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Jan 26

Looking Ahead: What role will Virtual Reality play in Marketing?

       

In: Strategy Insights

If you’re like me, virtual reality brings to mind movies like Total Recall and Minority Report where people pay good money to immerse themselves in an alternate universe and live out their wildest fantasies. While this is still one aspect of VR that’s being developed, its broader market implications have dramatically shifted since Arnold Schwarzenegger took that virtual vacation to Mars back in 1990.

“It has been forecasted that around 15m people will be in another reality by the end of 2016, and we can expect around 38 million people to own a virtual device of some kind by the end of 2018.”

While VR’s immediate impact will be seen first and foremost by the gaming community, the new reality is one that integrates both consumer enjoyment and branded content to engage users and drive sales much more effectively than that banner ad dying at the top of your web page. The real question is how far beyond gamers and sci-fi buffs will virtual reality go?

Augmented Reality and Virtual Reality: What's the Difference?

The first step in understanding how AR and VR are going to impact your marketing strategy is to fully understand the difference between the two. While VR is a wholly immersive experience, AR adds a more interactive layer to the world around us. Think of Google Glass layering restaurant reviews over a street you’re walking down. While the success of Google Glass could be considered dubious at best, it’s possible the world wasn’t quite ready for that level of technological integration on a consistent basis. Or that it just wasn’t done right.

Usher in the next big thing: Microsoft HoloLens. While Google Glass was made to be worn casually, the HoloLens is a singular, dedicated AR machine. Though the headset itself seems clunky and akin to a historical concept of future technology, Volvo is already embracing it to showcase a car they haven’t even built yet. Augmented reality has much greater potential as a market force in the near future due to its greater adaptability across industries as compared with VR. In fact, AR could see its market reach grow as far as the smartphone and tablet market extends today.

One industry in particular has found early success adopting AR strategies: the consumer goods space. And it makes sense. Not sure if that table will look good in your dining room? You can project a hologram of it to find out. Similarly, the Home Depot app allows users to see what a new front door or new bathroom fixtures would look like just by holding up their phone to different rooms in their house. The implications of this extend to everything from “trying on” a new dress in the comfort of your bedroom to painting your living room 15 different colors in ten minutes.

The real goal of AR marketing is to make everything easier and more engaging for the consumer. With nearly 70% of Americans in 2015 shopping online at least monthly, and 33% shopping weekly, marketers should be focused on removing barriers and making those transactions as seamless and exciting as possible. When you don’t have to leave your couch to find, envision, and purchase a new one, the sales funnel becomes a much smoother place.

Where is Virtual Reality Today?

Unlike AR, VR is an all-encompassing adventure and you certainly can’t walk down the street while you use it. The biggest event on the horizon for VR today is the Oculus Rift. Since they opened for pre-orders on January 6th, they’re already back-ordered four months. This is particularly impressive considering the $600 price tag. And that doesn’t include the high-powered gaming computer with a compatible graphics card you’ll need to run it. While the Microsoft HoloLens has struggled somewhat to merge the holographic world with the real one we live in, the Oculus Rift creates the entire world for you. As Peter Rubin of wired.com describes it:

“As far as your brain is concerned, there’s no difference between experiencing something on the Rift and experiencing it in the real world.”

According to a Deep Focus survey of 1,203 young adults, 51 percent had heard about Oculus and similar devices, with 41 percent signaling they were interested in trying one out. As a counter-balance to the top-of-the-line Rift, users can also experiment with VR using just their smartphone and Google Cardboard, or opt for the $99 Samsung headset which is compatible with all newer Samsung smartphones. Whichever way you slice it, more and more consumers are interested in experiencing virtual reality for themselves. And with a highly captivated audience who is ready and willing to interact with your brand, the marketing implications are almost daunting.

The Double Edged Sword of VR Marketing

Imagine visiting a luxury travel destination and walking down the beach before you even book a flight. What about test driving a car from your living room, or sitting front row at a concert that’s happening on the other side of the world? Obviously, not all businesses are equally primed for VR marketing. As a B2B services company, you may not need to give potential clients the real experience of walking through your office and sitting in on your conference calls. For small businesses, the cost may be the most prohibitive aspect. With a three-minute video often costing upwards of $1,000,000 to produce, there will have to be a significant leveraging of cost before the playing field is leveled.

Additionally, companies need to be hyper-aware of the world they are plugging consumers into. A three-minute virtual helicopter trip over the Alps can be an exhilarating experience, but a poorly done campaign can also leave a user feeling sick for the rest of the day. Consumers will judge a poor VR campaign much more harshly than an annoying television commercial they can simply tune out.

The sharpest side of this sword is whether VR campaigns will truly be successful in the long run. With a series of false starts in its history, it’s as yet unclear whether or not these multi-million dollar campaigns and billion dollar investments are going to provide the ROI that they’re hoping for. While driving a virtual Volvo is certainly a novel experience, can it ever truly replace the feeling of sitting behind the wheel of a new car? And the $64,000 question: will driving a virtual Volvo actually increase sales of real Volvos, or just the number of virtual drivers?

So What Does It All Mean?

With traditional advertising methods dying in the wake of more engaging experiences, some businesses are eager to adapt, and many will be quick to jump on the VR bandwagon. While something as sexy as virtual reality can be hard to pass up, it’s a relative certainty that companies will spend and fail as the space continues to take shape.  High-end VR systems like the Rift will likely find their place at home in the gaming niche, and cheaper alternatives like Google Cardboard (and its accompanying apps) will bring Virtual Reality to the masses. But before you start penciling “virtual reality” into your marketing budget, consider the broader market applications and lower barriers to entry found with AR. It may well be the better place for most to put their virtual marketing dollars as the burgeoning industry continues to develop.

 

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