Inside Roblox’s Growing Ad Platform with Louqman Parampath

Summary

Marketecture Podcast Summary: Inside Roblox’s Growing Ad Platform with Lukman Parampath

Podcast Information:

• Title: Marketecture: Get Smart. Fast.
• Host: Ari Paparo
• Episode: Inside Roblox’s Growing Ad Platform with Lukman Parampath
• Release Date: June 9, 2025
• Description: Hosted by industry experts Ari Paparo and Eric Franchi, Marketecture offers in-depth interviews with leading thinkers in advertising and marketing, alongside weekly news and vendor insights.

---

Introduction

The latest episode of Marketecture features an engaging conversation between host Ari Paparo and Lukman Parampath, Vice President of Product and Ads and Commerce at Roblox. Released on June 9, 2025, the episode delves into Roblox’s burgeoning advertising platform, exploring its growth, revenue streams, ad products, and future prospects.

Roblox Overview

Lukman Parampath opens the discussion by defining Roblox not merely as a game but as an "immersive gaming and creation platform" ([02:18]). He emphasizes Roblox’s role in enabling developers to create diverse gaming experiences, supported by a robust community of over three million creators worldwide. Highlighting the platform’s scalability, Parampath notes:

“We have almost 100 million in Q1 of this year. We just had our earnings. Last week we announced 97.8 million daily active users.” ([02:18])

Roblox is positioned as one of the fastest-growing platforms in the gaming ecosystem, consistently achieving 20-30% year-over-year growth across key metrics such as daily active users (DAUs), engagement time, and platform bookings.

Audience Demographics

Roblox primarily attracts a younger audience, particularly Gen Z, distinguishing it from other gaming platforms. Parampath highlights the significant engagement from this demographic:

“You know, 87% of Gen Z audiences do some sort of gaming. And so this is the kind of new form of content consumption that is taking up, that is taking up people's time.” ([04:50])

This younger skew not only fosters high engagement but also makes Roblox an attractive platform for brands aiming to reach the coveted Gen Z audience.

Revenue Streams

Roblox’s revenue model is predominantly based on microtransactions and the sale of digital goods. Users purchase Robux, Roblox’s virtual currency, to buy avatars, accessories, and in-game enhancements. Parampath shares a personal anecdote:

“My preteen daughter was always buying like little tutu to put on her avatar and whatnot.” ([05:23])

While microtransactions currently constitute the majority of Roblox’s revenue, the company is actively developing its advertising capabilities as a significant future revenue stream.

Advertising on Roblox

Ad Products

Roblox is still in the early stages of building its advertising platform, with over two years invested in developing ad products and capabilities. Parampath outlines the primary advertising units available:

1. Sponsored Tiles and Paid Search: These allow creators to promote their games or experiences within Roblox, similar to app store advertising where keywords can be purchased to increase visibility.

   “If you go into Roblox you would see a tile like sponsor tiles or if you search for content, there is also paid search sponsored search on product search.” ([07:17])

2. Immersive Ad Units: These include billboards integrated into the 3D environments of Roblox experiences, which can be static or video-based.

   “There is a billboard that can either be static or play a video and that would be the ad.” ([09:27])

3. Portal Ads: These allow users to navigate between different experiences, offering another avenue for brand exposure.

4. Rewarded Video Ads: A full-screen video ad that users can opt into in exchange for in-game rewards, such as leveling up or gaining an extra life.

   “It is a full screen, takes over the entire screen. It is opt in by the user. So it's win, win, win for the user, for the creator and for the advertiser.” ([09:13])

Ad Sales Model

Roblox employs a hybrid sales model, combining direct sales and programmatic partnerships. Initially focusing on direct sales through its salesforce targeting agencies and brands, Roblox is also integrating with programmatic DSPs to streamline ad purchases.

“We want this ad to be as standard and as liquid as possible. So we want to bring in standard targeting capabilities, you know, first party data, third party data, but also the ability to activate in a way the market chooses to.” ([11:07])

Roblox has partnered with Google for ad serving and mediation, leveraging Google’s DSPs like DV360 and GVP to enhance their programmatic offerings.

Data and Compliance

Given Roblox’s substantial young user base, data privacy and compliance are paramount. Parampath discusses Roblox’s adherence to COPPA 2.0 regulations, ensuring that data usage is contextual and compliant.

“We are very careful about how we actually use data on our platform...We use contextual ads for COPPA 2.0 for users who are below a certain age as per the regulation.” ([11:50])

Roblox utilizes primarily first-party data for targeting and employs stringent measures to ensure data sharing is fully compliant with user consent and privacy standards.

