Roblox Stands to Benefit from Growth in Gaming Advertising

IAB report shows how Gaming is becoming a more important marketing channel

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To coincide with their recent Playfronts event (which featured speakers from Roblox, Gamefam, Super League and others), the Interactive Advertising Bureau (IAB) released the report Changing the Game: How Games Advertising Powers Performance.

Here's how they describe the report:

"Changing the Game: How Games Advertising Powers Performance is IAB’s groundbreaking new study that quantifies the success marketers are seeing with games advertising. With 213 million digital gamers in the U.S. (ESA, 2023), advertisers no longer consider the games advertising opportunity as only reaching “gamers.” Instead, games advertising has matured and evolved to become a continuous part of the media mix, reaching diverse and unique consumers on a massive scale."

Although this report takes a broad look at how brands and marketers are leveraging gaming to reach audiences, I thought that there were a lot of takeaways that also apply specifically to brands and Roblox.

The report highlights many ways that gaming is growing as a marketing channel, which bodes well for Roblox's ambitions to drive considerable revenue from advertising.

Here's what stood out to me related to Roblox and brands.

GAMING REACHES HUGE A AUDIENCE

Number of digital gamers in the U.S.: With more than 212 million digital gamers in the U.S., advertisers have a massive and diverse audience to reach through gaming platforms. This statistic highlights the broad reach of games advertising beyond traditional notions of "gamers."

MARKETERS USING GAMING ARE FINDING SUCCESS

Growing Importance and Increased Investment: Nearly 90% of marketers currently using games advertising view it as increasingly important to their company. Additionally, 40% of these marketers plan to increase spending in 2024, positioning games advertising as the third most anticipated channel for increased investment.

Consistent Presence in Advertising Mix: Games advertising has evolved into a consistent presence within the advertising mix, with a majority of advertisers using it continuously throughout the year rather than relying solely on one-off campaigns. This trend reflects the integration of games advertising as a strategic and ongoing component of marketing strategies.

Engagement with Target Consumers: Over 90% of advertisers find games advertising effective in engaging with the right consumers, reaching them where they are with relevant messaging. This indicates that games advertising is successful in connecting with valuable and often elusive audiences.

Positive Impact on Brand Outcomes: Nearly 90% of advertisers agree that games advertising positively impacts brand outcomes. Moreover, when combined with other media channels, 86% of advertisers believe it amplifies the impact of the overall campaign. This suggests that games advertising not only contributes to brand success but also enhances the effectiveness of integrated marketing efforts.

My Takeaways: These statistics make me think about growing amount of companies that have launched numerous campaigns on Roblox, including Walmart, Gucci, NFL, NBA, NBC Universal, Paramount, Warner Brothers, Walmart, Spin Master, etc. These companies look to Roblox for ongoing marketing activity because they've realized that a valuable audience hangs out there. Their ongoing investment on the platforms speaks to them getting a positive ROI. I imagine we will see more brands who fall into this category of active Roblox marketers over time.

WHERE GAMING BUDGETS COME FROM

Maturity in Budget Allocation: Games advertising is now recognized as a vital component of media budgets rather than being relegated to research and development (R&D) or experimentation. Less than 10% of marketers allocate funds for games advertising from an R&D or experimentation budget.

Dedicated Gaming-Specific Budgets: Brands are notably more inclined to have a dedicated gaming-specific media budget compared to agencies. This indicates a strategic recognition among brands of the importance and potential of games advertising, leading to the establishment of specific budgets tailored to gaming initiatives.

My Takeaways: I imagine that for many brands coming to Roblox for the first time, these budgets still come from R&D budgets. However, it's encouraging to see that eventually these budgets can potentially come from media budgets, both as brands look to gaming as a consistent marketing channel and as Roblox rolls out video advertising.

CHALLENGES FOR HOW TO THINK ABOUT GAMING

Perception Divide: Advertisers are split on whether they view games advertising as its own standalone media channel or as part of other media channels. However, there is a notable group that considers it a separate channel.

Perception of Ease: While 79% of advertisers find games advertising relatively easy and uncomplicated to buy, this still falls short compared to other digital media channels.

Additional Effort Required: Experienced planners and buyers recognize that fully leveraging the benefits of advertising in games requires additional effort:

Researching gaming audiences and understanding their preferences.
Dealing with the complexity of audience engagement across multiple games, platforms, and communities, which complicates planning.
Tailoring ad formats and creatives to the target audience's gaming experience, which may require custom work not typically needed for other media channels.

My Takeaways: Because we are still in the early "Wild West" days of brands leveraging Roblox for growth, it makes sense that there is still confusion about how to categorize this channel. As more brands continue to enter the platform, I believe these challenges will get sorted out, which will make it even easier for more brands to come on board.

ADVANTAGES OF ADVERTISING VIA GAMING

Incremental Reach and Unique Audiences: Games advertising enhances brand awareness by reaching unique and specific audiences immersed in gaming experiences. Advertisers highlight its ability to deliver incremental reach compared to other digital media channels, tapping into audiences that may not be reached through traditional advertising methods.

Rating in Driving Awareness: Advertisers rate games advertising as third-best for "excellent" performance in driving awareness compared to other digital media channels. They attribute this high rating to its ability to engage unique audiences and deliver incremental reach, highlighting its effectiveness in enhancing brand awareness.

Unique Strengths of Games Advertising: Advertisers emphasize the interactive and dynamic nature of games advertising, which invites consumers to actively participate. This engagement is regarded as a unique strength of games advertising.

Influencing Purchase Decisions: Advertisers rate games advertising as second only to social media in its ability to deliver excellent purchase and conversion outcomes. This indicates the significant impact of games advertising on influencing purchase decisions.

Awareness: While social media and display are rated higher for driving overall awareness, games advertising can be used to reach unique, specific audiences who are receptive to brand messaging.

Research & Consideration: Games advertising is considered nearly as effective as social media in inspiring brand consideration. Its interactive and immersive nature engages consumers, capturing attention, and driving ad engagement and recall.

Purchase: Games advertising ranks as the second-highest media channel for delivering purchase and conversion outcomes in the consumer journey. Advertisers emphasize its superior performance in driving sales, conversions, and clicks.

My Takeaways: Like other gaming solutions out there, Roblox reaches people that are hard to reach via traditional and even digital channels. As young people spend more and more time on gaming platforms like Roblox, these platforms will become increasingly important for advertisers.