Is AR/VR AdTech’s Wild West?

If you wonder what you’re going to watch on Sunday nights when Game of Thrones ends, HBO is hoping to tempt you with its beautiful, artificial intelligence-filled rendering of the old west. Westworld is based on the book and movie of the same name, and lands somewhere between Deadwood, Jurassic Park and The Matrix. The show is set in the not too distant future where a fully immersive alternate reality, filled with artificial intelligence characters, has become a popular “vacation” spot.

Adtech is on the cusp of a major disruption—maybe even a revolution. If you doubt that artificial intelligence, and its siblings, virtual and augmented reality, are going to usher in a whole new galaxy of brave new worlds, you evidently missed out on the insanely popular Pokemon Go craze this summer. In fact, reporting on data from Goldman Sachs Global Investment Research, Statista concludes that the AR/VR market could be worth up to $35 billion by 2025, with applications as diverse as video-gaming, live entertainment, education, engineering and healthcare.

Maybe we don’t know where the road goes over the next few years, but there are definitely signs that give us some clues:

Millennials are looking for immersive experiences beyond the TV screen

Advertisers and marketers are acutely aware that millennials are different from their GenX and boomer counterparts. Their preferences are more about having memorable experiences rather than acquiring piles of stuff. A 2015 Nielsen report found that people younger than 35 years old watch significantly less television—both live and time-shifted—but are more likely to use multiple different web-connected devices each week, and spend much more time playing video games. While it’s difficult to assess whether those habits will continue as millennials gets older, an Elite Daily report estimates that the generation’s spending power will top $200 billion in 2017.

When you factor in that this generation also trusts traditional advertising the least, marketers who want to reach this group will have to get creative in how and where they place ads. Whatever native-type advertising looks like in the virtual and augmented reality world, that’s a safer bet than ads that disrupt the audience’s preferred experience.

Pokemon Go was wildly popular because it played into nostalgia, it got people out in the sun during the summer and it turned real life locations into augmented reality game locations—effectively making the whole world an open gaming environment.

In-game ads are already a thing

The video game and advertising industries have been struggling to find a way to place ads inside video games for years. Beyond simply sponsoring a game, brands are looking for ways to have ads and product placement directly in the gaming experience.

The process has stumbled along for a few years, running up against problems like the disparity between how long it takes to develop a video game compared to how far out ad campaigns are planned. Games takes a couple of years to plan, while campaigns and collateral aren’t usually planned that far out. But that’s not the only issue: there’s a limited number of genres for which dynamic in-game ads actually make sense, and a significant shift to gaming on mobile devices has seen an uptick in casual gaming over immersive multi-hour storyline gaming.

In the win column, though, those obstacles haven’t prevented RapidFire from building a network which dynamically places ads in games, and it’s not just Mountain Dew and Doritos that are participating in the exchange.

Augmented reality is coming and it’s going to be awesome

Leaving aside the moral and ethical questions about artificial intelligence and the coming singularily, the physical world as we understand it is about to change. Thanks to Microsoft’s HoloLens and Florida-based Magic Leap, we’ll soon be able to watch television on a giant screen…when the screen doesn’t even exist in the real world. We’ll be able to watch a sporting event from any seat in the stadium and experience first-person shooters through a headset that projects all this into the room we’re in (augmented reality) or like a 360° hi-def TV (virtual reality).

We’re already curating everything, AR is just the next step

You’ve probably heard about the echo chamber. Thanks to Facebook and Google, our online experience is curated and chosen for us by the things we engage with. There’s an algorithm to optimize everything, though some would say all this constant refining and curating denies us the opportunity to experience new things.

If you’re not familiar with the echo chamber, it’s described eloquently in this wonderful experiment. Basically, the more things you like that are similar, the more of those things you’ll be served. And since the space to serve it up is finite, you’ll be served less of other stuff. Not because you don’t like it—you may not even be aware of it—but because you like other stuff and Facebook wants to serve you stuff you like. It’s like the most dysfunctional relationship with an overly attentive partner who just wants to cook food you like. So you end up eating the same thing. Every. Single. Meal.

Or retargeting, as we know it by its name.

Not to get all existential here, but we’ve been on this path for a long time and it’s been evolving. Virtual and augmented reality are just the next iteration of not having to pay attention to things that don’t fit exactly with our worldview.

Media sales in hyper-targeted personal universes? Yes please!

So how does all this work for marketing and ads? Imagine: millions of people all in their own virtual worlds that have hyper-targeted ad space just ready for your clients. Serving up ads based on the things they’ve already engaged with or bought or browsed to.

The value of this kind of targeting might be immense. And the almost-infinite locations that publishers will be able to serve those ads to is mind-blowing. Two people watching the same event won’t have to see the same ads. It’s not just local or geo-targeting, it’s connected profile targeted. So if you happen to have browsed to a new set of irons last week, when you’re virtually walking the course at Augusta with Bubba Watson as he competes in the Masters, you might see a retargeting ad to take you back to the retail site.

And all of this is just the beginning. Time to put on your VR headset and watch this space.