XR Marketing Report 2020

Nerd Pirates

Published in

Virtual Library

16 min readFeb 17, 2020

New Year. New Insights.

Last year, we released a VR whitepaper, collating our research into marketing with immersive tech 🔮

Its aim was simple. We wanted to help other VR professionals understand how VR can be used to sell products and, conversely, how you should go about ‘selling’ VR.

It’s an especially important document to us for two reasons.

One. It’s kind of rare. Research into VR often focuses on the technological side of immersive tech, rather than its business applications.
Two. Writing it was an interesting process. With all the hustle & bustle of running an agency, it’s a rare thing that we get the chance to be contemplative about our industry. But — as I hope our VR peers would agree — it’s important that we don’t take the immersive ecosystem for granted. We must stay curious if we want to keep up with XR’s growth as a technology and as a business tool. And good research is the key to all of that.

For those reasons, we’ve decided to re-publish our whitepaper below and add some important updates for 2020.

We hope you find it useful. And we’d love to hear your take on what 2020 holds for the future of XR & marketing.

XR MARKETING REPORT 2020
— Understanding Sales & Marketing in the Immersive Technology Sector

Definitions

Before we get started, let’s get the dreaded definitions out of the way.

XR — “Refers to all real-and-virtual environments generated by computer graphics and wearables. XR is the umbrella category that covers all the various forms of computer-altered reality.”(1)

AR — “An enhanced version of reality created by the use of technology to overlay digital information on an image of something being viewed through a device (such as a smartphone camera)”(2)

VR — “An artificial environment which is experienced through sensory stimuli (such as sights and sounds) provided by a computer and in which one’s actions partially determine what happens in the environment”(3)

MR — The merging of real and virtual worlds to produce new environments and visualisations where physical and digital objects co-exist and interact in real time.(4)

The Big Disclaimer

Many people in the immersive industry have mixed feelings about the use of the term XR. Within this report we use “XR”, to refer to all immersive technology. When using “AR” or “VR” or “MR”, we’re referring to that specific technology type.

Introduction

This document is designed to give immersive tech (XR) professionals a more accurate understanding of the function, effect, and complexities of sales & marketing for and with emergent tech.

It’s impossible to be comprehensive about the topic, but we’ll provide some insights into a few key areas:

What’s the landscape like for XR right now? (SWOT analysis)
What are the biggest XR marketing trends for 2020?
Who are the audience for XR?
How do you market XR products?
Why should brands use XR in their marketing?

Why Publish This?

The XR landscape has come a long way in recent years and insight is needed from expert sources to shed light on the growing and developing role of XR in sales/marketing.

There is still confusion around how to sell XR to consumers; how to market XR solutions to businesses; and how to use XR as a tool for PR & Marketing.

As a marketing agency specialising in immersive technologies (XR), Virtual Umbrella have first-hand experience of the industry. We arrived in the sector before you could even buy headsets in shops, and became keenly aware of the intricacies of marketing a product which some audiences couldn’t yet try.

We want to share our expertise with the wider emergent technology industry.

SWOT ANALYSIS

Let’s kick things off with a some classic SWOT analysis.

Right now, what does the immersive landscape look like? What are the Strengths, Weaknesses, Opportunities, and Threats for XR technology?

STRENGTHS

XR is flexible. It has applications in entertainment & gaming, but it’s equally promising as a tool for businesses, for art, for medicine, and much more. As a technology, it’s truly sector-agnostic.
VR has the power to immerse its users. This can be used to create higher engagement rates, more intense emotional responses etc. For that reason, VR is particularly potent as a marketing, storytelling and educational tool.
XR has improved drastically across the last few years. VR headsets are cheaper and more user-friendly than ever (untethered from high-end computers), encouraging a wider audience to adopt the tech.

WEAKNESSES

The mainstream ‘image’ of VR is very gamer/techy-centric. The industry will have to work hard to dispel this idea in order to win over new users.
VR’s reliance on headsets often puts users off. They’re somewhat intimidating and clunky.
XR is expensive to make. And — even as VR headsets are becoming standalone — many consumers feel that the hardware required to use XR is too costly (excluding mobile AR).

OPPORTUNITIES

As XR becomes more integrated with other forms of technology it becomes even more impactful and useful. As artificial intelligence grows, AR applications can become more sophisticated. As haptic technology develops, VR applications can be made to feel more immersive. As eye-tracking becomes more widespread, marketeers can measure the effectiveness of XR adverts more accurately. The possibilities are massive.

THREATS

Perhaps the biggest threat to XR is, ironically, XR itself. As companies rush to adopt XR, many aren’t taking the time to understand it properly before they invest in it. This results in the creation of poorly constructed, unsophisticated VR and AR experiences. These, in turn, put companies off of using XR in the future, hampering the technology’s growth.

2020 Trends

Let’s make some predictions.

Here a list of what we think will be the biggest XR sales & marketing trends in 2020.

