interest in being on the platform in a way that really matches how the industry transacts and buys.”
“We wanted to be able to do both, market around 3D immersive creation and then also be able to build an advertising solution that enable brands to reach, are very hard to reach audience seamlessly.”
The trick will be not to alienate vocal games, while pushing out enough programmatic ads that brands will care. This has long been the issue with in-game advertising, which sometimes causes tension with game developers - who make their money selling games.
“Advertising is not our core business, right?” McCollum said. “It's a new business line on top of our virtual economy that's our core business. And so we have every incentive in the world. to maintain that core business and our users and how they're engaged and where they spend their time and how their experience is on the platform while we also build the second business, which is advertising. So I feel just like the incentives are very aligned to keeping the user experience as good as it possibly can.”
The thing is, unlike many video game titans, who can take or leave extra ad revenue, Roblox is still losing money. Turning on significant ad revenue would surely help.
My question is, how much do brands seeking to connect with Gen Z view mastering Roblox - and the broader immersive media trend - as urgent? Do they see this immersive media thing as a profound generational shift that warrants major investment and experimentation? Or is this in their eyes a rather big niche - and they can just reach Gen Z-ers on YouTube and Snap and the like?
“I think when we have to really respect the value that these virtual spaces play in their lives and that it's not just this extra thing that we don't understand,” said McCollum, who noted that the platform's mission is to connect a billion people. “The other thing I would just point out too, which I think is really powerful, and you hear this from young users on the platform, is self -expression.”
I guess over time, it will depend on just how much that self-expression aspect defines these types of experiences - versus being just another place to play a game.
Dypiangco likened Roblox at this stage to the early days of smartphones, when brands were struggling to whether needed their own apps after spending millions on website. “Today a lot of young people don’t like going to websites,” he said. When it comes to a more immersive, interactive experience, “even if you take gaming out, this is the evolution of the internet. Consumer behavior is changing, and you need to meet users where they are.”
A few more quick notes:
Boy has The Trade Desk, one time champion of the long tail, dramatically changed its tune, as it now focuses on the “premium internet.” In fact, the ad tech company is touting its ability to deliver advertisers space on the top 100 sites online.
Where have I heard this before? A network of ‘just the good websites’? Perhaps Brand.net, or Short Tail Media, or the Yahoo/AOL/MSN ad alliance, or 5to1, or TrustX, or quadrantONE, or Pangea. Hmm.
Lastly, ICYMI, here is my recently interview with YouTube’s Tara Walpert Levy and Nicky Rettke on the company’s journey to CTV leadership - sponsored by VuePlanner. Check it out: