Roblox’s new advertising rules will hurt brand interest in the metaverse

The news: Changes to advertising rules on Roblox are throwing the platform’s advertising potential into question. In response to an FTC complaint last August, Roblox recently updated its rulebook with significant changes to its advertising policies, including an explicit ban on advertising to users under 13.

• Marketers may no longer use links or QR codes to direct users off-platform.
• Advertisers must clearly indicate advertising content with language like “Ad” or “Sponsored.”

Roblox has posted a guide to help parse the new rules, recommending advertisers ask themselves questions like “Do you consider or intend for the content to be advertising?” Other unhelpful questions include:

• “Does the content promote demand for a product or service available outside the experience where the content is placed?”
• “Does the content promote attributes of a product or service, either expressly or implicitly?”
• “Does the content contain a call to action encouraging the purchase of something available outside the experience?”

A tough sell: While the above rules are intended for all users who advertise on Roblox—not just big brands—they present obvious problems for any brand trying to partner with the platform. Some brands will consider losing access to that younger demographic bad enough, but what’s worse is that current and planned activations have now been thrown into question.

• Take Spotify Island, a successful activation intended to build brand familiarity with the audio service. Do Spotify Island’s various interactive games and virtual instruments promote the service, even if they don’t name specific Spotify features or call users to download the app?
• Other major brands that have partnered with Roblox include Netflix and Nike, both of which declined to comment to AdAge when asked about a lack of proper disclosure.

Rough goings for the metaverse: Roblox’s advertising shakeup is especially notable because it and competitor Fortnite are the only two metaverse platforms to have attracted significant brand attention.

• After a year of nonstop metaverse chatter, offerings from Meta and Microsoft feel further away than ever thanks to higher interest rates, a return to pre-pandemic lifestyles, and a new focus on artificial intelligence.
• But now, even Fortnite is coming for Roblox’s lunch. Epic Games recently launched Roblox-like game-making tools in Fortnite using a modified version of its popular Unreal Engine, along with a store where users can buy and sell 3D assets—creating a suite of services in direct competition with Roblox.

Our take: The metaverse has always been a tough sell for advertisers because of technological barriers and steep costs. Those problems hurt even more now in a high-interest rate environment and are compounded as the two primary metaverse platforms’ young audiences create murky legal situations.