Digital marketing has seen a massive upswing in the past decade, with search engines and social platforms delivering millions of sponsored messages from advertisers every minute of every day. The competitive nature of advertising has, however, created a new problem in which advertisers are seeing diminishing returns on every advertising dollar, causing their overall ROI figures to drop significantly. This has opened the door for novel technologies like augmented reality and virtual reality to enter the arena as untapped advertising options.
Digital marketers are well aware of the limitations that current digital display ads are facing. These challenges include ad blockers and a growing intolerance from users toward digital adverts. A 2017 report by PageFair showed that ad blocking was up 30% between 2015 and 2016, and some 615 million devices were blocking ads as of December 2016. This trend is expected to continue to rise. Consider Adobe Digital Insights’ 2017 report , which shows that internet advertising costs are up 12% over a three-year period. This increase is five times higher than inflation, meaning that companies are paying more for advertisements that are reaching fewer people.
Augmented Reality Basics
Augmented reality has been utilized by global heavyweight Coca-Cola, which recently kicked off a new AR campaign with Alipay to help celebrate Chinese New Year. Other big players that have experimented with AR include Nivea, Starbucks and Volkswagen. The efficacy of these campaigns remains debatable, though, as many consumers see this avenue as more of a gimmick or novelty than a legitimate advertising tool.
Global augmented reality advertising spend (paywall) tells a different story, however. These figures show an almost 100% jump in spending, from $6.6 billion in 2016 to $12.8 billion in 2017. When we look at projected trends (paywall) for both AR and VR technologies combined between 2016 and 2020, the figure skyrockets to a potential $215 billion in 2021 if adoption rates are high.
The best current example is the runaway success the mobile AR game Pokémon Go experienced in mid-2016. The popularity of this game led to partnership deals with Sprint, McDonald’s and Starbucks.
AR technology is currently in its infancy, with large players such as Microsoft, Apple and Google only now working on the first iteration of devices and software development. Manufacturers are expecting wearable AR tech to be the next big thing, with products like Microsoft’s HoloLens and Intel’s Vaunt looking to integrate people’s digital lives more effortlessly than ever before. Google’s web AR initiative removes current barriers that are present in the existing AR frameworks. Even Apple is rumored to be working on wearable technology.
Virtual Reality Basics
VR is an immersive form of digital entertainment. Sensors allow head movement to alter content to give users the impression of perspective and motion, and the end result is eerily realistic.
Another spin-off technology that has emerged thanks to VR implementations is 360 video, which is where the majority of VR advertising efforts will likely be aimed in the future. Some automotive manufacturers, including the likes of Audi and Porsche, have already begun offering their clients a VR showroom experience that allows customers to view the interiors of their vehicles in different configurations and colors.
The biggest hurdle that VR manufacturers have to clear is that of pricing, which will ultimately decide how accessible the technology will be for future consumers. VR hardware in its current form is prohibitively expensive for the majority of consumers, with a price tag of $300-$600, not including additional gaming consoles or PCs.
The technology’s price tag still makes items like these far from accessible for the average consumer, but in the near future this will change, just as the personal computer did in the 1990s.
The Future Of VR And AR
The most important challenge that the new VR/AR world will hold for advertisers is ad placement. There will be no place for display ads, no video pre-rolls and no header bidding, so if those are no longer in play, where will the ads be placed? How will the publisher make money, and how will the advertiser gain traffic?
As the technology catches up with the vision of advertising within VR and AR gaming environments, we will start to see more engaging and interactive advertising content being pushed to consumers. Traditional billboards will give way to AR-designated spaces, allowing 3D content to be streamed directly to consumers, while specially created VR content will start to appear in online games in the form of in-game advertising.
To understand just how much VR advertisement and placement will change, imagine this scenario: You are online at your favorite virtual jazz bar. You look across the table and see your friend drinking a cold beer. At that exact moment, the AI system will recognize that beer and make a purchase suggestion to you. You will then be prompted with a one-hour delivery option of that same brand of beer via Amazon drone, and a simple yes or no will complete the transaction or cancel it. Another scenario will have you playing your favorite virtual reality game or watching a movie, and AI software installed in your virtual reality hardware will determine the best possible product placement for a bottle of Coke or Pepsi (depending on the market demographic that you happen to fall under) within the movie/game frame – seamlessly.
This is a lot to digest, but there is a brave new world of marketing and advertising waiting just behind the next curve in the road. Are you ready for it?
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