Advertisers and Use Cases

Roblox attracts a diverse range of advertisers targeting the Gen Z demographic. Key verticals include:

• Entertainment: Ideal for promoting movie trailers and new releases directly to a receptive young audience.
• Fashion and Beauty: Leveraging Roblox’s extensive female Gen Z user base to market apparel and beauty products.
• Automotive: Integrating brand experiences within racing games and other automotive-themed environments.

“Fashion is good, you know, beauty is another interesting vertical that works quite well on our platform because we do have younger, younger women, you know, Gen Z females on our platform quite a bit.” ([13:21])

Future Outlook

Roblox is committed to expanding its advertising capabilities while maintaining an open and innovative platform. Future initiatives include:

• Enhancing Ad Units: Developing more standardized and templated ad formats to simplify integration for creators.
• Expanding Programmatic Partnerships: Beyond Google, Roblox aims to incorporate additional DSPs to broaden its programmatic reach.
• Supporting Creators: Continued investment in tools and products that enable creators to monetize effectively without compromising the user experience.

“We will continue to be very, very open and innovative and support our creators in multiple ways.” ([16:17])

Lightning Round

In a brief segment, Parampath answers quick questions highlighting key aspects of Roblox’s advertising strategy:

1. Biggest Market Challenge:

   “Getting out there and making sure that people understand the strength of our platform, the differentiation of our platform, the size of our audience, the engagement of our audience.” ([17:23])

2. Number One Competitive Advantage:

   “The massive reach of the Gen Z audience and engagement that they provide.” ([17:45])

3. If Roblox Advertising Was an Animal:

   “Maybe a lion. The king of the jungle.” ([18:03])

Conclusion

The episode concludes with Ari Paparo expressing appreciation for Lukman Parampath’s insights into Roblox’s evolving advertising platform. Listeners are encouraged to subscribe to Marketecture for future episodes and to engage with the community through various channels.

---

Key Takeaways:

• Roblox is a rapidly growing immersive gaming and creation platform with a strong emphasis on user and creator engagement.
• The platform’s advertising efforts are still in nascent stages but show substantial potential, particularly in reaching the Gen Z demographic.
• Ad products on Roblox are diverse, ranging from in-game billboards to rewarded video ads, offering multiple pathways for brand integration.
• Data privacy and compliance are critical, with Roblox adhering strictly to regulations like COPPA 2.0 to protect its young user base.
• Future developments aim to expand programmatic capabilities and enhance support for creators to monetize effectively.

For listeners interested in the intersection of gaming and advertising, this episode provides a comprehensive overview of Roblox’s strategic initiatives and the platform’s potential as a major advertising venue for brands targeting young audiences.

Transcript

[AdTech God]

This is AdTech God. And this is French 101. Welcome to class. The correct pronunciation is can, like a can of soup, not like cans of soup. Now that you've graduated, I'm here to tell you about the Ad Tech God Crashes Adweek House event happening on June 16th at 8:30pm it's going to be fun 80s style and takes place in an absolutely stunning hotel called the Majestic. It's right on the Croisette. If you'd like to attend, go to AdTechGod Events and register now. Invite your friends at agencies, brands, ad tech, media publishers, even your neighbor if he happens to be going there with you. Just kidding, but we'd love to see you there. Everyone is welcome and we're really looking forward to this event. See you at Cannes.

[Ari Paparo]

Foreign. Welcome to marketecture where you can get smart fast with in depth interviews of leading technology executives. I'm Ari Paparo and I'm joined today by Lukman Parampath, who is the VP of Product and Ads and Commerce for Roblox. So thank you so much for being here.

[Lukman Parampath]

Thank you for the invitation, Ari. Good to chat with you.

[Ari Paparo]

I'm pretty excited about this because I'm not a Roblox user, but my teenage daughter was like totally addicted for a couple years and I'd watch her play and I'd be like, wow, this seems like a world I could learn a lot about. How long have you been there?

[Lukman Parampath]

Six months. Yeah, I joined just before Thanksgiving last year.

[Ari Paparo]

Do you play much? Are you a big user?

[Lukman Parampath]

Again, I'll give you a secret. One of the reasons I joined Roblox is to be in the good big books of my two daughters. They are both avid Roblox users and I do game quite a bit. But Roblox is something that I've been using more and more of late.

[Ari Paparo]

All right, well, probably many of our listeners are not very familiar with Roblox, so maybe you could just start by giving a sort of an overview of what is this company now, what is the footprint and what's your job as head of ads and commerce.

