Forrester has reported that the U.S. digital marketing spend will reach $120 billion by 2021. XR technology and services — including Virtual Reality (VR), Augmented Reality (AR), Mixed Reality (MR) and 3D — is expected to generate over $200 billion in revenue that same year. As a business on the forefront of combining new advertising techniques within these immersive environments, we whole-heartedly believe ad spend on XR will take up a large chunk of that pie in 2021.

To date, much of the attention in XR has focused on developing hardware and content, but brands and publishers alike understand that to realize the promise of that $200 billion in XR revenue will rely on the development of a robust and efficient XR ad platform. And we believe that there is no day like today for brands and marketers to get ready to engage their audiences in these new platforms.

Advertising in AR and VR is unlike any type of traditional 2D advertising done before. Forget banner ads. Forgo pre-roll videos. Consider pop-ups long gone. These ads are too clunky and obtrusive. Brand interaction in XR must now be personalized to each user in a natural, non-disruptive format, so as not to take away from the user experience. This is not just us saying that, users expect it, and poor user experience is a big reason why adoption of this tech is still in its infancy.

As this space heats up, and if you, as a brand, fail to think about XR integration for your ad strategy, it’s almost guaranteed that you will also fail to capture the attention of new consumers. These environments are primed for consumer interaction and benefits include the promise of higher engagement levels, successful pinpoint marketing and instantaneous purchasing. What more could you ask for?

To expand, below are just three of many reasons why brands need to consider allocating budget to XR in their ad strategy, starting now:

1) Users Are More Engaged

A recent study found that emotional engagement among potential customers is 27% higher in VR than in 2D. And “not only were VR participants highly engaged, but they were in a highly-engaged state for 50% of their experience.” Because of VR’s “hyper-social effects”, it can create deeply emotional connections and positive brand associations in a very short period of time. Marketers should take note.

For brands, there are no advertising shortcuts in these environments. To engage, they need to carefully balance the exploratory element and storyline flow that users have come to expect within XR environments. The goal here is to effectively divert attention to key branding moments without disrupting the overall experience. Brands that seamless integrate their products with the environment are set to earn the respect, and eventually, loyalty, of the consumer.

2) Users Share Their Location

The Pokemon Go craze introduced AR to the masses — almost overnight in terms of growing adoption — taking just 19 days to reach 50 million users. Outside of the massive amount of interest, the insane amount of data that was shared by consumers participating — especially in regards to their location — should definitely turn marketers heads. As mobile devices are the driving force behind AR, interaction in these environments within these platforms will help boost “pinpoint marketing” and aid in serving up the right ad at the right time and place.

For advertising — second to only the message — timing reigns supreme. In pinpoint marketing, you are able to take in account the consumer location, the time of day, personal profiles and buying patterns for relevant targeting. If you manage to deliver the ad at the right time and place to a very captive XR environment — the effect can be immediate in closing a sale. Predictive analytics at its finest!

3) Users Can Shop for Your Products. Instantly.

XR environments are set to reinvent the shopping industry and how people review/purchase products. And it’s happening now. BMW created a VR app using the Oculus Rift headset that provided people with a virtual product presentation and the ability take a test-drive. As Forbes has reported, virtual and augmented reality is giving home buyers and sellers a new way to experience properties through 3-D walkthroughs, virtual staging and even 3-D modeling for building sites under construction. Clothing, accessories and make-up can all be “tried-on” in real-world settings, and more.

In the 3D world, consumers will have the ability to interact with the brand they are seeing, and then buy every single item in their environment that they see, as they see it. One simple click and its purchased. See where I’m going here?

With new AR and VR developments popping up every day, it is truly an exciting time for XR technology and the potential for advertising. Industries from the obvious — gaming and entertainment, to the logical, such as real estate and retail, to the inspired, including healthcare, education and engineering — are all making investments in XR. And they are also expected to continue to adopt and integrate the technologies in an effort to attract and improve customer experiences and drive operating efficiencies. Innovative marketers need to learn how to tell their story within these new formats. And they need to learn now. If not, they risk not being part of what could be one of the most significant transformation in the global economy in a century.

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