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Roblox rolls out new ad tools amid concerns around how companies market to children — the core users on the platform

Even while Roblox gets ready to roll out updates to appease marketers’ growing appetites for the metaverse, consumer advocates warn the platform has left a bitter taste in the mouths of some users.

On Friday, the company revealed new ad formats that aim to create new “immersive” formats such as three-dimensional digital billboards, in-game “portals” that let users jump from one experience to another and eventually video ads. The company wouldn’t disclose what the costs of the immersive ad formats might be. However, “it’s not like slapping banners,” said Richard Sims, senior product director for monetization at Roblox. The new tools give Roblox and developers new revenue streams while also creating content ratings and limitations to make sure content is age-appropriate.

So far, companies such as Warner Bros. and Vans have tested the new formats, but a broader rollout isn’t expected until next year. Some already see potential opportunities while others are skeptical of whether new safety measures go far enough.

Until now, companies often promote their branded Roblox experiences with ads on other platforms — such as Twitch, Twitter and TikTok — or rely on Roblox influencers. But soon, they’ll be able to reach users within the platform with targeted ads, which some marketers say could help create new ways for reaching Roblox users while they’re within the game.

“Just because you build it does mean they’ll come,” said Keith Soljachic, head of innovation at Publicis Group. “And we have to find creative ways of driving more virtual foot traffic.”

Josh Neuman, president of Melon — a studio that builds virtual experiences for companies like Chipotle, Mattel and PacSu — said the updates will help automate marketing rather than doing individual outreach to influencers, developers and other partners.

“Portals have been very successful in driving new traffic to new experiences,” Neuman said. “But that’s kind of like driving a manual car.”

The updates come amid growing scrutiny around how companies market to children — the core of Roblox’s users base — while consumers advocate also worry Roblox hasn’t done enough to disclose branded experiences and in-app purchases from other content. In April, the consumer advocacy nonprofit Truth In Advertising (TINA) filed a complaint with the Federal Trade Commission accusing Roblox of deceptive advertising tactics and a range of other concerns.

According to TINA, branded experiences, in-game purchases and other content weren’t properly disclosed as marketing with Roblox. The group also claimed that influencers on the platforms and AI-controlled bots didn’t adequately disclose their affiliations with brands. Children aren’t cognitively developed in their early years to understand marketing and distinguish it from other content, according to TINA executive director and co-founder Bonnie Patten.

“They’re taking these advergames at face value,” Patten said. “Whereas as an adult and you’re being marketed to, you have a healthy dose of skepticism because you know the marketing may be better than what the product or service is.”

Earlier this year, the Digital Futures Commission conducted a survey about eight different online platforms and found that Roblox and Fortnite were seen by children as the most “addicting,” “commercially exploitive,” and “unsafe.” Sonia Livingstone, a professor at the London School of Economics and one of the report’s authors, said part of that is because of the business model — which is largely funded by the in-game currency along with various branded experiences.

“All of this is concerning for kids because they don’t understand the business model,” Livingstone said. “Nobody understands the business model.”

With Roblox expanding its in-game ad capabilities, there’s the question of whether it will create a new walled garden or adopt more open policies for partnerships between advertisers and in-game ad firms. Despite already developing an in-game economy with brands and developers, Roblox won’t allow third-party data partners or ad networks — a move that’s meant to create a privacy-safe environment and avoid the pitfalls of other platforms like Facebook and Twitter.

Roblox is also adding new restrictions for users depending on their age. Only users over 13 will see immersive ads. Games will also be split into three tiers: One for users over 13, another for users 9 and older, and another for all ages. Whether these updates will be enough to create proper guidelines for users and developers is yet to be tested. However, during the Federal Trade Commission’s public hearing last week Mozilla chief security officer Marshall Erwin — who didn’t mention Roblox specifically — said it’s important that any new regulations address adult platforms with the context that kids might still use them.

“We need rules that put an affirmative obligation on major platforms to do something when they have a reasonable basis to believe kids are using the platform, even if it isn’t targeted to them,” Erwin said. “Just to give you an example, YouTube, and not just YouTube kids. And that way we can avoid the sort of kids compliance theater that we do worry about a little bit.”

Alongside worries about ads and other content, there’s still another more meta question: Will users want ads in the metaverse? According to a July survey conducted by YouGov and Globant, 35% of gamers said they’re comfortable with advertising and another 35% were undecided. (Around half of those that were comfortable with ads were between the ages of 18 and 29.)

Andrew Frank, a marketing analyst at the research firm Gartner, said Roblox has yet to pass the experimentation phase when it comes to ad budgets. Although brands often experiment with new formats, Frank said experimental ad formats often end after the pilots — either because of high costs, challenges with scaling or issues with oversight. Plus, he said, Roblox is more of a gaming platform than a social media platform — and one that’s now been around for more than a decade — and would require the platform to substantially evolve before becoming a line item on a media budget or reaching maturity like connected TV.

“How many times have we heard that in-game advertising is now the medium?” Frank said. “But if you compare it to social media, I don’t think it’s going to have the same scale and engagement as we’ve seen in with TikTok.”