Brands in The Virtual World

Why Gaming Platforms & Virtual Worlds are Becoming Staples for Brands

This one of a series of posts written by FOV Ventures Entrepreneur-In-Residence, David Ripert, that take a deep dive into FOV Ventures’ thesis areas, taking a look at each topic, the industry trends and startups involved.

FOV portfolio company GEEIQ was founded in 2018 on the notion that people weren’t just going into games to play, they were going in to socialise.

If gaming is an evolution of social media, brands will want to follow these eyeballs.

Just like in other verticals - TV, print and social media - you need data tools for discovery and attribution - for virtual worlds - GEEIQ is the answer to that data problem.

David sits down with GEEIQ founder, Charles Hambro, to discuss why brands are creating 3D activations, how they can be successful, and what the future holds for brands in the virtual world.

The full episode is below, to compliment this article that looks at how we got here, and what is next for brands in the virtual world.

Picture this... It’s late afternoon in the early 2000s, and you are rushing home to fire up the dial up connection in order to speak to your friends who have just spent all day with at school on AOL’s Instant Messenger.

Released in 1997, AIM was a popular way to communicate for millions of people throughout the late 1990s/early 2000s, and it helped form Internet culture of today. It’s where so many became fluent in LOL and emojis, and started the itch to stay in constant contact with others no matter where we are.

Fast forward 24 years, and the same scene is true.

But this time, the static AIM chatbox is replaced with virtual 3D worlds, where - represented as their customised avatars - people run around playing games on platforms like Roblox, Fortnite and Zepeto, while simultaneously interacting with friends.

This is so normalised that over half of all children globally played Roblox for an average of 130 minutes a day. With 70 million pairs of eyes glued to their Roblox screens everyday, brands have found a new frontier ripe for exploration.

Beyond eyeballs, what platforms like Roblox afford brands is interactivity.

GEEIQ data around the movie Kung Fu Panda 4 exemplifies this perfectly. While you might scroll through Instagram and see a film advert for roughly 3 to 5 seconds, instead of that, The Kung Fu Panda 4 ‘Obby’ on Roblox offered players (11 million played the game) a chance to earn a highly-coveted emote by spending at least 15 minutes in the experience.

That’s a 179x increase in engagement.

And this is only the beginning. According to GEEIQ Q4 2023 and Q1 2024 were the largest quarters on record for new brand activations in gaming and virtual worlds.

More Opportunities

To bring Roblox back down to earth. 3 Billion users, on average, visit Facebook every day.

To sustain growth and achieve user numbers like Facebook, Roblox will need to grow beyond gaming and become a primary form of communication across all ages.

Roblox CEO Dave Baszucki now describes the platform as a “utility company,” highlighting new features like Roblox Connect, avatar meetings with facial recognition and animation - think FaceTime for Roblox. Additionally, Roblox has launched experiences for users aged 17 and older to attract a more mature audience.

This expansion into non-gaming experiences - like the planned introduction of dating features for older users - opens new avenues for brands to engage with consumers on a more regular, integrated basis.

Fortnite too, continues to enhance its platform capabilities, as evidenced by Epic Games’ announcing at GDC that it would enable Fortnite creators to integrate with LEGO Fortnite, Rocket Racing, and Festival, further broadening the range of creation that is possible on Fortnite Creative.

Elsewhere, platforms like Zepeto cater specifically to mobile, and VRChat to VR interfaces, both focusing on social interactions rather than extensive content creation.

Non-gaming virtual world platforms like Obsess and Emperia may also see more brand engagement as VR grows. 3D shopping environments don’t necessarily lend themselves well to the act of ‘clicking’. VR will make these platforms more immersive and more welcoming to the consumer.

More Monetisation

Common across all these platforms is not just time-spent and engagement, but the presence of digital goods.

Millions of users visit Roblox’s marketplace every day, and in December 2023, nearly 71% of user spent time editing their avatar daily.

This equates to people buying billions of items there, including nearly 1.6 billion digital fashion items during the first nine months of 2023. Brands are also getting in on the action: in 2023, Roblox brand partners sold about 27 million items on Roblox.

Adidas / Roblox partnership

Digital goods are only as valuable as the environments you can use them in, and because Roblox has an incredibly valuable environment to 300 million monthly active users, assets within those environments then inherently are also valuable.

