Research Summary
The report discusses Roblox’s plans to expand its advertising business, focusing on the potential of in-game advertisements. It also explores the challenges and opportunities of immersive ads on the platform. The report further highlights Nefta’s advertising network’s solution to the issues faced by publishers and advertisers, and provides an overview of the global gaming industry.
Key Takeaways
Roblox’s Advertising Opportunity
- Roblox’s Potential Revenue Stream: With 80% of engagement on Roblox coming from non-paying users, the platform sees advertising as a significant growth lever. In-game advertisements represent a massive growth opportunity for Roblox, potentially adding an additional $3.3B advertising opportunity.
- Immersive Ads as a Revenue Booster: Roblox is testing rewarded video ads, which could enhance the effectiveness of advertising, reduce the cost for brands to advertise on Roblox, and enable more brands to have a presence on the platform.
Challenges with Immersive Ads
- Disruptive User Experience: The current user experience with immersive ads is disruptive and disorienting. Players often leave instantly after being teleported to a branded experience, which negatively impacts the metrics of the branded experience and prevents it from reaching organic discovery.
- Slow Adoption by Advertisers: The top 50 developers on Roblox, who make over 50% of total platform revenue, only get 1% of their earnings from Immersive Ads. This indicates a slow adoption rate by advertisers due to the aforementioned user experience challenges.
Nefta’s Advertising Solution
- Privacy-Compliant Advertising: Nefta’s advertising network provides a privacy-compliant solution to the problems publishers and advertisers face, using first-party data to improve in-app advertising revenue. The platform uses advanced machine learning and behavioral analytics to create profile groups, resulting in greater audience engagement and revenue growth.
Global Gaming Industry Overview
- Record Year for Gaming: 2023 was a record year for gaming, with $86B in disclosed value for closed deals, mainly due to Microsoft’s acquisition of Activision. The report predicts M&A activity to steadily increase again in 2024.
Actionable Insights
- Exploring In-Game Advertising: Brands and advertisers should explore the potential of in-game advertising on platforms like Roblox, considering the significant growth opportunity it presents.
- Improving User Experience: Platforms and brands need to work on improving the user experience of immersive ads to increase their effectiveness and adoption rate.
- Adopting Privacy-Compliant Advertising Solutions: Publishers and advertisers should consider adopting privacy-compliant advertising solutions like Nefta’s to improve in-app advertising revenue.
- Monitoring the Gaming Industry: Stakeholders should keep a close eye on the global gaming industry, given the record deal values and predicted increase in M&A activity.
