Rob Less (NYSE: RBLX) For many investors, it has been a controversial investment. On the one hand, it pioneered a unique business model combining user-made games, social networks and digital economy, showing early versions of the Meta Edition.
However, investors retained Roblox’s reliance on revenue from selling Robux (its digital currency). Therefore, its recent partnership announcement could be an important step in addressing investor concerns.
At the recent IAB PlayFronts 2025 advertising conference, Roblox revealed a big step in its advertising strategy. Rewarded video ads will soon be available for programming and direct purchases letter' (NASDAQ: GOOG) (NASDAQ: GOOGL) Google Advertising Platform. This partnership gives Roblox instant access to a wide network of brands and agencies, making immersive advertising across the entire platform easier.
Rewarded video ads allow users to voluntarily follow full-screen videos up to 30 seconds in exchange for in-game rewards such as electricity or currency provided by game creators. Early testing is promising, with an average completion rate of more than 80%, and some experiences exceeding 90%, which suggests that users see real value in the exchange.
Through integration with Google Ad Manager, Roblox can meet where ads have been purchased, which helps eliminate friction and expand coverage. This launch also unlocks new revenue streams for Roblox and provides creators with another way to get content while enhancing user engagement.
As for Google, this partnership helped expand its immersive advertising offerings, and now video formats are added to Google Ad Manager and Admob. In short, this is a win-win situation for all parties involved.
Partnerships with Google can be transformative for several reasons. Through integration with Google's advertising infrastructure, Roblox has become accessed by millions of advertisers who already use Google Ads. This approach helps Roblox quickly expand its advertiser base by investing very little rather than building an advertiser base.
If this partnership succeeds, it could lead to a deeper collaboration in the future, transforming Roblox from a niche gaming platform to a mainstream digital advertising platform, just like it did a few years ago.
It is also important that Roblox is accelerating its efforts to grow its advertising revenue by launching reward video ads. This will make its revenue more recurring and sustainable than relying on charges for transactions on its platform. Doing so can also boost investors' confidence and make them more likely to invest in the company in the long term.
Additionally, this new advertising program should be very beneficial for content creators. For example, rewarded video ads allow users to earn game rewards, which can improve overall user engagement, especially for users who usually don’t spend money on advanced gaming experiences. Additionally, developers can generate additional revenue from ads inserted into the game. By making developers more successful over time, Roblox ensures that the best developers stay on their platform and maintain long-term development of high-quality content.
In other words, this partnership could help the turbocharged Roblox grow machines, allowing it to iterate its business model as it crosses metatrends.
While the latest partnership with Google could be a game-changer in the long run, it's not yet certain. Roblox must ensure that ads don’t harm users’ experience, especially its young core audience. The key here is to make sure that ads add value to the gamer’s experience, or at least not reduce them.
Likewise, Roblox must strike a balance between advertising (and the nature of advertising content) and regulatory and security issues. Failure to do so may affect relationships with parents and regulators. In other words, tech companies must balance making extra money with user experience. It is also important to monitor the advertiser's return on investment (ROI) over time. If advertisers can't generate enough returns, they're unlikely to double down on Roblox.
In short, Roblox must perform well in the next few quarters to achieve desirable results from this partnership.
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Alphabet executive Suzanne Frey is a member of the board of directors of Motley Fool. Lawrence NGA has no position in any of the stocks mentioned. Motley fool has a place and recommends letters and Roblox. Motley Fool has a disclosure policy.
Roblox's latest partnership with Google could be a game-changer, originally published by Motley Fool