AR will become even more popular in branded advertising. In 2018, 63% of US Internet users surveyed say they’ve tried an AR experience created by a brand.(5) It’s likely that this number will grow in 2020.
As time goes on, VR experiences will begin to be seen as more monetarily valuable — akin to pieces of art. As such, they won’t just be sold on digital platforms; they’ll begin to be sold in spaces usually reserved for physical art. Need proof? A volumetric capture of Marina Abramovic’s latest piece, ‘The Life’, will be sold at Christie’s later this year in world’s first mixed-reality auction. The price-tag is estimated to be around: £600,000 for one of three 3D videos.
There will be increasing debate surrounding data collection. As companies expand their use of eye-tracking, heat-maps and other analytics, we’ll see an upswing in conversations about user privacy when using VR/AR applications (especially experiences which are collecting data for promotional purposes).
AR adverts will become smarter. As AI improves, facial recognition used for augmented reality ads will become more powerful and much more effective.
Standalone headsets like the Oculus Quest will make VR demos cheaper and easier to run. We expect to see far more VR at corporate events, and a stronger presence of VR at gaming expos.
Last but not least, XR will be continue to be a hot-topic at industry events for marketeers. 2020 will be the year of talks called ‘Why our agency pivoted to XR’ or ‘How XR will change the future of advertising’. Mark our words.

Who is the Audience for XR?

Whenever we talk about XR, it’s impossible to escape the word ‘mainstream’. Press & gamers alike all want to work out if VR/AR is ‘mainstream’ yet. Or they want to define how VR/AR could become more ‘mainstream’ if it did X or Y.

Let’s interrogate this idea a little.

In our opinion, VR hasn’t yet got a ‘mainstream’ audience. It is widespread and growing, with a whopping 171M VR users worldwide, up from 0.2M in 2014.(6) Plus, now more than ever, audiences know what VR actually is (78% of Americans are familiar with VR technology).(7)

However, it hasn’t achieved the kind of everyday popularity that it needs to be considered ‘mainstream’. It might be widespread. But it hasn’t saturated our culture in the way it needs to. Indeed, it’s still seen by many as a new and exciting novelty rather than a tool that’s integrated into our everyday lives.

Alternatively, AR is a little closer to ‘mainstream’ status. AR headsets aren’t overwhelmingly prevalent in the great scheme of things. But platforms like Snapchat prove that augmented reality is already a staple of everyday social media use, even if users aren’t explicitly aware that they’re using AR.

One of the current benefits of AR is that it’s at everyone’s fingertips, on their phones.

– Fan Huang, Product Marketing Manager, AR Ads at Facebook

Leaving the word ‘mainstream’ behind for a moment. Let’s try and get more specific….Who exactly are the people who are using VR?

Apparently, “41% of adults are interested in giving VR a try”(8). But there’s still disagreement on what group is VR’s main demographic.

Research is still in its relative infancy, and given the variety of different VR devices available & range of industries currently adopting immersive technology, it’s difficult (even misleading) to make generalisations about its audience.

However, there is some data available to us.

There is general agreement that VR consumers are skewed towards younger age-groups.

YouVisit’s consumer survey suggests that 18% of 18–24 year olds have tried a headset, and 46% of that age group expressed a desire to try. It also states that only 14% of people over 65 years old said they wanted to experience virtual reality.(9)
Nielsen’s 2017 “U.S Games 360 Report” reports that 44% of consumers interested in buying VR are millennials.(10)
YouGov reported that 47% of British people who own VR headsets are aged 18–34.(11)

VR users also seem to skew male.

According to GlobalWebIndex, 30% of men surveyed had used a VR headset at least once. The number was only 16% among women.

There is also agreement that — although gamers still make up a huge portion of VR/AR’s audience — they are not the technology’s sole consumers.

Indeed, while the public image of the XR user is still very much influenced by game-focused stories like Ready Player One, reports show that other industries are taking an increasingly important role. The Perkins Coie 2018 VR/AR survey remarks:

“respondents chose gaming as the sector they expected to attract the most [XR] investment for the coming year. But gaming’s position was not as strong in 2018, with retail, military and defence, and real estate among the areas making gains.”(12)

As noted above, VR isn’t just for everyday consumers or gamers. It has a strong B2B audience — people and corporations who are using VR for business reasons.

43% of manufacturing companies say VR will become mainstream in their organisation within the next three years.(13)
75% of Forbes World’s Most Valuable Brands have invested in some form of AR/VR experience.(14)

What About the Audience of the Future?

When thinking about the audience for immersive technology, it’s essential to remember that XR is still relatively new. The audience that it has now might not be the same kind of audience it has in the future.

A recent survey revealed “67% of respondents have not already tried a VR headset”15. In other words, well over half of the potential consumer-base have had no experience with the technology at all.

Moving forward, companies working in this sector will need to think as much about the impact of new & diverse audiences with the potential for massive growth as they do about retaining the attention of early adopters.

MARKETING XR PRODUCTS

Demos

Public demos or location-based XR installations are an effective way to get new users familiar with immersive tech, without them having to commit to purchasing expensive equipment. (Cost is, after all, considered the second largest barrier to mass adoption)(16). They are usually conducted at public events — everywhere from arts festivals, cinemas, and arcades, to business/ marketing conferences.

