Consumers’ use of augmented reality (AR) and virtual reality (VR) technology is a novel trend that seems to be scaling upward lately — such a trend, what some may view as a fleeting fad, may be the next big, innovative opportunity for marketers across the globe to engage customers, both new and current. In the last few years, AR and VR technologies have been continually, and at an increasingly rapid pace, transforming the way consumers choose to spend their hard-earned dollars. In an omnichannel marketing strategy, AR and VR technologies ultimately provide customers with a digital experience in place of a traditional, physical one, offering brands a new space to market their products and services.
The money-making power of the internet
With such ongoing innovations in e-commerce, forecasters at Forbes predict that the global e-commerce market will total $6.3 trillion in 2023, and by 2026, the e-commerce market is expected to total over $8.1 trillion. If brands wish to get a slice of this pie, it may be worthwhile to note that AR and VR trends are expected to continue growing in the 2023 – 2024 years and accelerate over the 2023 – 2027 period, giving retailers the chance to enhance online shopping experiences in an exciting way that may bring in a fresh, young audience.
As the money-making power of the internet radically changes the world economy, the economy of virtual goods generates more than a modest portion of overall global gaming revenue. With the gaming industry expected to maintain its recent growth, possibly becoming worth more than $321 billion by 2026, the market seems to be dripping with opportunities for brands to generate more direct sales. Indeed, in a VR world with billions of users, these goods aren’t simply gaming products — they are the same products brands are marketing, trying to drive revenue with, in real life. While the rise of cryptocurrency continues to find a place in the global economy for the long term, the world of VR is already seeing innovation and development from leading brands, in both virtual-to-physical and physical-to-virtual transactions.
How brands are driving revenue in virtual reality
By creating virtual experiences for shoppers such as product trials and tutorials as well as virtual store experiences like in-store navigation apps and games for shoppers, brands are both enhancing their image and yielding an impressive ROI. Notable examples of brands driving revenue in VR come from companies like Estée Lauder, MAC, Gucci, and Dior, to name only a few. These brands, and others, allegedly created AR “try-on” advertisements that successfully generated direct sales. These “try-on” ads allow app users to use their smartphone cameras to superimpose 3D digital replicas of products onto their bodies. According to The Coin Republic, “Dior’s digital sneakers had 2.3 million views and a sixfold return on advertising investment.”
As a savvy marketer looking for new ways to drive revenue, you may be thinking this sounds like an excellent brand-enhancing opportunity, but how do transactions in VR work? Depending on which platform consumers are engaging on, where brands have set up shop, and whether users are making real-to-virtual or virtual-to-real transactions — will all determine how money moves across wires. The short explanation is that in some VRs, consumers can link their payment info into the app. In other instances, users are making purchases with cryptocurrencies; however, rest assured that whichever way brands are making cash in VR now — they are actually seeing those dollars in real life.
Think first — Don’t jump into Decentraland just yet
While the opportunity may seem golden, don’t jump into Decentraland and set up shop just yet. It’s important to remember that consumers have typically used AR and VR for gaming only, so there is a lot to consider when thinking about VR as an interactive consumer experience, in which users actively engage with brands online in real time.
Only recently, mostly with Mark Zuckerberg’s company’s rebrand to Meta, has VR become more of a social engagement platform, allowing users to participate in VR for reasons other than gaming. Users are shopping, dining, socializing, etc. There is no doubt that money is being spent, and investors are reaping the profits. Domino’s is taking pizza orders in the Metaverse, to deliver actual pizza to customers’ doorsteps in real life, and Gucci, using an NFT method, is engaging shoppers with lower-cost virtual replicas of its products to adorn users’ avatars.
In a recent article, Reuters reports the Investment Bank Morgan Stanley forecasts that by 2030, the digital fashion industry may rise by $50 billion with consideration to new VR purchasing trends. Yet, this is only a prediction — like many social platforms we have seen over the last two decades, they rise and fall. Those individuals deeply invested in VR, in the Metaverse, in incorporating it into their lifestyle, are fortelling that VR will be the next iteration of the internet — a platform that will change society for generations.
However, if you casually browse chat boards engaged in by VR users and creators, the overall attitude is that the VR platform is stalling — it’s not growing, and companies’ demands of it will likely outbid its abilities. The start-build-stall pattern driving the engineering behind VR may entirely be its downfall, and as consumers desire more and more from a platform that can simply not deliver, the novelty may quickly dissipate.
The questions all marketers must ask
Undoubtedly, offering an omnichannel experience is a great way to include and engage a multitude of customers; however, deciding whether to make AR and VR a part of your omnichannel strategy takes major consideration. Some key factors to keep in mind might include questions such as who are my customers and what type of experience would drive their engagement? How can my brand create a differentiated experience? And, does AR and VR offer a unique opportunity to showcase my value proposition?
There are countless opportunities for most industries to try AR and VR and win a high ROI — especially now since consumers are being drawn to it for lifestyle experiences. Will it catch on, will it truly deliver the ROI you desire, or will it be a failed endeavor? These are the first, essential questions every marketer must remember to ask when taking on a very new channel that still sits only as a possibility.
When it comes to mastering the channels you currently have, look no further than a Relationship Marketing strategy. Learn more in this guide.