BofA picks potential winners, losers in 'immersive reality' trend (NYSE:RBLX) – Seeking Alpha

“Immersive reality” – and its accompanying advertising opportunity – draws some focus from BofA in its series on themes for the next five years, and it’s likely to lead to benefits and costs for industry players as the environment shifts.
The researchers considered making augmented reality/virtual reality platforms a key theme, analyst Justin Post notes, but they’ve covered that in the past, and now turn their attention to the need for advertisers to get “immersive” in order to hold on to reach.
“Social media was a major innovation for Gen X and Boomers, but Gen Z & Alpha (born between 1997 and 2022) are shifting media consumption patterns towards experiences that mix elements of social, immersive, and user-generated content,” Post said.
“Younger consumers spend significant time in virtual spaces just hanging out, and they are more likely to be influenced by peers and experiences.” That means the lines between content and advertising are blurring.
Those consumers are more averse to traditional advertising, and with attention fragmentation, they’re harder for brands to reach, Post said. That means content that might not be very traditional “advertising”: “(1) brand driven experiences in the metaverse, (2) visual search, (3) augmented reality gamification, (4) augmented reality lenses, (5) nonfungible tokens/items, and (6) influencers/creator marketing.”
Those benefiting most from such a shift are those with exposure to immersive content creation and/or large content creator communities, including Roblox (NYSE:RBLX), Unity (U), Snap (NYSE:SNAP), Adobe (ADBE), and a number of private names.
Snap (SNAP) published a study showing return on investment for its AR “lenses” was six times higher than TV when it came to personal care/beauty ads. And BofA estimates users are engaging with Roblox’s (RBLX) “Vans World” experience for close to an hour per sitting, he noted.
Such new ad format categories add up to a $40B opportunity by 2028, Post estimates.
As for companies seeing some risk from the shift, they include Meta Platforms (NASDAQ:META), though Meta is “investing heavily in content, tools, creator acquisition and Metaverse, which could create big new opportunities.”
Most at risk, Post said, are ad-tech’s “pure intermediaries” that often serve as alternatives to Google (NASDAQ:GOOG) (GOOGL) and Meta (META) – those include AppLovin (APP), Digital Turbine (APPS), AdTheorent (ADTH), Viant Technology (DSP), and The Trade Desk (TTD) – due to their focus on traditional digital advertising and the need to transition.

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