Recently, Roblox got in trouble with the Children’s Advertising Review Unit for failing to clearly label in-game ads for children under 13 and using social media influencers who failed to identify that their content was promotional.
Roblox responded by claiming it did nothing wrong. Yet the company is planning to block brands and game developers from serving ads to kids under 13.
“Older age groups enter environments that require some form of age verification, from nightclubs to some concerts or movies,” the company’s founder and CEO, David Baszucki, wrote in a blog post. “On Roblox, we want to recreate these dynamics of real life in virtual space.
Just like in real life, the key is establishing appropriate expectations for people on Roblox based on the different experiences.”
With 43% of Roblox’s users under 13 and about 70% 18 and under, Roblox must pay attention to legislation and policy around advertising to children. But it would be a total head-scratcher for Roblox to pivot its ad business to focus on over-18 audiences.
After all, Meta and TikTok have a stronghold on adult users. And advertising for children’s products and services, including toys and games, entertainment and personal care, totaled $1.6 billion in the US in 2022, according to MediaRadar, up from $1.1 billion in 2021.
Here’s why Roblox should maintain its focus on users who are 18 and under:
- It’s a big market with lots of opportunities: Advertising for kids is a $1.6 billion market in the US and is 3x greater globally, according to data from PwC.
Beyond advertising, Roblox also generates revenue from in-game purchases, subscriptions and licensing agreements with retailers and game developers. For example, adventure, action and role-playing games typically generate 75%-85% of their revenue from in-game purchases vs. 15%-25% from advertising.
And as anyone with kids will tell you, they influence a lot of purchase decisions they don’t make. Do you think anyone with teens decides where to go on vacation or buys a car without consulting their kids? The potential advertising opportunity for Roblox as a kid-focused destination is massive.
- Early market leader SuperAwesome is no longer independent: Founded in 2013, SuperAwesome was an early leader in kid-friendly, privacy-safe advertising. Now the company is owned by Epic, whose PC gaming platform markets games that aren’t exactly child-friendly, like Grand Theft Auto V and Dead Island 2.
SuperAwesome’s loss of independence is an opportunity for Roblox to become the destination for kid-friendly digital marketing campaigns.
- Making a play for the creator market: Everyone is used to hearing endorsements from actors and other famous people. The creator economy expands this trend, enabling anyone to become a product endorser. Unlike celebrities getting paid for a testimonial, creator endorsements succeed because of the authenticity of the creator’s recommendations based on their personal experience with the product or services.
As a platform that reaches so many users 18 and under, Roblox is well positioned to work with the ad industry, regulators and creators to establish industry best practices around age-specific, kid-friendly advertising. This is an excellent opportunity for Roblox to lead. By developing best practices and working with creators to ensure the content they create meets the criteria for advertising to kids, Roblox will become the destination for kid-friendly advertising.
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For example, Roblox can partner with creators and marketers to create ad campaigns that explain to kids what marketing is and how they should evaluate marketing messages to make them smarter consumers.
Trying to be everything to all people rarely works. Roblox has already proven that the platform is a desirable destination for users 18 and under. It will be difficult to appeal to users over 18 while remaining safe and privacy-friendly for younger users.
Advertising is an industry built on chasing youth. Roblox already has it. That’s why it should keep its focus on this key audience.
“The Sell Sider” is a column written by the sell side of the digital media community.
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