AR and VR — Will Local Advertisers Bite?

AR and VR will certainly be applied to lots of activities, both consumer and enterprise. But what about advertising? There’s an opportunity to bring a more immersive touch, such as checking out a new car. As we’ve examined, this will have to be done in native ways to be successful.

But what about local advertising specifically? We’re talking small businesses and big brands that target specific geographies. It’s a $150 billion market, and is particularly conducive to AR, given the technology’s ability to qualify purchase decisions in the commerce-heavy offline world.

In Street Fight’s ongoing coverage of VR and AR one question remaining is, how are local advertisers viewing the opportunity today? And what better way to answer that question than turn to Street Fight’s Local Merchant Survey  and Enterprise Local Marketing Survey (both below).

The former involves SMBs and the latter is comprised of larger brands who localize their ad campaigns. For both groups, interest in AR and VR are unsurprisingly still relatively low: Among small business marketers, 18 percent are interested in AR & VR. Among larger brands, 12 percent indicated interest.

Though low interest isn’t surprising in early days of immersive technologies, it’s somewhat surprising that SMBs showed greater interest than brands. Generally it’s the opposite: larger brands with dedicated marketing resources and bigger budgets are more adoptive of emerging ad media.

With VR specifically, SMB interest could be due to a competitive drive to gain an edge with emerging technology that’s visually oriented. Visual media such as video has always resonated with certain high-value verticals (i.e. professional services, autos) — a sort of vanity factor among some SMBs.

With AR on the other hand, there could be a territorial angle. Thought it’s not necessarily a factor in these survey results, mobile AR could tap into SMBs’ pride and passion for their locations, more so than multi-location brands. AR graphics can augment their spaces with product info, reviews or deals.

There will indeed be a land grab for this digital real estate as mobile AR gains consumer traction. There will be also questions about who “owns” that virtual space. This will all create potential opportunity for local publishers or startups to help SMBs claim and optimize that space with the right AR content.

This scenario will also require lots of location data to make sure that graphics and informational overlays are shown properly, and in the right places. Mobile local AR apps will succeed on a combination of object recognition and geo-data for stores’ location and product details.

This could be analogous to local SEO in terms of making sure data is optimized so that AR graphics show up in the right place, including spatial positioning, creative, and business details. And the size of that opportunity will hinge on consumer uptake for mobile AR as a new use case for local search.

My prediction is that traction will come, but will take longer than many people in the AR/VR world think. The first round of ARkit apps for iPhones aren’t very compelling. We saw the same thing with the first batch of iOS apps in 2008, before the Foursquares and Ubers of the world emerged.

When local AR does hit its stride, there will be a big opportunity marry it with local offline commerce — a new flavor of “O2O.” Companies like Amazon and Ikea are already using AR to drive e-commerce, but the larger play — in terms of sheer dollars — will be offline AR-assisted shopping.

It’s a matter of time before mobile AR is a common modality for local search and discovery while out and about in high-buying intent moments. Local advertiser sentiment at that point will likely grow beyond low double-digit figures. And local media companies should be ready when that moment hits.

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.