2022 Predictions: Immersive Tech Edition
Tis the season for predictions. In fact, this is baked right into Street Fight’s December editorial theme. So, to add to the chorus of projections, we’re weighing in with thoughts and wishes for the coming year. But to keep things focused, we’re zeroing in here on immersive tech.
Specifically, we’re talking about camera-based technologies like augmented reality. These have applicability to local commerce, such as Snap Scan and Google Lens’ storefront overlays. And yes, we’ll invoke the m-word. Metaverse mania is everywhere, but (spoiler) that could die down.
As background, there are a few metaverse tracks. The one that you likely hear more about involves virtual worlds that host synchronous activity among far-flung individuals – an “embodied internet” as Mark Zuckerberg calls it. This is often discussed in VR contexts or in regard to multiplayer games like Fortnite.
The other (less-discussed) track involves a real-world metaverse where geo-anchored data triggers AR devices to reveal digital content that goes beyond physical objects. This is the metaverse track where local commerce comes into the picture, and is truer to the Greek root “meta,” which means beyond.
With that backdrop, here are three predictions for what could happen at the intersection of immersive tech and local commerce. And because I often disparage broad predictions that don’t have any teeth, we’ve included action-specific or figure-based statements in each prediction (highlighted in bold).
1. Metaverse Mania Dies Down
Though the metaverse is a legitimate principle with ample promise, its fully actualized arrival is years or even decades away. That goes for both metaverse “tracks” outlined above but is especially true for the grand vision of fully-immersive experiences seen in movies and books like Ready Player One.
But you may not get that from the traffic jam of blue-sky metaverse musings cramming up the interweb today, which frame it as imminent. As Scott Galloway likes to say, “the metaverse is a consensual hallucination between Mark Zuckerberg and the media.” There’s some truth to that, at least in the near term.
We believe this means one of two things: 1. We’ll be talking about the metaverse with the same frequency and intensity for the next several years until it comes true. 2. When society’s immediate gratification isn’t satisfied – at least to the point of living up to the current hype – metaverse mania will die down.
We believe option two will occur. That’s to say that any metaverse outcomes that materialize in the next year can’t possibly live up to the hype. So the outcome will be disappointment in the wake of an over-promised metaverse. It won’t go away … but you won’t see many more metaverse headlines in USA Today.
Put another way, the topic will live on in immersive tech circles, such as the AR and VR indusries, while metaverse building blocks make meaningful strides. But the mainstream public discourse won’t continue at its current volume.
2. AR Ad Revenue Approaches $3 Billion
One of those metaverse “building blocks” that’s actually here today is AR marketing and commerce. And one subsegment of that broader category is paid ad placement. This is a leading AR revenue category at $1.98 billion in 2021. Snap has especially latched onto it as fuel for its camera-company revenue growth.
To further define this, paid AR ad placement takes form in branded lenses that companies pay to amplify on AR networks like Snap and Facebook. It’s driven by Gen-Z’s affinity for camera-based experiences; brands’ attraction to 3D visualization; and the ROI validation that continues to be seen in AR ad campaigns.
Hardware evolution such as LiDAR will enable AR lens leaders like Snap to offer more robust rear-facing lens campaigns. This helps them, and Facebook’s Spark AR platform, evolve from front-facing (selfie-based) lenses to those that augment the broader canvas of the physical world (read: more ad dollars).
The timing is also right. Though advertising is usually hit hard during downturns, Covid-era factors had a net positive impact on AR advertising. Such periods historically cause advertisers to re-examine and reallocate budget to emerging ad formats, as seen circa-2005 (search) and 2010 (social).
AR has benefited from similar factors, and its momentum will carry into 2022. If you throw in the upheaval in the ad world from privacy lockdowns like Apple’s ATT, brands are more receptive than ever to new options. To boil all this down to a concrete prediction, AR ad revenue will reach $2.86 billion in 2022.
3. Visual Search Pulls Ahead
Killer apps tend to follow a progression from fun and games to utilities (except those that originate in the enterprise). For example, the web’s killer apps have matured into mundane but pervasive activities like search, email, news, and shopping. To that end, AR will scale when it finds the right broadly applicable utility.
And we believe that starts with visual search, which utilizes the smartphone camera as a search input. Identifying and contextualizing real-world objects by pointing a phone at them has real utility and range — everything from education to fashion. It also appeals to camera-native Gen-Z, which continues to gain spending power.
And most of all, it’s monetizable. This traces back to prediction #2 in that visual search will evolve into an ad-supported medium. As a side note, AR ad evolution from lenses to visual search tracks to the historical evolution of web ad formats. We started with display long before search ads were a thing.
Visual search’s monetization will build on its high intent (just like web search). So Google, Pinterest and Snap will continue to invest in their respective visual search products. They’ll need more traction before monetizing, but will gain ground on the path to $1.9 billion in visual search ad revenue by 2025.
Milestones & Signposts
So, there you have it. The metaverse isn’t arriving anytime soon, but there will be meaningful milestones and signposts along the way. Or as my AR industry colleague Amy Peck likes to say: “the metaverse will be as much about the journey as the destination.”