Alex Rahaman: What is the future for AR-based advertising?

Alex Rahaman, CEO of NEXD, and NDA’s monthly columnist, is an adtech pioneer, founding the first mobile DSP, StrikeAd.

It’s always the way. You read a review for a new restaurant/film/piece of tech. Everyone’s singing its praises and you can’t wait to get to try it out yourself. Finally, you get your chance: and after all the suspense, all the expectations, you’re left feeling a little disappointed. 

Such is the case of augmented reality (AR) which became a household phrase back in 2012 with the launch of Google Glasses, the now infamous, ill-fated smart glasses. AR, not to be confused with virtual reality (or VR), is the overlay of digital content on top of the real world. This can be done either with a phone’s pass-through camera or a dedicated headset.

The technology is doing wonders for industries like construction, where workers need extra guidance for project planning, for underground construction and for accurate measurement.

For many years, AR was considered the next big thing that would revolutionise the ad-tech industry. And, as with many things dubbed revolutionary, it hasn’t quite lived up to its initial promise.

Less of a bang, more of a fizzle

The reality is, AR has never really taken the industry by storm in the way that some industry professionals had predicted. For some, it’s been far too gimmicky for widespread industry adoption; for others, there’s been privacy and security concerns

And we’ve certainly seen a slew of negative headlines recently, from Oculus’ CTO, John Carmack, suggesting that consumer AR is over-hyped, to Magic Leap’s retreat from the consumer market, to the final nail in the coffin for Google Glass when the digital giant announced the roll out of its final update to the system.

Should we then assume that the end is nigh for AR-based advertising?

Not quite. But let’s face it: the technology advances in AR haven’t yet lived up to the hype and excitement surrounding it. As the XRAA whitepaper points out,  there are certainly mobile apps working in the AR space but “AR technology offered on the web is nascent and browsers do not yet support tracking very well.”

Trying to run before we can walk

As far as I’m concerned, we’ve all been getting a little too ahead of ourselves; which is hardly surprising – it’s always exciting to witness the next big thing come to fruition. And I still believe we eventually will. 

Allison Wood, CEO of Camera IQ predicts that AR-based advertising will account for between 10% and 25% of digital ad spend by the end of this year and research firm, SuperData, has forecasted that by 2022 AR will generate $19B in revenue. The fact remains that what excited us so much about AR seven years ago is still relevant today.

What’s great about AR is the level of engagement that can be generated with users. In a world where some consumers are experiencing digital advertising fatigue, AR enables brands to remove the friction between advertising and content, resulting in immersive advertising that delivers unique data points, in addition to brand uplift.

And there are definitely signs of movement within the industry to suggest that AR will be a dominant medium in the future. Technologies like 5G, WebGL and cloud processing are of course continuing to develop. Apple recently announced its plans to release its first AR headset in 2022, followed by a pair of AR glasses the following year. 

Google has also revealed it has been working on its AR platform, ARCore, and that it will be releasing new upgrades as part of its new Depth API that will enable brands to perform occlusion, or in layman’s terms, the ability to block an artificial object from view with real-world objects. This will essentially make the AR experience all the more realistic for users.

There have already been some very promising stories coming out of the industry to suggest the hype will be justified in the end. One of those is “AR try-on” which allows users to overlay filters on an image of themselves – a perfect try-before-you-buy option for ecommerce. Take the example of Garnier and Modiface who launched a tool to allow users to try out a new hair colour before buying it.

And I probably needn’t even mention the example of Pokémon GO which reached 10 million downloads in a record 7 days. According to Slant Marketing, 71% of Pokémon GO players have visited a business simply because there was a PokeStop or gym near the location. This type of location-based AR could prove a fantastic medium for drive-to-store advertising.

Clearly, we shouldn’t be too quick to dismiss AR-based advertising. Sure, the adoption rate has been slow, but the campaigns that have been run using AR have ultimately delivered what they promised: higher engagement levels.

For me, that’s key. After all, at Nexd, our reason for being is to enable brands to develop highly creative and thoroughly engaging advertising content – hence why I’m so interested to see how AR technology will evolve over the next few years. And once it does, the possibilities for advertisers will only be hindered by the limits of their imaginations.

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