The story of the Gucci 'Queen Bee Dionysus' bag, which sold for 350,000 Robux (roughly $4,115), more than its real-world counterpart, is a prime example of how digital goods can achieve significant value.

This phenomenon is not limited to luxury fashion; any brand can leverage this by creating exclusive, desirable content that enhances the user's gameplay. For example, Ferrari - who naturally shy away from advertising - was the first licensed car in Fortnite.

We would also be amiss to not briefly mention NFTs too. Although the hype around NFTs has seen fluctuations, their potential to create new revenue streams through on-chain digital collectibles remains significant. In the last few months, Disney, Lufthansa, and Coca-Cola have launched new projects in this space.

More Direct

According to Charles (GEEIQ), what is much getting easier and much clearer is the top of funnel engagement metric.

But, as these virtual worlds are evolving, new businesses, like Flaunt, are providing more bottom of the funnel solutions on conversion by allowing you to add email signups within Roblox experiences so that you can acquire emails for your CRM.

Additionally, Roblox has introduced new advertising features. Developers can now easily integrate, track, and monetise ad units, including video ads, through a user-friendly Ads Manager.

Looking ahead, Charles believes everyone is waiting for that moment when you can sell physical product inside these virtual worlds.

This (inevitable) introduction of direct-to-consumer (D2C) capabilities within these virtual worlds would transform them into full-fledged marketplaces. Imagine a scenario where players not only interact with a brand's virtual storefront but purchase physical products directly through the platform. This seamless integration of virtual browsing and real-world purchasing will close the loop of commerce, inevitably shifting how brands allocate their digital marketing budgets.

Not only that, but payment providers like Stripe and e-commerce platforms such as Shopify will see expanding opportunities to integrate with 3D platforms. This could open significant new avenues for startups. Additionally, companies like Graswald and Aino, which operate in semantically related verticals, might find substantial new opportunities for growth 3D-ifying products.

More Affordable

The brand experience with the most visits all-time is Vans World with over 105 million visits occurring over a 2-year period.

However, there was a high cost of launching an experience like this — between $300k-$500k just to develop, not including operating costs. Similarly, even brand placements within games come with a lofty price tag.

The integration of AI and other innovative technologies will make entry into virtual worlds more affordable for brands and developers. AI developer and art tools will allow smaller teams to create and manage rich virtual experiences that were previously the domain of larger studios.

Gen AI is already streamlining creation in unprecedented ways, and the biggest opportunity we see for AI is in our art workflows,” said Guy de Beer, Chief Operating Officer at award-winning Roblox studio Toya Play. “For the kind of branded experiences we build — with hundreds of bespoke avatars — AI changes the creation economy, providing boundless opportunities for creators to bring their creative visions to life. With the innovations happening within Roblox and across the industry, the creation process will be transformed entirely in the next decade.

Roblox AI Generated Avatar Tools

Startups and independent creators are particularly poised to benefit, as the lower cost barrier allows them to experiment and innovate with less financial risk.

Beyond development, AI and advanced analytics will transform marketing within these platforms by providing more targeted and effective advertising. Personalised ad experiences, enhancing engagement without the need for large-scale traditional advertising campaigns. This precision marketing reduces waste and increases ROI, making it a cost-effective strategy for brands of all sizes.

But those improvements need data from companies like GEEIQ.

More Data

With social media advertising CPCs and CPMs optimised down to an exact science, virtual worlds need the same in order for brands to maximise their impact.

This is where a company like GEEIQ can really advance the space, with their data platform giving comprehensive insights across the entire sector.

But more data too is coming from the platforms to meet brand’s needs. Roblox in 2023 added new analytics features allowing creators to better understand the audience they are developing for, empowering them to make smarter updates, and ultimately better games.

Similarly Fortnite, plans to add a Persistence API that will allow a wider range of player data to be captured and analytics to track how frequently players interact with different elements of the game.

At the intersection of technology, creativity, and commerce, the role of platforms like GEEIQ in enabling effective brand strategies becomes increasingly indispensable.

The journey into virtual worlds is in its early stages, but with precise data and a dynamic approach, the potential for brands is expansive and grounded in tangible outcomes.

As we look to the future, the question is not just about how large the games market will grow, but also about the nature of its evolution. It seems inevitable that gaming will transcend its traditional bounds to give rise to entirely new forms of social and consumer experiences.