[Lukman Parampath]

Yeah, thanks, Ari. So the best way to talk about Roblox is as an immersive gaming and creation platform. So we're not a game by itself. We are a platform that lets developers come in and create great experiences, great games. We have a very, very robust creator community. Three million plus creators across the globe. Yeah. And people don't realize the scale of Raw block. So that's one thing I would love to talk about. 3 million plus developers coming in and creating games, they make updates, they refresh it. There's a lot of improvement in the platform itself that have driven the adoption by creators across the globe. We have almost 100 million in Q1 of this year. We just had our earnings. Last week we announced 97.8 million daily active users. Wow, that's a huge number, our monthly active users. And hundreds of millions, clearly. And what we are seeing is a continuous acceleration in the adoption of the platform, both by creators, creating great experiences by players, users who are actually spending time in these games. The engagement of the platform continues to grow and increasingly brands are looking at this particular platform as where they need to be present to reach the much coveted Gen Z audience. Much of our audience is younger, do trend younger. And one of the things that we are also seeing is continuous adoption and engagement. Engagement by the Gen Z audience.

[Ari Paparo]

Right, so your audience skews younger than other gaming as well, right?

[Lukman Parampath]

That would be fair, yes. Yeah.

[Ari Paparo]

Okay, gotcha. And what is 98.7 million DAOs like? Where does that put you in the landscape? Who is a good comparison?

[Lukman Parampath]

I mean the way to look at it is if you look at the overall larger gaming ecosystem compared to some other channels, you could say that it's not growing as much. But we are the fastest growing platform, perhaps the fastest growing platform with in gaming itself. Right. If you look at our numbers, they consistently see 20 to 30% year over year growth in all of the key metrics. We look at whether it is daily active users, whether it's engagement time, whether it's bookings on the platform, which is microtransactions and digital goods purchased on the platform. So generally we are one of the, if not the fastest growing gaming platform and where more and more of the engagement is happening. And one other thing I would quickly raise is with the Gen Z audience, gaming is they spend a lot of their time on gaming. Like I have people talk about, you know, 87% of Gen Z audiences do some sort of gaming. And so this is the kind of new form of content consumption that is taking up, that is taking up people's time.

[Ari Paparo]

So you mentioned in game purchases, is that the bulk of your revenue? What's the revenue breakdown?

[Lukman Parampath]

Yeah, I mean we don't break that up.

[Ari Paparo]

Sure. In a public, but just in a general sense like where do you make your money?

[Lukman Parampath]

Yeah, it's historically, you know, microtransactions and digital goods and experiences, revenue made and experience on the platform is the vast majority right now.

[Ari Paparo]

Yeah. So my preteen daughter, when she was playing like crazy. She was always buying like little tutu to put on her avatar and whatnot. So how does we also have a.

[Lukman Parampath]

Currency called Robucks currency? So what Robux, what a lot of players or users do is they buy the currency and spend it on the platform.

[Ari Paparo]

Yeah, right. That makes sense. So where does ads fit in? How mature is the ad product? What is the ad product? We'll spend some time on that.

[Lukman Parampath]

Yeah. We are still in the early days. I think it's fair to say that the company's been doing some work on building on an ad platform and building advertising capabilities. A few things like I said, because of the reach of the audience and the massive levels of engagement, it's a platform where there's been increasingly a high level of interest from brands. We launched a few ad products and capabilities two plus years. It's an area where we think there is substantial upside and that's why I'm here. But at the same time, when you look at what is happening on the platform, a large majority of our users are still not a large majority, majority of users are still not buying goods they play on the game. They're not payers, as we call it. A good number of users are payers, but then there is a real opportunity on users that are not payers. And then one of the key things we focus a lot on ensuring that creators on our platform can continue to build meaningful businesses. We are at a point where last quarter we announced $280 million of payouts back to creators. So we are looking at approximately more than a billion dollars that is spent back to creators. So.

[Ari Paparo]

The creators are creating effectively games or experiences on your platform and, and they need to be compensated for that. So, so tell me about ad. So if I'm a creator and I want ad revenue, what are my options and what do I get?

[Lukman Parampath]

Yeah, if you look at our own, our advertising products, right. Or advertising strategy, that are approximately three ways to look at it. One is actually offering advertising units to the creators itself. It's a very endemic business where just like all game developers spend a percentage of their earnings in UA user acquisition, our game developers would do that. So if you go into Roblox you would see a tile like sponsor tiles or if you search for, if a user searches for content, there is also paid search sponsored search on product search. So one way in which we build our business is offering units for creators to promote their experience and stand out from the rest. This is where they spend a percentage of their revenue back on the platform.

[Ari Paparo]

So this is analogous to app store advertising. Advertising the way Apple lets you buy a keyword. So these app developers, these creators, want to make more money. So you search for whatever medieval sword game and.

