Virtual Reality = A New Marketing Reality?

Since Facebook changed its name to Meta and announced the Metaverse as the future of social connection, I have been wondering how this will reshape digital marketing. Will virtual hubs completely take over and will brands adapt their marketing strategies to reflect such a new reality? Or is it merely a fad and it will pass without having a major impact on how brands communicate with their audiences?

Virtual Reality: Is It a Fad or for Real?

Because on one hand, virtual reality, augmented reality, and mixed reality are not new concepts (check for definitions here). Companies have been testing new approaches revolving around virtual reality and its hybrid forms for quite some time. Here are a few examples:

• IKEA Place: IKEA was one of the first mobile shopping ads to benefit from Apple’s ARKit (more information on what the ARKit is can be found here) and allows users to place IKEA furniture in their own homes. This experience beats the traditional catalog experience in terms of user engagement and, consequently, user satisfaction (source).
• AMC: a great example of how augmented reality can be integrated into your marketing without reinventing the wheel is AMC’s app through which users can scan movie posters to obtain additional content information (source).
• NETFLIX: as part of its promotion of season 2 of Stranger Things Netflix launched various AR lenses on Snapchat enabling users to dive into the world of Stranger Things and get hyped for the season launch (source).

The pandemic of course once again was a perfect accelerant as it forced industries such as the event and music industry to find new ways to get in front of an audience. Travis Scott’s Fortnite Show in 2020 attracted 12,3 million players (source). For comparison, the Oscars had a viewership in 2022 of 16,6 million in the US (source). Not bad, one might say.

So, How Big Is the Market?

JP Morgan is pretty bullish about the opportunities as well (source) and more and more brands develop concepts solely focused on virtual reality. Sneakers that can only be worn by avatars, luxurious real estates that exist only as bits and bytes, and so on.?

And if you think now, who would spend serious money on something like this, look no further than the video gaming industry: the market for skins - cosmetic add-ons that customize the look of game characters - is supposed to be around 40 billion USD a year (source). In Fortnite 70% of players spend around 85 USD per person on in-game items, the majority on cosmetics that don’t have anything to do with the actual gameplay:

58.7 billion USD - that’s the projected market size for augmented reality, virtual reality, and mixed reality combined by the end of 2022. That’s almost double the market size in 2021 but even this impressive number will be dwarfed by the expected market size by the end of 2024 which will be close to a whopping 300 billion USD (source).

So, the question of whether there is a market can be answered with a resounding “YES”.

How effective is advertising using virtual reality elements?

Looking at Virtual Reality from an advertising perspective research indicates that augmented reality ads spur curiosity and grab the users’ attention. A study conducted by Springer (source) suggests, that “replacing traditional advertisements with augmented reality advertisements enhances customer physiological responses and willingness to pay”.

Replacing traditional advertisements with augmented reality advertisements enhances customer physiological responses and willingness to pay.

For Marketers, this technology is a chance to stand out from the crowd and gain crucial ground in the battle for customer attention.

What’s the Bottom Line?

Virtual Reality, Augmented Reality, Mixed Reality, whatever you want to call it is for real and here to stay. The market is huge, consumer behavior promising, and smart marketers will try to outpace the competition by learning quickly. But just with other emerging platforms such as TikTok, it will take marketers time to understand how to use it effectively and maximize the return on investment. Because in the end what counts is the bottom line.?

That’s it for this week’s edition of the mrkt’insider. I hope you enjoyed the reading and if you did please ?? SHARE it with your friends and colleagues.

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