(Bloomberg/Cecilia D’Anastasio) — Roblox Corp. executives have been trying to get advertisers to market their wares in the gaming platform’s virtual worlds since the company went public in 2021.
It’s a chance for brands to reach the 150 million people who spend an average of two hours a day on Roblox. Inside its games, virtual billboards and video ads can tempt the platform’s young audience with images of fast-food hamburgers and trailers for movies like Wicked: For Good. Advertising is “uncharted and very big,” Chief Executive Officer David Baszucki said in a 2023 interview.
Yet four years after the ad push began, there are few signs of progress. On 10 straight quarterly calls with investors, analysts have asked what’s going on, and Baszucki has mostly deflected their questions, saying advertising is a future opportunity. Even after signing a partnership with Google in April, it remains an “insignificant” part of the business, according to the company’s most recent quarterly filing.
“At Roblox, we’re focused on scaling a premium, immersive ad channel where high-quality content matches the demand we see from brands,” a spokesperson said in an email. “We are happy with the progress of our ads business, which is still in its early days.”
Multiple obstacles stand in the way of Roblox becoming the internet’s next ad juggernaut. For starters, the developers who create its games aren’t embracing ads in large numbers, in part because the money isn’t substantial, according to several interviewed by Bloomberg.
Ad rates for dozens of Roblox games ranged from a fraction of a penny to 55 cents for every thousand visits, according to the creators, who asked not to be identified discussing nonpublic information. That’s “on the lower end” of rates for video games, according to Dario Raciti, managing director of Zero Code, a gaming unit of Omnicom Group Inc., one of the world’s largest ad companies.
Many would rather just sell in-game goods, like the kangaroo eggs on Adopt Me!
“The biggest headwind Roblox faces is developer adoption,” said Ben Spoont, CEO of Misfits Gaming, an interactive entertainment company that operates several Roblox games. “Roblox is an authentic experience, and they don’t want to disrupt gameplay.”
Then there’s the company’s young user base. A third are under 13, and that makes potential sponsors wary. Federal law limits what marketers can say to children and what information can be collected.
“These games are for very young children,” said Reid Steinberg, director of media at the advertising firm Icon International, whose clients have included Warner Bros. Discovery Inc. and Visit Orlando. “There are a lot of sensitivities from most clients.”
Roblox says it prevents kids under 13 from viewing ads. However, a recent collaboration between the popular game Dress to Impress and the Wicked film studio Universal Pictures was accessible to anyone over five. Roblox doesn’t label every game that involves advertising.
The watchdog group Truth In Advertising complained to the US Federal Trade Commission over Roblox advertising to children in 2022.
“They have continually made representations that children would not be marketed to on their platform,’ said Bonnie Patten, the group’s executive director. “And we have continually found that all children on their platforms are being marketed to. And most times, these children don’t understand that what they’re seeing is advertising.”
In response, Roblox pointed to past comments about the group’s complaints, including this 2022 statement:
“We have strict guidelines for developers that want to promote or use ads within their experiences, including specific rules to protect users under 13, expectations that all developers adhere to Community Standards we strictly enforce, and no tolerance for fraud or scams.”
Advertising is part of Roblox’s goal to capture 10% of the global gaming market, Baszucki said in July, and in October, Morgan Stanley raised its estimates for the company, citing advertising as one reason.
Yet on an call with investors a day earlier, Chief Financial Officer Naveen Chopra played down the potential for near-term progress.
“There’s still a lot for us to do on that front, and therefore, not something that we would call out as a major contributor in the short term,” he said.
Roblox, which isn’t profitable, will face tough comparisons next year. In the latest quarter, the company reported better-than-expected user numbers and the fastest sales growth in almost two years. Yet the shares fell on investor concern that growth will slow in 2026 as the company rolls out age-verification features that could potentially impede new user sign-ups.
Advertisers reach Roblox users in different ways, including portals where sponsored games are promoted. They can buy space on billboards that appear in games or spend money on rewarded videos — ads that earn players digital items and credits if they’re willing to watch. In a Nov. 12 report, Morgan Stanley projected rewarded video could be a $3 billion opportunity for Roblox by 2027.
“We’ve been encouraged by the adoption we’ve seen so far, and as of Nov. 11 made Rewarded Video available to all ads-eligible developers,” the Roblox spokesperson said.
During the “metaverse” frenzy, brands including Adidas AG and Walmart Inc. started paying developers to make virtual dwellings on Roblox, where users could play, shop for digital items or just immerse themselves in branding.
Some were successful, like the Chipotle Mexican Grill Inc.-branded game where players could stuff their own virtual burritos. On average, users spent 14 minutes in Roblox Chipotle – more than they spend on in a Chipotle restaurant, according to Nick Malaperiman, founder of video-game marketing firm Spud Farm Marketing.
Nonetheless both the billboards and virtual dwellings had “limited impact” for brands, according to Zero Code’s Raciti. Several advergames sat mostly empty for months after their release, like West Elm Roblox.
While Roblox doesn’t share many details on its advertising business, developers offer some insights. The company, for example, takes about 70% of the revenue that ads generate, leaving the rest to creators, according to people with knowledge of the matter.
Even the most successful games appear to contribute a small portion of revenue. In September, Roblox said its fourth-most-popular game, Brookhaven, was earning five figures a month in ad revenue. That’s about $65,000, according to one game developer who asked not to be identified. But top 10 games on Roblox generated $2.8 million in revenue a month last year, largely from in-game merchandise purchases, suggesting Brookhaven ad revenue is relatively low.
One of the challenges for Roblox is delivering credible real-world data about its online world to sponsors. Games with “rewarded” video ads might rack up millions of plays as young gamers work hard for branded digital items from Gucci or Sonic: The Hedgehog. But proving the games funnel web or foot traffic into retailers is another matter.
Roblox says 75% of its users are likely to notice brands in games, while 87% of users like rewarded video ads.
“A lot of marketers question the lack of measurement,” said Icon International’s Steinberg. None of his clients have expressed interest in advertising in Roblox.
Still, advertisers want to go where the attention is. Bloomberg contacted the six largest advertising companies, and three said they have clients on Roblox.
“There is a lot of interest from a lot of brands,” Raciti said.
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