[Lukman Parampath]

Racing game and so on. It's not just search though, it is also. It's a mix of both organic and paid recommendations in the home screen itself. And different ways in which you can acquire our users.

[Ari Paparo]

That is correct.

[Lukman Parampath]

But for creators itself, how do they make money? Now, like I said, they make money primarily through inexperienced purchases and so on. But one of the things we are offering is we have offered historically additional advertising units inside their experience and we bundle that together across all of the experiences, all of the games, and sell it with our targeting and mentioning capabilities to brands. So that's the way in which they would use advertising as a revenue opportunity. And this is where a couple of years ago we had a few products and now we are actually pushing out much more standard liquid products like video rewarded video that creators can easily integrate. And we offer monetization by actually driving demand to those units.

[Ari Paparo]

What do these units look like? Because 3D environments are always kind of tricky. Are these flat? Do they move with the gameplay? How does the video play work? We'd love to hear some details.

[Lukman Parampath]

Yeah, that's an excellent question, Ari. So we have a few of those units. Historically we've had more immersive units that look like billboards that are very native to the immersive experience. So if you're actually navigating through the 3D immersive experience, there is a billboard that can either be static or play a video and that would be the ad. That's something we have offered for some time. There are other units called portals we are offered where you can go between experiences and kind of move between different games. And the big one that we have launched and we love to talk more about it, is what we call as rewarded video, which is a very standard video unit, similar to what you would see in other in app gaming experiences or gaming apps. And it's a full screen video. It is full screen, takes over the entire screen. It is opt in by the user. So it's win, win, win for the user, for the creator and for the advertiser. And if the user opts in because he gets a reward in the game, something like leveling up to the next level or a particular particular, an extra life in the game that you're playing that offers you an opportunity to watch an ad, get the reward. And then that ad is, like I said, a full screen ad that is just like any other video ad that you would buy in the industry.

[Ari Paparo]

Right. And that's like an interlevel kind of thing usually. Right.

[Lukman Parampath]

It doesn't have to be interlevel, doesn't have to be.

[Ari Paparo]

Okay.

[Lukman Parampath]

But it's a rewarded ad. Very common in gaming experiences where you get a reward that helps you move further in the game.

[Ari Paparo]

Right. Okay. And so the sales of these ads, is it direct sales where your salesforce is out, you know, calling on agencies, trying to convince them that Roblox is a good place to put their ads?

[Lukman Parampath]

Yeah, yeah. So the way we look at it is we want this ad to be as standard and as liquid as possible. So we want to bring in standard targeting capabilities, you know, first party data, third party data, but also the ability to activate in a way the market chooses to. So we want to meet the market where it is. So we do have direct sales and you can buy through an insertion order, but we also plan to integrate with programmatic partners. And so you apply through, you know, traditional programmatic mods in which you buy video today.

[Ari Paparo]

But to be clear, right now it's direct only.

[Lukman Parampath]

No, it's both direct and it's both now. Yeah, it's about both direct.

[Ari Paparo]

Let's talk about the data side. So how are you navigating the young average age of your platform and how does that relate to data?

[Lukman Parampath]

Yeah, so we are very careful about how we actually use data on our platform. Our CEO just recently announced publicly, or there was a press from him, an article from that said we are supportive of COPPA 2.0, which is the updated COPA regulations. So we are very careful about how data is used because we do have a large amount of kids using our platform. And so how we look at it primarily as you know, by and large we use contextual ads for copper 2.0 for users who are below a certain age as per the regulation. And about that, we use targeting, but mostly first party targeting, our own targeting that is standard in the industry. And we are very, very careful about which we are compliant with all regulations. And we make sure that when we work with partners, we are only sharing data that have full opt in concept and so on and so forth.

[Ari Paparo]

Do you have accurate age information? Because you could sign up for Roblox without using an ID or a credit card, right?

[Lukman Parampath]

You don't need a credit card, it's an ID plus. Yeah, I need to provide your age.

[Ari Paparo]

Yeah. Okay. And then in terms of context, this is gaming. So what sort of context is it is a genre is the primary context.

[Lukman Parampath]

Yeah, genre is one genre. And yeah, the experience that you are in primarily is one form of contextual information that you would have.

[Ari Paparo]

Right. And so what kind of advertisers are attracted to this audience?

