“Data-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.
Today’s column is written by Adam Foroughi, co-founder and CEO at AppLovin.
Virtual reality technology is far from mainstream, but carries incredible implications for advertising. There are already 175,000 development kits for Oculus Rift in the market ahead of a 2016 public launch, while Gartner estimates 25 million headsets will be sold by 2018.
Once it takes off, it will evolve and could potentially revolutionize not just advertising, but how we experience marketing in general. The user experience of advertisements could become seamless once users are immersed in content they really love, and because the medium is so engaging and emotional, users could well be primed to make more transactions.
The data gathered from virtual reality technology could inform business decisions in an entirely new way. Brands, for example, could tease products before their release with consumers in the virtual reality world and gather data on consumer interest before making production and marketing decisions.
Advertisers should follow the latest developments in virtual reality – it has the potential to become a huge market they can’t afford to ignore.
Gaming: At The Head Of The Pack
Video gaming platforms are the undisputed leaders in the virtual reality technology space. IGN’s review of the latest advancements in virtual reality notes that it has become more natural feeling because of developments by the major gaming platform players. By 2018, Gartner predicts “immersive devices and virtual worlds will have transitioned from the fringe to the mainstream.”
Game developers have been pushing the envelope from a technical standpoint, and it will only snowball from there. We’ve come a long way from “Pong” to “Witcher 3.” It’s conceivable that within decades, virtual games will be nearly indistinguishable from real life, making this realistic space a field ripe for immersive, native advertising. I believe virtual reality technology will take what we now think of as “native” to entirely new levels in a variety of ways.
The Reverse Product Placement
We’ve seen product placements used extensively in gaming, but with virtual reality technology, we might see more reverse product placements, which is when products are created and distributed in a virtual or fictionalized setting before being produced and marketed in the real world. A great example is Bertie Bott’s Every Flavor Beans, which were first introduced in the Harry Potter books before being manufactured in real life by Jelly Belly.
In virtual reality, brands could introduce products to consumers before going into production, in essence testing consumer interest, similar to how some clothing brands had storefronts in the online virtual world Second Life, whose heyday was almost 10 years ago.
But brands also will be able to create entire environments infused with their messaging that consumers will be able to deeply engage. Coca-Cola, for example, pulled off a virtual reality event during last year’s World Cup that gave users access to different parts of the stadium, including the field. The value of the experience wasn’t just in the branding, but in giving viewers access to something they otherwise would have no access to – thanks to Coke, said Matt Wolf, Coca-Cola’s head of global gaming.
And as we all know, wonder and gratitude do wonders for brand loyalty.
Virtual Reality: A Slower Trajectory Than Mobile
While some bullish experts think that widespread adoption of virtual reality technology will be fast and furious, quickly expanding beyond the gaming world, most others think it will take hold more modestly.
“HMD (head-mounted device) technology is expected to have a different and slower trajectory over the next few years compared with the fast adoption that was seen with the introduction of smartphones,” Gartner indicated in late 2014.
Nick Coronges, global chief technology officer for the agency R/GA, puts it another way: "We might be where mobile was in 2005."
It’s likely going to take longer and more effort because head-mounted device technology is not an integrated part of consumers’ lives.
We can, however, look at the history of mobile marketing to understand the opportunity that virtual reality may present for advertising: In 15 years, mobile ad spending has ballooned from next to nothing to $40.5 billion in the US and $100 billion worldwide.
Virtual reality marketing could become another big channel for brands, but in order for that to happen, it will take someone to nail both the hardware and software. Only then can the advertising opportunity explode as the platform gains wider adoption.
Industry Leaders To Follow
While several companies now offer virtual reality hardware or say it’s in production, mainstream brands should keep an eye on a few in particular.
One frontrunner is Oculus, which Facebook bought in 2014 for $2 billion. Oculus plans to launch a head-mounted display in early 2016. Given Facebook’s reach, Oculus is bound to take significant market share beyond tech nerds and gamers. CEO Mark Zuckerberg has already talked about creating social apps for it and developing immersive 3-D content. Facebook has placed its bet early that virtual reality is where people will be en masse.
Then there’s Sony’s Project Morpheus, which one reviewer says is nailing it with immersiveness and great storytelling. Its shark-infested sea dive app called “The Deep” did “tranquil beauty far better than horror or suspense.”
Also keep a close eye on HTC’s headset Vive, which has received rave reviews for offering a mind-blowing physical experience. One reviewer notes that it offers an incredibly authentic, bodily sense of being truly transported. “Strap on the Vive and you are somewhere else,” he says. “I slapped at fish in a shipwreck, walked like a giant through a battlefield, cooked in a virtual kitchen, and it felt so unbelievably real.”
Virtual reality is not just a burgeoning niche of console gaming. It represents a whole new frontier in human experience, along with new eras in commerce and advertising.
Until virtual reality platforms mature and their audiences go mainstream, we can only guess exactly how creative will unfold. Maybe music fans will have front-row, brand-sponsored seats at concerts, even if they’re thousands of miles away. Perhaps shoppers will browse in virtual malls to try on items before the real things are shipped home. Maybe virtual tourists in Times Square will see the iconic billboards, only they’ll be populated with ads from programmatic inventory.
All of these are “maybes,” but one thing is certain: It’s going to be amazing to see how great minds in advertising take on this new challenge.