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Tis the season for predictions. In fact, our research arm ARtillery Intelligence recently released a report that examines the lessons from 2021 and the outlook for 2022. So to add to the chorus of next-year predictions, we’ve extracted a few of the report’s takeaways.
Specifically, we’re talking about predictions for AR. And we’ve pulled out three of the report’s many 2022 projections below (more to come here in the coming weeks). And yes, we’ll invoke the m-word. Metaverse mania is everywhere, but – spoiler – that could die down.
As background, there are a few metaverse tracks. The one that you likely hear more about involves virtual worlds that host synchronous activity among far-flung individuals: an “embodied internet”, as Mark Zuckerberg calls it. This is often discussed in VR contexts.
The other (less-discussed) track involves a real-world metaverse where geo-anchored data triggers AR devices to reveal digital content that goes beyond physical objects (a.k.a metavearth). This metaverse track is truer to the Greek root “meta,” which means beyond.
With that backdrop, here are three predictions for what could happen at the intersection of AR and the metaverse. And because we often disparage broad predictions that don’t have any teeth, we’ve included action-specific or figure-based statements in each prediction.
1. Metaverse Mania Cools Off
Though the metaverse is a legitimate principle with ample promise, its fully actualized arrival is years or even decades away. That goes for both metaverse “tracks” outlined above, but is especially true for the grand vision of fully-immersive fare from books like Ready Player One.
But you may not get that from the blue-sky metaverse musings cramming up the interweb, which frame it as imminent. As Scott Galloway likes to say, “the metaverse is a consensual hallucination between Mark Zuckerberg and the media.” That could be true in the near term.
We believe this means one of two things: 1. We’ll be talking about the metaverse with the same frequency and intensity for the next several years until it comes true. 2. When society’s immediate gratification for these grand visions isn’t satisfied, metaverse mania will cool off.
We believe option two will occur, as any metaverse outcomes in the next year can’t possibly live up to the hype. So the result will be disappointment in the wake of an over-promised metaverse. It won’t go away.…but you’ll no longer see metaverse headlines in USA Today.
Put another way, the metaverse as a topic and talking point will live on in immersive tech circles, such as the AR and VR industries, while metaverse building blocks make meaningful strides. But the mainstream public discourse won’t continue at its current volume.
2. AR Ad Revenue Approaches $3 Billion
One of those metaverse “building blocks” that’s here today is AR commerce. And one subsegment of that broader category is ad placement. This is a leading AR revenue source at $1.98 billion in 2021. Snap has especially latched onto it as fuel for its ad revenue growth.
To further define this, paid AR ad placement takes form in branded lenses that companies pay to amplify on AR networks like Snap and Facebook. It’s driven by Gen-Z’s affinity for camera-based experiences, brands’ attraction to 3D visualization, and continued ROI validation.
Hardware evolution such as LiDAR will enable AR lens leaders like Snap and Meta to offer more robust rear-facing lens campaigns. This helps them to evolve from front-facing (selfie-based) lenses to those that augment the broader canvas of the physical world (more ad dollars).
The timing is also right. Though advertising is usually hit hard during downturns, Covid-era factors have had a net positive impact on AR advertising. Such periods historically cause advertisers to re-allocate budget to emerging ad formats, as seen circa-2005 (search) and 2010 (social).
AR benefits from similar factors, and its momentum will carry into 2022. If you throw in the upheaval in the ad world from privacy lockdowns like Apple’s ATT, brands are more receptive than ever to new options. To put a number on that, AR ad revenue will reach $2.86 billion in 2022.
3. Visual Search Pulls Ahead
Killer apps often follow a progression from fun and games to utilities. For example, the web’s killer apps have matured into mundane but pervasive activities like search, email, news, and shopping. To that end, AR will scale when it finds the right broadly applicable utility.
And we believe that starts with visual search. Identifying and contextualizing real-world objects by pointing a phone at them has real utility and range — everything from education to fashion. It also appeals to camera-native Gen-Z, which continues to gain spending power.
And it’s monetizable. This traces back to prediction #2, as visual search will evolve into an ad-supported medium. AR ad evolution from lenses to visual search also tracks to the historical evolution of web ad formats. We started with display long before search ads were a thing.
Visual search’s monetization will build on its high intent (just like web search). So Google, Pinterest and Snap will continue to invest in their respective visual search products. They’ll need more traction but will gain ground on the path to $1.9 billion in visual search ad revenue by 2025.
The Metaverse Journey
So, there you have it. The metaverse isn’t arriving anytime soon, but there will be meaningful milestones and signposts along the way. Or as our AR industry colleague Amy Peck likes to say, “the metaverse will be as much about the journey as the destination.”
We’ll be back in the coming weeks to unpack additional predictions from ARtillery’s report, including the outlook for AR glasses and Apple’s entrance. Read the entire thing here.
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