[Lukman Parampath]

Yeah, so a lot of advertisers, because it is typically advertisers who are more looking for the Gen Z audience. So we are talking to advertisers across verticals where that makes the most sense. Entertainment is a great place. Right. For instance, you know, when you're launching a new trailer as for movies with this specific audience in mind, you would want to actually be on the Roblox platform. It is a great platform to actually do it. Fashion is good, you know, beauty is another interesting vertical that works quite well on our platform because we do have younger, younger women, you know, Gen Z females on our platform quite a bit. Auto would be one, because you can integrate quite well with racing applications, racing cars and, you know, games where you have racing experiences and so on.

[Ari Paparo]

Right. Do you give out any numbers about what the size of your advertising business is?

[Lukman Parampath]

We do not. We do not break it out publicly.

[Ari Paparo]

Okay, great. And then in terms of the programmatic capabilities, is there sort of a whitelist of DSPs that are currently integrated and is there any other details you give about what they are able to do?

[Lukman Parampath]

Yeah, yeah. So what we did announce, I think it was during Playfronts in the first week of April in partnership with Google. So what we're doing is we are using Google as part of a tech stack. So we're using Google for some of our ad serving and mediation capabilities and we will use that to integrate with multiple DSPs. So the way we look at it is Google itself will be one demand partner, their programmatic DV360, which is their DSP, and GVP, which is their mobile demand source that will be one programmatic partner. And then we will add a few more programmatic partners using their mediation layer that typically is primarily in the brand bucket right now. So they are trying to reach these Gen Z audiences that you do not get anywhere because increasingly they are spending time on our platform. And then we look at additional other demand sources like performance, where we can actually integrate to those DSPs. So we are working through the next set of partners that we will need to stand up beyond what we have with Google and our direct CS team.

[Ari Paparo]

Got it. On previous episodes of this podcast, I've had vendors from the gaming space who've claimed that they can serve ads into Roblox. Do you allow third party Networks into games.

[Lukman Parampath]

Yeah, we call these independent ads where a lot of studios that are on the platform, we have a partner program. So effectively we have a list of partners that work with our creators that have meaningful scale and they in some scenarios do sell ads on behalf of those creators too. So that does play out in the market. And there are scenarios where we have unique offerings and there are scenarios in which they have unique offerings which are much more custom and bespoke and deeper integrations that they work with creators directly on.

[Ari Paparo]

Right, got it. And what's the future look like for advertising on Roblox?

[Lukman Parampath]

Yeah, I think it's. Roblox is a fairly open platform and we want it to be open. We want to actually drive the creativity and the innovation of our community. And that's what's really differentiated the platform. Like I said earlier, the creators investing in the platform, innovating on the platform, continuing to make revenue, continuing to bring more users, that drives the larger growth of the platform itself. So we'll continue to be very, very open and innovative and support our creators in multiple ways. But at the same time we do want to make it easy for them to monetize. That's why we have our own investment in our ad platform, our own investment in most standard units, our own investment in actually building somewhat differentiated units, but that'll be more templatized. We are looking at that too. So we will work on a bunch of capabilities around advertising and we will make sure that the policies that we have are very compliant and that it is consistent across whoever is ultimately selling in the market.

[Ari Paparo]

Right. Okay, great. Let's, let's move on to a quick lightning round. So relatively quick questions, quick answers. So what is your biggest market challenge?

[Lukman Parampath]

We are early in the business right now, so the biggest challenge when you're doing a zero to one business from an advertising perspective is just getting out there and making sure that people understand the strength of our platform, the differentiation of our platform, the size of our audience, the engagement of our audience. So just getting the word out there is where we are spending a lot of time right now.

[Ari Paparo]

What's your number one competitive advantage or.

[Lukman Parampath]

The massive reach of the Gen Z audience and engagement that they provide? You want.

[Ari Paparo]

That makes sense.

[Lukman Parampath]

Or anyone else.

[Ari Paparo]

Yeah, yeah. And final question. If Roblox advertising was an animal, what animal would it be?

[Lukman Parampath]

Maybe a lion.

[Ari Paparo]

Why lion?

[Lukman Parampath]

I don't know. The king of the jungle. We want to be one. You know, it's a gaming platform, so we. I was just using a gaming analogy here, but I just. Yeah, that could be the closest one you want.

[Ari Paparo]

Always a safe answer, everyone. A lot of lions. We get a lot of lions. All right, Lookman, thank you so much for joining us. This is a very interesting conversation.

[Lukman Parampath]

Thank you, Ari, thank you for the conversation, and take care.

[Ari Paparo]

Thank you for listening to the marketecture podcast. New episodes come out every Friday and an insightful vendor interview is published each Monday. You can subscribe to our library of hundreds of executive interviews at marketecture tv. You can also sign up for free for our weekly newsletter with my original strategic insights on the week's news at News Market tv. And if you're feeling social, we operate a vibrant Slack community that you can apply to [e-mail].