Virtual Reality Will Impact the Ad Tech Ecosystem

What do the iPhone and Virtual Reality have in common with the future of ad tech? Ten years into the mobile advertising revolution, what lessons have we learned about the future of VR advertising? Read on to find out.

Ad dollars follow consumers. More importantly advertising budgets follow consumers. And the ad spend tends to accelerate the development of consumer technology and vice versa. Ad dollars get spent on measurable, effective and scalable ad forms. But what happens when the definition of an ad changes? How do you measure it? How do you pay for it? That is the future of advertising in the augmented, virtual and mixed (AVM) reality world.

The model for AVM advertising will closely mirror the world of mobile. There will be multiple AVM devices in households just like phones and tablets — currently an average of three devices per household. And we can expect that average to keep growing as I predict there will be multiple versions of AVM devices for different use cases. The AVM the device you have for work will be different from the AVM device for gaming to the one used for another specialty. This will inevitably create the issue that is currently in the mobile ad ecosystem: cross-device targeting. For those not familiar, cross-device targeting is the ability to utilize an ad campaign for one person across all their devices. It creates the ability to incrementally reinforce and build an ad campaign around multiple devices — think your desktop, phone, tablet — to maximum effectiveness. However as easy as that sounds, the cookie-less environment of mobile apps make it difficult to track a user, but also give data intensive behemoths like Facebook, Google, Amazon to build immense walled gardens where they have all the data they need. Hence it makes sense for Facebook and Google’s intense investment into AVM. They know who you are, and now if they know who you are on another device, it opens a new vertical of ad dollars that will flow through the system.

And when you imagine a future where every household will eventually have a phone, tablet, AVM device and smart TV, having access and more importantly control of user data will accelerate the flow of ad dollars to those that have the most information.

However, this is all easier said than done. Although Facebook and Google are mobile giants now, it doesn’t mean their investment will translate into the AVM world. It is almost a guarantee that a new player will appear in this space that will not have to think about taking a traditional platform into an AVM platform. A new entity that can think of AVM purely without the expectations and legacy of desktop and mobile sentiments. At the end of the day the product that brings the most delight to customer and translates that into a steady MAU (monthly active users) will win the battle. But they will win the walled garden battle.

The user experience for an AVM device is unimaginable at this point. But if you use a traditional model as the benchmark, you can expect a flow that follows the hardware (head mounted devices/HMDs), operating system (OS) and application model:

And if you look at the market development in AVM right now, you see a consolidation in the first two spaces where Google and Facebook are building the hardware, the OS and even some applications. By owning the data supply chain, they are taking their success of mobile and aggressively doubling down on it to keep building the wall in the garden higher and higher. In the ad tech eco system, that is an immense value.

But when we step back and look at the lessons learned in mobile, you can see the impending issues and opportunities arise. If an ad is shown in in AVM:

· How will cross device targeting be achieved?

· What are the variations in the OS that must be accounted for? In mobile it’s technologically split between iOS and Android, but will it be more saturated in AVM?

· Will this be a cookie-less environment much like apps? If so, how will ad frequency capping occur?

· How will ad tech servers, real time bidding and distribution occur alongside the current tag based systems?

· And more importantly, how will impressions be defined and reported? An AVM environment provides an interaction with objects that will re-define how we view ad tech metrics.

June 29, 2007. That is when Steve Jobs announced the iPhone at the Macworld Convention and kicked of the smartphone revolution. Ten years later we are still trying to piece together technology, vendors and systems to work as a cohesive system in mobile ad tech. If the market for AVM comes close to mirroring mobile or exceed it as experts have predicted, you can imagine the implications in ad tech. I have a feeling that in 10 years from now, we will still be defining this new world that has only now just kicked off.

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