This post is an excerpt from AR thought leader and Super Ventures partner Tom Emrich’s latest Medium Post. Entitled Advertising Enters the Next Dimension, it references ARtillery Intelligence data and commentary. It is excerpted with the author’s permission, and you can read the full article here.  

Advertising Enters the Next Dimension

By Tom Emrich

25 years ago, AT&T bought the first-ever banner ad on the web as part of its “You Will” campaign which fittingly featured commercials depicting an internet-enabled future. This 2D rectangle changed the world of advertising as brands and marketers gained a new way to reach the masses with a level of measurement never seen before.

Today brands and marketers are facing another transformation as advertising enters the next dimension through spatial computing.

Spatial computing is the shift of computing from 2 dimensions to 3 dimensions. To enable this shift, computers need the ability to understand space — the environment around it and everything in it including people. Computers are able to do this using sensors, such as cameras, and artificial intelligence.

Once computers understand space, we can use these informed computers to edit our real world by placing digital objects and information in it and view this all through a transparent digital screen like smart glasses or even our smartphone: this is Augmented Reality or AR.

Or we can put on device on our head (a head-mounted display or HMD) that completely occludes us from the real world allowing us to enter a completely simulated environment which we can walk around and interact in because the computer is sensing our physical actions: this is Virtual Reality or VR.

Like the waves of web, mobile and social before it (SoLoMo anyone), spatial computing: AR and VR will provide new opportunities for brands and marketers to reach, engage and understand consumers.

Here are just seven ways I see spatial computing evolve advertising and marketing.

1. The Evolution of Display Ads

Augmented Reality ads are not new. Marketers have been running ads in Snapchat for a number of years now. But a number of major changes on mobile have unleashed AR’s full potential as a killer new ad format which is expected to reach a $2.6 Billion ad spend by 2022.

The first change was with Snapchat itself with the introduction of AR programmatic advertising in 2018 which dramatically reduced the price of augmented reality advertising to the same price as regular Snap ads.

The second change was in Facebook’s support of 3D and AR ads in the newsfeed starting with a pilot with Michael Kors which used AR to let consumers try on sunglasses. Facebook had previously tested AR ads in Messenger with a variety of brands reporting successes: ASUS saw 10 times the engagement with their AR experience; Nike sold out of the Kyrie 4s shoe in under an hour; and Kia increased engagement with its dealers.

The third major change came from Unity which recently announced that it will now be serving AR ads on mobile. Unity has one of the world’s largest mobile ad serving businesses and at the end of last year they partnered with Fossil to pilot this new ad format in mobile games.

Finally, a breakthrough in WebAR thanks to startup called 8th Wall makes mobile AR ads possible outside of an application. 8th Wall recently partnered with Amazon Sumerian on a WebAR ad experience where, with just a click of a banner ad, an AR experience placed a 3D Spiderman into your space for you to interact with directly in your mobile browser.

With opportunities both within large app ecosystems and outside these closed gardens with WebAR, there has never been a better time for marketers to move beyond the simple 2D banner ad.

One huge opportunity for AR ads which goes beyond the 2D banner format is its ability to allow users to “try before you buy”. Experiences like the one below from Michael Kors in the Facebook newsfeed gives users the ability to put a pair of sunglasses on their face rather than having to imagine what it would look like on them from a picture of a model. This type of ad also lets a brand market multiple styles and products within a single experience.

Michael Kors is not the first to tap into this opportunity. Ikea, Sephora, Warby Parker and Houzz are just a few more brands using AR to help users try out virtual goods to convert to physical sales. AR try-on experience have been reported to increase sales, Houzz has said that AR ads make consumers 11 times more likely to buy, and they have the potential to reduce returns and improve overall customer satisfaction.

But AR try-on is not limited to smartphones. Instead of displaying signage in-store which features a model marketing merchandise, let consumers see themselves in the ware with the help of a Magic Mirror. Magic Mirrors, like the one shown below from FXGear, require no download or device to be able to show a consumer what they look like in inventory that may or may not even be in store.

In virtual reality, the try before you buy opportunity is realized as a simulation which provides a safe environment to use new products. This is exactly what Lowe’s is doing with its Holoroom. The Lowe‘s Holoroom is being used to let customers test drive power tools and other home renovation equipment so that they feel comfortable not just buying it but also using it when they get home.

The hope is that the interactivity and training will lead to increased purchase conversion. Lowe’s says that early versions of a similar VR training program for employees led to a 127% increase in confidence compared to traditional training procedures — they are hoping to bring these same results to the customer space.

Read the rest of Emrich’s article here, and check out our recent report on AR advertising here

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Disclosure: AR Insider has no financial stake in the companies mentioned in this post, nor received payment for its production. Disclosure and ethics policy can be seen here.