At the 2017 Singapore Motorshow, attendees built their custom dream cars in an elaborate Augmented Reality (AR) exhibit by carmaker Audi. Days earlier, halfway across the world, techies at the Consumer Electronics Show waited up to two hours to try the latest Virtual Reality (VR) campaign from dozens of global brands.
From conference floors to strategy rooms, VR and AR have piqued the curiosity of marketers and consumers alike. By most estimates, the VR/AR market could reach $108 billion by 2021, with AR taking longer to mature but accounting for roughly 75 percent of the market. Last year’s AR/VR success stories included Pokémon GO and Snapchat’s Spectacles, which quickly solidified it as the latest marketing technology darling.
But how real is all the hype?
As with all new technologies, VR/AR don’t come without challenges. Here’s a quick survey of the current state of VR/AR in marketing, who’s doing it best, and the key hurdles that modern marketers must overcome to leverage AR and VR to improve customer experience.
The Current State of VR/AR
Most experts say that 2016 was a mixed bag for VR/AR. Hurdles for Facebook’s Oculus Rift, HTC’s Vive and other key players resulted in an annual revenue of $3.9 billion—below the $4.4 billion projection. However, thanks to the success of Pokémon GO, AR brought in $1.9 billion of that total—a higher percentage of the market share than originally projected.
Growing pains aside, industry experts are still expecting healthy VR/AR growth between now and 2020. Statista data shows that VR gaming sales will account for a significant portion of this growth, increasing from $660 million in 2015 to a hefty $22.9 billion by 2020. And the unexpected success of Pokémon GO has companies like Google and Facebook setting their sights on AR. In short, marketers can expect to see a growing number of brands that can provide the platforms, and content, for their AR/VR marketing initiatives.
But projections of industry insiders aside, how are customers responding to VR/AR? According to one Greenlight Insights study, 62% of consumers feel more engaged with a brand that provides a VR experience, and 71% think brands that use VR are forward-thinking. In an age where Gartner predicts customer experience now trumps product as the top brand differentiator, that finding goes a long way.
VR/AR in Marketing Today
The customer drives today’s marketing landscape. In fact, more than 50% of organisations plan to implant significant business model changes to improve customer experience by 2018. It comes as no surprise that marketers are tapping into VR/AR to close the experience gap.
Early evidence shows that VR/AR can be effective tools for fostering user engagement, brand exposure and market awareness. A study from Nielson, for example, found that VR received a 17% higher emotional response than a 360 video, and engaged users for 16% longer. Forward-thinking marketers have begun adopting VR/AR to achieve the following key marketing objectives:
– Demonstrate product attributes and features
– Communicate brand mission at the point of sale
– Provide an immersive, branded entertainment experience
– Increase excitement and engagement at tradeshows
– Add a new dimension to traditional storytelling
VR/AR marketing is cutting across industries, but the Harvard Business Review expects that retail marketers will be a key adopter of this tactic and that they will transform our shopping experience in the process. Other industries tapping into VR/AR to enhance their marketing include travel (Marriott), automobile (Audi and Mercedes) and home decor (Ikea). Experts say that as the understanding of VR/AR continues to evolve, this technology will expand from purely mobile to in-store experiences.
VR/AR Marketing Success Stories
Across industries and time zones, marketers are embracing VR/AR—despite the hefty learning curve. Before we dive into the challenges, let’s talk about a few success stories.
– Bedtime VR Stories (Samsung): Despite its issues with the Galaxy Note 7, Samsung has proved itself to be one of the top VR/AR marketers. The Bedtime VR Stories app, which lets parents and their kids read stories together in a rich, vibrant VR world is a great success. The app uses VR and VoIP technology.
– Marriott Transporter: This VR phone booth does exactly what its name implies. This 4D Oculus Rift experience allows users to “transport” to travel destinations such as Hawaii and London—all from a booth equipped with a headset, wireless headphones and 4D sensory elements.
– Happy VR (McDonald’s): Global fast-food brand McDonald’s jumped on the VR bandwagon by introducing a Happy Meal box in Sweden that can be repurposed as a Google Cardboard VR Headset. The success of this campaign? Tying the VR experience into an iconic feature of the McDonald’s brand.
– JeJu Flying Bike (Innisfree): Last year, this Korean-based company launched a VR bike ride to promote its eco-friendly values—which gained rave reviews from visitors at the Shanghai Disney Resort.
– Pokémon GO: Although this isn’t a marketing campaign, per se, we have to include Pokémon GO based on its sheer impact. More than 75 million users tapped into this AR game, which allows players to interact with the outside world. It delivered $600 million in mobile revenue within its first three months and set investors’ and marketers’ sights on AR.
VR/AR is still largely uncharted territory. In addition to technical issues—an all-day battery life, for instance—marketers face several hurdles when implementing VR/AR campaigns to drive ROI.
– Creating content: VR/AR will be a booming industry, but content for these platforms will be an emerging market in its own right. In order to leverage VR/AR to its full potential, marketers must partner with agencies with specialised experience in the space, or cultivate these capabilities in-house. Complicating matters is the skyrocketing price tag of VR/AR video content—and the difficulty of navigating VR/AR storytelling.
– Understanding the user experience: To truly deliver value via AR, marketers must resist the urge of creating mediocre apps. Instead, they must work closely with data scientists and other technologists to truly understand how customers interact with AR and then incorporate that into their AR design.
– Integrating VR/AR into the customer journey: One study showed that a one-off augmented experience brought positive attitudes toward the application itself, but not the brand or product. However, by integrating AR into a customer journey framework, this marketing tactic has the ability to positively impact purchasing decisions.
– Making it mobile-friendly: Just as websites must be responsive, VR must also work for mobile. Goldman Sachs Research predicts VR/AR have the potential to be the next big computing platform—but they must leverage mobile to achieve that. Facebook CEO Mark Zuckerberg, says:
“The phone is probably going to be the mainstream consumer platform [where] a lot of these AR features become mainstream.”
Despite a year filled with both losses and wins, more marketers than ever are embracing VR/AR to deliver a next-level customer experience. In order to leverage this tech, marketers must lead the charge in developing high-quality VR/AR content and new customer journey models. In these key areas of marketing, the reality hasn’t fully caught up to the hype just yet.