This is amazing. By doing a payment directly linked to a billing account you also allow the developers on the platform to save MILLIONS of dollars. So many people spend in-platform robux to advertise their experiences and it could be challenging to explain to the IRS what robux is; to let them allow you to deduct robux purchases for ads and sponsors to be deducted from your taxes. Now you can with ease deduct these expenses from your taxes!
Another great thing is that more upcoming developers can now advertise their experiences without having to pay consumer prices for the Robux on-site or have to have an already existing “robux” flow aka. cash flow from already existing games. Very great update!
My only concern is; will website ads also be supported for the Ads Manager?
Fortunately, you don’t have to. Robux holds no value, until it’s converted into a fiat currency through the DevEx program (which will then count as income).
This is a good point, the new system will hurt the small games that make just enough robux to reinvest into ads, now they won’t have enough to sustain.
What you mentioned, is one way to look at the advertisement situation, however there’s an alternative view that’s totally centered on cost per play. (Which can actually make this advertising system beneficial for devs)
Over the summer I was able to sponsor my game and get 1 play per 4 robux (or 1.4 cents) Using that rate I would have gotten
Before Change:
$10 → 1000 robux → Buy Ad = 250 Plays
Game Generates 1000 robux → Buy Ad = 250 Plays
After Change
$10 → Buy Ad = 714 Plays
Game Generates 1000 robux → $3.50 → Buy Ad = 250 Plays (EXACTLY THE SAME)
So you get the same amount of plays for 1000 Robux, and additionally you can set your max bid to .01 per play which would get you 350 Plays per 1000 robux (since you get charged only when a player plays your game), which is technically a better rate than what I was able to get. (.01 bid is equal to a 3 robux CPP)
If you had an advertisement that had better than a 2.857 CPP, then this update will cause advertising to be more expensive, however this will probably end up benefiting creators as they’ll get to choose their CPP max.
The default bid for a sponsor is 0.05 ad credits which at the current exchange rate is 14 robux. My ads regularly pay < 6 robux per play with the current system and many people achieve significantly lower rates than that.
The abstraction of Robux into Ad Credits serves only one purpose; to encourage higher spend. The high value of a credit is no mistake; it encourages people to view “0.05” as a small bid and so maybe you increase your bid to 0.1 ad credits and bam you’re spending R$28 for a play.
It’s an opaque system designed to obscure spend in order to shore up Roblox’s flagging bottom line, nothing more.
The lack of ability to remove a card concerns me given how common Roblox account theft is. Any payments here should require two step authentication at a minimum.
As recently as this year it was possible to run sponsors and achieve 5R$/Play give or take.
The $0.2USD/Play minimum is 12X that at about 60R$.
A minimum this high defeats the point of having a bidding system like this.
Or atleast it does for devs.
For companies with massive marketing budgets? not so much.
This technically dosent matter - if you have a game making “x” amount of money you can still write off your robux purchases that you would have made for ad spends as long as you had the business “created” and kept “receipts” (which is automatically provided when robux is purchased) under the previously existing system
This would be an irrational and wasteful way of supporting the marketing for your game. Purchasing Robux (on-site, off-site or by any means) will always be more than the DevEx conversion rate.
Majority of large game developers have access to millions of virtual funds (Robux) worth tens of thousands of dollars - this is what they use to run ads, they don’t buy Robux, they simply use what’s already there. If it’s already Robux, it cannot be deducted as a business transaction as the nature of it was purely virtual and zero fiat currency involved.
Basically, the method you are proposing:
Robux Earned >> DevEx to Fiat @ 0.0035 >> Use Fiat to Buy Robux (Deduct as Business Expense) >> Run Ads
Not only is that incredibly inefficient and you lose a large portion of the Robux worth by exchanging to fiat and exchanging back; it would definitely be a pain in the rear end trying to prove that your purchased Robux was used for business and not for personal reasons to the IRS/HMRC or equivalent governing body.
tl;dr Since Robux (earned through Roblox) is virtual, not real money, it cannot be considered a business transaction.
I’m just speaking on behalf of the people that have done what I stated earlier, I’m sure there are many individuals and companies (As stated by Roblox itself) that purchase robux at retail price to run their current ads.
" If it’s already Robux, it cannot be deducted as a business transaction as the nature of it was purely virtual and zero fiat currency involved."
In order to purchase robux a financial transaction using real $$ is necessary which a company would write off as an advertising expense when filing taxes (with further support via sponsoring page so it doesn’t get audited and rejected).
Also the method you stated “I’m proposing” is not at all what I am suggesting or focusing on as I would argue it would be difficult to claim as a write-off robux earned advertising vs robux purchased for advertising. I’m discussing the robux necessary to even run ads so the conversation of what happens with robux earned doesn’t matter (at this point)
I definitely agree its an inefficient way to spend money overall so this new sponsoring system will help companies and individuals that have to purchase robux at retail price just to use the current system.
Main takeaway being that the circumstances that ad spends can be written off is only when real money is used to obtain robux - with regards to tax write offs whatever you do with your robux you earn from your game is hard to argue as a write off unless you have a system of cashing it in and then using it for robux again - assuming you wanted it show on your tax records but this would be very inefficient and wasteful.
Currently, we require a minimum of 10 ad credits to run ads, 5 credits per day with a minimum of two days. We recognize this is a significantly higher minimum budget than the previous Sponsored Experiences system. The new ad delivery system enables you to bid on conversions and requires more budget to help predict conversions. We are working on fine-tuning the delivery to support smaller budgets in the future.
We’re simplifying the process of collecting address information for running ads. In the coming weeks, we’ll be removing the mandatory address requirements for developers who want to run campaigns using ad credits. Originally, this was introduced to accommodate different payment methods, but we’re now streamlining the process to make it easier for ad credit users.
The conversion rate from Ad Credit to Robux is the post-DevEx rate. We recognize that, in the past, developers were able to use earned Robux directly for running ads. However, using a post-DevEx conversion rate enables easy comparisons between ads that are bought in fiat (USD) and ads that are bought using ad credit. Most importantly, ads will be delivered through an auction system.
The actual price you pay for ads is determined by the market: advertisers compete to reach the same audience. Advertisers may achieve a better return on investment with this change given that you can set max bids, target to reach the right audience, and are charged based on an auction.
Are you going to lower the max bid for sponsored ads?
With the current sponsored games, putting 10k into a sponsored ad I get about 581k impressions.
Converting 10k into ad tokens is about 35 ad tokens and if the max bid is still 1 for awareness that would probably average out to about 35k impressions which is a lot less unless there’s something I am not understanding.
Additionally it seems that ads are a lot less effective since last year, I ran a 70k week long sponsored ad or 10k a day last week and only got about 4,653,631 impressions and 7,316 attributed visits
Looking at a sponsored ad I ran in the middle of July 2022, I put the same amount 70k over 7 days or 10k a day and I got 394,489,775 impressions and 83,116 attributed visits
I’m not sure what the difference between then and now is but with the ads already performing a lot worse and then on top of that making it more expensive I am concerned with how this will play out.
CPP, then this update will cause advertising to be more expensive, however this will probably end up benefiting creators as they’ll get to choose their CPP max.
