Among AR’s areas of applicability, marketing is among the most opportune. And that’s proving out today in the form of brand adoption. Sponsored AR lenses and virtual product try-ons offer them the ability to demonstrate products in immersive ways – from furniture to footwear.
This was recently quantified by our research arm, ARtillery Intelligence, which estimates that annual AR marketing spend will grow to $15.1 billion by 2026. Beyond demonstrating products with greater dimension, this spend is fueled by a feedback loop of campaign results.
But to derive those results, one question looms: how do you measure AR performance? Tried and true 2D metrics like impressions and click-through rates (CTRs) don’t capture AR’s depth of engagement. That depth can achieve things like greater memory recall and “craveability.”
Yet, the “buy side” of the advertising world (brands and agencies) are hooked on these established metrics. And in some cases, they’re not wrong….they need to benchmark against known quantities. But the result is that AR’s performance can get lost in ill-fitting metrics.
What’s the CTR of AR?
All the above boils down to the question of what’s the CTR of AR? How do we standardize AR marketing with a common meter stick that lets marketers benchmark performance? Snap may have one answer to this question, which it calls the Marketing Mix Model (MMM).
The idea is that AR – or any ad format for that matter – doesn’t happen in a vacuum. Most brand marketers have several media channels in play – or “omnichannel” as it’s often called – considering social, search, email, display, video, etc. How does AR fit into the mix?
In short, Snap worked with Nielsen to convert AR performance to metrics that can be compared with the above formats. It tracked 15 brand lens campaigns and correlated their activation to three years of sales data, brand-health tracking and other KPIs (full methodology here).
Essentially, what this all means is that the MMM’s answer to the question of how we measure AR is to create a sort of conversion formula that lets us compare it to traditional metrics in legacy media. This lets marketers get an apples-to-apples view of its relative performance.
And the results? AR lenses achieved a 1.67x return on ad spend (ROAS) across these fifteen brands. This compares with other formats in the media mix such as television (1.04x), other social media (.93x), and the overall average (.77x). Anything less than 1 means a negative ROI.
Stepping back, an inherent challenge with new technologies is that they need to be revolutionary (see Dan Bricklin’s law of 100x) to replace what came before them. But that same order of magnitude difference is what causes adoption friction from comfort-bound stakeholders.
And that brings us back to the “buy side’s” addiction to metrics like impressions and clicks. To break the habit, we’ve seen some movement in native AR metrics, such as 8th Wall and Poplar’s emphasis on dwell time. On that measure, AR outperforms established formats like video.
Of course, the ultimate metric is revenue. It’s universally understood and applies across ad formats. But a direct line from campaign to cash register isn’t always clear, so the advertising world relies on proxies for, or extrapolations of, revenue impact – again, clicks and impressions.
This is all to say that AR’s challenge isn’t just to develop new metrics, but to transition in ways that accommodate brand comfort levels and benchmarking. Snap and Nielsen’s MMM is one way to do that while native metrics develop over time. But the latter will be a gradual process.
“With media agencies and creative agencies, it’s hard to reframe your mind in this new medium,” M7 Innovations’ Matt Maher once told us. “So you benchmark it based on the past medium. […] But slowly, we’re seeing the smart marketers say, ‘Okay, we’ll create new benchmarks. We’ll start to adapt what we know.’ You don’t want this to be a bolted-on innovation. If it’s measured wrong [the client is] never going to do AR again. So you kind of need that balance of both to justify the spend.”