The Future of Advertising and Commerce Lies With AR and VR
The big surprise for XR in 2020 was high demand from brands for AR and VR solutions to connect with consumers and recreate impulse-led commerce. Social media platforms are integrating AR functionality at an even faster pace. Virtual music events, sports and gaming have shown tremendous user growth and are using mobile AR and web VR to deliver richer experiences. And consumer platforms like Snapchat, Facebook, Epic, Niantic, Apple, Steam are positioning themselves to be the next commerce and advertising juggernauts.
As has always been the case with emerging technologies, consumers adopt them in small increments. Aside from rare groundbreaking new products like the iPhone, consumers are looking for simple, small improvements to digital solutions and devices that they are already familiar with. Because for the average consumer, the barrier to experience — or unfamiliarity with a new technology — is more costly and disruptive than its potential benefit.
At the closing of 2019, the common belief was that new digital tools and new immersive technologies like AR and VR, visual search, and AI-powered virtual assistants were going to be adopted slowly in the consumer sector. That they would start to really get traction in 2023, with the projected mass launch of multiple types of AR glasses and proliferation of 5G. But the COVID-19 pandemic has greatly accelerated consumers’ need to interact with one another, with products, with information and with entertainment — remotely, in a more immersive way.
Anywhere/Anytime Redefines Omnichannel as Consumers’ Behavioral Changes are Here to Stay
Consumers’ behaviors have forcefully and abruptly changed and will keep modifying future interactions between brands and consumers. Consumers are often unable or unwilling to go to a store, more cautious about germs, crowds and travel. They are rediscovering and adapting to a life lived much more at home. So product interaction, brand interaction, impulse buys have to be delivered anywhere, anytime. This is expanding the definition of omnichannel to fully include immersive technologies like AR and VR, delivered seamlessly through AI-powered applications.
Consumers need to try-on, try-out or at least feel like they can interact with products virtually — from make-up, to shoes, to cars, to clothing, to furniture. They need to step into a brand’s world and get a sense for what it represents without walking into a perfectly set up flagship store. Brands have also clearly identified their needs.
Virtual music performances, sports and gaming are showing incredible user growth. They are blending with commerce and are the most promising platforms on which to develop experiential shopping. Travis Scott’s concert on Fortnite — attended by 12 million people — grossed him $20 million, in large part due to the in-event sale of merchandise.
A recent Accenture study points out that 47% of consumers say that immersive tech makes them feel connected with products and that they would pay extra for a product if they could customize or personalize it. Their motivations for trying out immersive technologies when shopping online include:
- 52% — viewing products without visiting the store
- 42% — assessing product features and capabilities
- 42% — experiencing products before purchasing
- 39% — increasing confidence in purchasing decision
- 29% — changing, customizing or personalizing products
Mobile & Web AR/VR Solutions Address Gap in Current Tech Capabilities
Unexpectedly, the demand has surpassed the offer. Since XR (i.e. AR and VR) devices and the infrastructure needed to deliver true XR experiences are still not mainstream, the ecosystem is rushing towards the production of cross-platform solutions in learning, communication, shopping, gaming. The purist view of XR — that true AR or VR is only delivered via dedicated face-worn equipment like the Quest or HoloLens — is giving way to the quick integration of AR/VR in web and mobile. And consumers are responding very well, being more than willing to give up a deeper level of immersion in exchange for using a more familiar and accessible device.
So AR and VR, first thought of as separate tools or disciplines, are merging with more traditional digital solutions and are becoming commonplace. We now expect AR elements and functionality in communication tools through filters or lenses, in gaming apps, when shopping for furniture (Wayfair), when trying on make-up or hair colors (11 beauty brands offering AR try-on), when trying on sneakers of any kind (Gucci). We expect to purchase from an AR pop-up store while communicating with friends on Snapchat (American Eagle). Similarly, we expect web-based VR functionality when browsing through a store (Dior), watching a virtual concert (Travis Scott on Fortnite), or virtually participating in a fashion show (Balenciaga).
Gaming and Social Media Platforms Will Compete With Pure Commerce Platforms
A new competitive landscape and digital partner ecosystem is emerging. Large experience-led consumer platforms like Snapchat, Facebook, Epic/Fortnite, Niantic/Pokemon Go, Apple and Steam seem to be perfectly positioned to create the future of digital consumer interaction, expanding from their leadership in gaming, entertainment and communication. These platforms can rely on:
- Their large user base
- On-platform social interactions and influencers
- The integration of AR/VR elements
- Their proprietary game engines or AR development tools
- The hardware (most of them)
- Pre-established integration with eCommerce and payment systems
- A library of 3D assets, created or crowd-sourced
- Partnerships with infrastructure players for distribution of heavy content
- An established developer ecosystem
- Access to users’ behavioral data
The Bottom Line — What Does This Mean For Brands And XR Ecosystem Players?
The real transformative future of commerce and advertising is not just based on adding emerging tech to existing list of product pages; rather it lies in truly bringing shopping and ads inside any experience that a user might be immersed in. Virtual music events, virtual sport events and gaming in particular are ripe for the development of these new commerce-enabled interactive solutions and experiences.
To start, brands need to create a 3D library of their unique assets — products, stores, manuals, but also manufacturing facilities and machinery. Then use and distribute the assets internally — for product design, training, digital catalogs — as well as externally for ads and commerce on entertainment, sport and social media immersive properties. If you’re new to this, a good place to start is with a virtual product catalog — and then build from there.
Easy-to-use tools to create 3D objects are becoming commonplace. For example, Unity is integrating RestAR — an AI-based 3D capture tool — into Unity Forma, and Vntana, Marxent, CGTrader and others provide similar tools. And on the advertising side, Snap is partnering with Unity to bring its Snap Kit tools to game developers and increase the reach and 3D richness of in-game ads.
Experience-led social media and gaming platforms need to capitalize on their audience and events — like virtual concerts, virtual sports, gaming and influencers — to grab part of the ever-growing digital commerce market. They need to integrate new functionality on top of their gaming and communication engines to provide seamless in-event commerce and advertising.
What we can see emerging is a new paradigm for shopping and advertising, where users’ full immersion in an experience leads to themed, impulse purchases.
