Where Will VR Fit Into Local Advertising?

Early television ads often showed a solitary individual reading a script for Ovaltine or Lucky Strike (or insert 1940’s quintessence). The reason: that’s the way it was done in radio. It took a while for TV ads to grow into their own skin. This is the dreaded “habit creep” that saddles emerging mediums.

Going back further, the telephone was first devised to be a way for switchboard operators to communicate with each other in real time. This was to solve logistical snags within that hub & spoke model… but no one yet thought of the opportunity for an entirely new (spoke-to-spoke) model.

More recently, the smartphone era launched with a flood of dysfunctional apps that replicated websites. And the ill-devised ad formats — predominantly banners — persist to this day. It took ten years to come up with truly native ad formats like Snapchat Stories or Uber local recommendations.

This all leads up to the question: how will advertising play out in (admittedly nascent) VR, especially in local? We’ll likely see the same early and ongoing misfires, such as banner ads. Or, as in video experiences, we’ll likely see a fair share of legacy formats — like pre-roll ads — ham-handedly shoehorned into VR.

“The impulse in moving from video will be to apply it to VR,” said Framestore VR’s Tyler Hopf in an event I attended last year. “But applying pre-roll to VR won’t work. People won’t want to be placed inside [an ad]. So we have to figure out ways to create valuable ad experiences.”

Stepping back, it’s important to separate the distinct technologies of VR and AR (we’ll examine the latter separately). But the same concept will apply to AR. When overlaying graphics on the real world, banner ads will be comically out of place. The 3 dimensional world doesn’t occur in rectangles.

Of course, there are great opportunities to infuse clever AR graphics in a location-relevant way. AR’s nearer-term scale will happen in mobile, and it will amplify the mobile local search and discovery use case we’ve come to love. But that fully-realized vision will be preceded by lots of epic fails.

Back to VR, it’s not just the ad formats and placement, but importantly their measurement. The same habit creep described above applies to measuring ad performance. It’s a wonder that we still use metrics like click through rates in mobile media. VR will adapt similar ill-fitting metrics at first.

And that will be a missed opportunity because of the level of immersion that VR offers. Issues in the ad world like ad avoidance will themselves be avoided in VR. Impression volumes will be scarce in the near term, but the value of those impressions will be greater, given technologies like eye tracking.

“VR has 100 percent viewability,” said Airpush’s Cameron Peebles at the same event. “In other media like online and broadcast, you can’t measure people truly viewing. [VR] is the first medium where you can validate that.” And Google supported this principle by acquiring Eyefluence last fall.

Speaking of Google, it recently took steps to identify best practices in VR native content development through Daydream usage data. It determined that developers should optimize for new consumption patterns like longer session lengths. Unlike mobile’s micromoments, VR is a meal, not a snack.

Based on that finding and other signals, I predict that one form of near-term VR ad success will involve a version of what we now know as content marketing. The real native formats will develop over time, but for now think of immersive experiences that are “brought to you by” a given brand.

But the most native thinking of all will tap into VR’s immersive ability to emulate consumer products. This gets beyond the traditional toolbox of ad copy or creative and instead goes straight for the jugular: Demonstrating actual product experiences. And that gets closer to measurable conversions.

“Think of an auto dealer,” said Hopf of a potentially further-off scenario. “There are multiple KPIs to get a user to an experience and visit [the dealership] in the real world. VR can skip those steps and get right to the experience.”

Mike Boland is Street Fight’s analyst-in-residence and author of the Road Map column. He covers AR & VR as chief analyst of ARtillry, and SF President of the VR/AR Association. He has been an analyst in the local space since 2005, covering mobile, social and emerging tech.