In a world where AR/VR is widely adopted by the population, what will advertising look like?

Virtual reality devices and the metaverse will eventually take over the phone, TV and social media to become the dominant consumer device and gateway to the internet. To get there, however, will require some major tech advancements in virtual reality, augmented reality and the metaverse, the results of which could open the path for new advertising opportunities and ways to measure performance. And new standards, controls and regulations are in development to ensure a privacy-centric, user-friendly, future of advertising.

Our phones will be replaced with extended reality 

Eventually, a single device, most likely glasses, that can combine virtual reality (VR) and augmented reality (AR) into one, extended reality (XR), will replace our current devices. The same way we currently rely on smartphones, laptops and other devices for so many things today, we will rely on our XR glasses for mostly everything. 

Conveniently, with built-in eye tracking and gesture controls, the device will be indistinguishable from regular glasses, saving users from wearing a bulky headset. 

Virtual environments open new advertising opportunities

But the real difference between smartphones and XR devices is that everything will be an omnipresent 3D experience, also creating new opportunities for advertising. Browsing the web will be like going to the park or hanging out at the mall.

Imagine walking down the street and seeing someone wearing a cool shirt. Your XR device will be able to show you a product tag with all kinds of details about it, like the brand, price, colors and even the ability to purchase it simply by looking at the “add to cart” and blinking. And just like that, a purchase is made in the literal blink of an eye. 

Virtual commerce

Brands will have virtual locations that act as counterparts to their brick and mortar stores, where users can choose to visit virtually or physically while taking full advantage of the XR capabilities to purchase items, try on clothes, or even customize nearly anything they can purchase.

We can already see brands experimenting with VR and AR today. At the beginning of the pandemic, American Eagle used Snap’s AR tech to create a virtual pop up shop, allowing customers to browse apparel as if they were at the store, without leaving their rooms.

When the campaign ended, American Eagle sold over $2 million in products, which doesn’t sound like much compared to their $1.3 billion in revenue earned in Q4 2020. But what is amazing is they were able to gain 50 million impressions from Gen Z. And that’s just one example, there are other brands like Ralph Lauren, Vans and Zenni Optical making use of VR/AR devices to reach audiences in creative, innovative ways.

Virtual experiences

Brands and advertisers in the metaverse will capture their target audiences’ attention using virtual experiences like theme parks, curated events and concerts and shows, too. In fact, Ariana Grande and Travis Scott both held virtual concerts in Fortnite. Travis Scott’s Fornite concert earned him $20 million in merchandise sales, over 10x more than his best show in the tour, and nearly 40% of the total tour earnings. What was once a popular video game, is quickly becoming a valid advertising platform.

Even typical car commercials will evolve. Instead of simply running video ads showcasing the car and its features, people will actually get to test drive it in the metaverse on racetracks and obstacle courses built by the brand and advertisers. These kinds of experiences wouldn’t be feasible in the real world but in the metaverse, advertisers can create unique experiences.

As tech capabilities improve to handle larger virtual environments, people will be able to seamlessly move between virtual and physical environments. Imagine, instead of needing to physically go to a store, office, or factory, users can simply put their headset into VR mode, and instantly visit their desired locations.  

New ways to measure advertising success with virtual reality devices

One of the really interesting aspects of XR advertising is the myriad of ways that advertisers and brands will measure the success of their campaigns. In a hyperconnected virtual reality environment, users will be able to interact with nearly every part of an ad, thus giving advertisers new insights into their campaign performance.

Instead of tracking users, brands and advertisers will be able to track interactions with ads:

• Did people try out the product or ad? 
• Are people zooming in to parts of an ad, and which parts? 
• Are people changing the colors or design of the ad? 
• How many views, clicks, or purchases were from an AR product tag? 

While the questions may seem odd now, XR devices with built-in eye tracking and gesture controls open a world of metrics for advertisers to measure performance.

In addition to the new performance metrics, conversions like online purchases or subscriptions, click redirects and other traditional KPIs will still provide meaningful insights into ad performance. 

Connected all day long

Putting our glasses on and removing them will be the first and the last thing we do when we wake up and go to sleep. We will be connected all day long. If one of the biggest challenges for brands and advertisers is to reach their targeted audience at the right time, right place, on the right device, how incredible would it be if consumers now use the same device for almost everything? Thankfully, we’re not too far from there already. 

In order for VR/AR to reach mainstream adoption, however, people must be able to switch between VR/AR without interruption. 

The good news is that work is already in progress by many tech companies to create a seamless XR experience for consumers. While the current XR landscape looks to be fragmented, organizations like the Interactive Advertising Bureau (IAB,) are guiding the digital advertising and media industry standards and terminology to allow disparate systems and platforms to work together. Thus, allowing users to switch between VR/AR like they do with apps or devices.

New advertising controls & regulations

Unlike what has happened with most new media, the advertising industry has to tread carefully and react to consumer behaviors and preferences instead of overwhelming users with invasive ads. Guided by laws and regulations, advertisers, brands and ad tech companies are working together to create new, industry-wide standards and solutions to ensure the new era of VR/AR advertising maintains a privacy-centric yet user-friendly experience.

Controls

Addressability Solutions

New addressability solutions that don’t rely on personal identifiers, like The Trade Desk’s Unified ID 2.0 (UID2), LiveRamp’s RampID and avatars, will enable brands and advertisers to reach their ideal target audience using any DSP, SSP and ad exchange while remaining privacy-compliant.

Contextual Advertising Tools

Contextual advertising tools will improve the user experience by providing them with relevant, engaging ads. Natural Language Processing (NLP) allows AI to “hear” and “read” what is said or displayed. Advertisers can then provide the AI with contextual information, which AI can use to determine the best ad for every impression.

Soon, advertisers will use the capabilities of AI to create endless iterations of ads using brand-approved assets, thanks to Dynamic Creative Optimization (DCO). And with machine learning (ML) algorithms, the speed at which AI can not only create, but improve its own performance will exceed human capabilities. 

Regulations

As VR/AR devices advance in capabilities and so does the metaverse, it’s imperative that laws and regulations are created or updated to reflect its everyday uses. Eventually, VR/AR devices and the metaverse will become extensions of our bodies and reality, so for people to adopt it into the mainstream, it’s vital that laws and regulations protect people’s data and privacy to the same extent as healthcare and financial data.

But how do we know that change is happening and that it is more than just buzzwords? There are already laws and regulations in place throughout the world to protect users, their privacy and data in today’s digital environments. 

In the US, the California Consumers Protection Act (CCPA) gives the residents of California greater control over their data, inspiring other states to propose similar laws. The General Data Protection Regulations (GDPR) in the EU are put in place to ensure user data is properly secured, users can opt in or out, and that additional safeguards must be taken when transferring data outside the EU. And the Anti-Spam laws in Canada (CAN-SPAM) prevents users from getting spammed with ads. 

The virtual age of advertising

Switching between VR/AR experiences and accessing the metaverse throughout the day, using nothing but glasses, will become the only device people use. And that’s going to create some really exciting and creative advertising opportunities. Meanwhile, advertisers will get many new ways of measuring campaign performance that are truly indicative of their success. 

It sounds like science fiction, but for it to become reality, new standards to seamlessly connect platforms will have to be developed by the advertising industry and tech companies. Additionally, ensuring people’s privacy and data are protected with robust laws and regulations is mandatory for VR/AR devices and the metaverse to reach mainstream adoption.

Benoit Skinazi is CMO at Sharethrough.