As Owlchemy Labs suggest in their blog on the subject, the immediacy of demos makes them useful for introducing people to immersive technology for the very first time. It can be difficult and long-winded to describe to someone what it feels like to be inside VR, or inside a particular VR experience (“the level of immersion VR delivers is inconceivable to anyone who hasn’t experienced it”). But demos remove confusion by putting the user straight into the action (“of course there is no replacement for experiencing VR first-hand”)(17).

Truthfully, most people don’t know what VR is. You can’t know unless you try it. (18)

- Stephanie Llamas (VR Analyst at Superdata Research)

Demos are also particularly effective as a form of word-of-mouth marketing. 79% of consumers surveyed, said that, once they tried VR, they would seek out additional VR experiences. And 81% of those who had already experienced virtual reality, stated that they had told their friends about the experience.(19)

“Just because VR and AR are cool, it doesn’t mean everyone will want to use it or have time for it. Immersive experiences need to be easy and comfortable for people to embrace it.”

- Anon, respondent, Perkins Coie, Industry Insights into the Future of AR/VR, March, 2018.

It’s important to note, however, that public demo stations have limited impact without experienced oversight. Demos work best as a sales tool when carried out by trained demo staff, who can make sure that new users are given a safe, comfortable, and enjoyable experience.

As anecdotal evidence from across the industry will reveal, basic health & safety and an awareness of the physical and emotional impact of VR can be the difference between someone investing into the technology and someone never touching it again. It doesn’t matter if you are a business promoting your content at an event or putting someone through a VR arcade — the responsibility is huge when it comes to taking a front-facing role in the industry.

But what makes a good VR demo? How can you make sure you’re introducing someone to VR in the right way?

Here’s are our top tips:

Give users context: Make sure you properly explain virtual reality to your user before they don the headset. Let them know that they’ll go ‘inside’ somewhere new. Make them feel safe. That way, they’re much more likely to embrace and enjoy the power of immersion.
Clean your headsets. Keep your HMDs clean. No excuses. (We recommend replacing the foam covers on your headsets with easy-to-clean waterproof ones.)
Be there! Try not to interrupt users inside VR. But make sure you’re on hand in case they need anything. Establish a clear ‘help’ protocol with your user before they put the headset on, so they know how to get your attention if they want it. This is especially important because, once the headset goes on, they can’t hear or see you very easily. Also get good at reading body language. You can usually see when people need help about 15 seconds before they ask for it.
Take care of your users. If possible, chat to your user once the demo is finished. Ask them how they feel. Get their feedback. Let them decompress a little (especially if the content is intense). It’s important that they get a moment to process what they’ve just experienced.
Consider content warnings. Make sure you warn your users if your VR experience contains any sensitive/scary content. Let them know that VR can sometimes feel a bit more intense that 2D experiences. And be on hand with tissues or emotional support if necessary. (While we’re on the subject, make sure your facilitators are emotionally supported too. It can be tough to guide users through emotionally tough content for a long period of time).

(For a full list of tips check out our article on the subject.)

Workshops/Seminars

To sell XR products to businesses, it’s important to formally educate them on the technology and its applications. If they don’t understand what immersive tech can do, they’re unlikely to invest time, money, or energy in it.

To this end, XR workshops are an exceptionally powerful tool. In the short term, they inspire businesses to invest in XR by:

Informing them about the XR industry as a whole (current trends, stats, future predictions)
Dispelling unhelpful myths surrounding XR technology that can discourage adoption
Giving them direct, hands-on experience of the tech, guided by experts

Feedback from our own immersive technology workshops, the VR Safari, has shown this in action. Testimonials include comments like: “I found the presentation and the ability to try out the experience so utterly engaging” and “I found it all very interesting”.

In the long term, XR workshops can also act as important networking opportunities, putting businesses interested in investing in VR/AR projects in the room with the industry’s best and brightest innovators. Our workshops always contain sessions from expert, guest speakers. As such, our participants don’t just come away with knowledge. They often finish their workshop with the contacts they need to start a VR project in the future.

Maintaining a Community (Not Just ‘Owning’ One)

The success of a VR experience, however, doesn’t just depend on winning over initial buyers/users. Once an experience or product has gained a user-base, it’s also important to maintain that community. This is especially the case because VR’s retention rate is relatively low in comparison to other digital products, with only 28% of people who own VR using it daily, and 19% reporting that they use it only once per month.(20)

It’s clear, then, that VR companies need to find strategies of re-engaging VR consumers after their initial conversion. There are numerous approaches an organisation can take to retarget existing VR users. A number of these methods have been included in the matrix below:

USING XR AS A MARKETING/SALES TOOL

Why Should Brands use XR in their Marketing?

It goes without saying that there is no one-size-fits-all-solution to marketing a company or their product; each brand ought to consider carefully whether XR is a good match for their culture and offering before investing. Nevertheless, there are some key advantages to using immersive technology in marketing materials that are worth exploring here.

Brand Perception

At the most basic level, aligning your business with XR sends a message of innovation and modernity. According to a study from Greenlight VR, 71% of adults agree that sponsoring VR makes brands seem “forward-thinking and modern.” Even more importantly, there are proven effects on purchasing behaviour : 53% of respondents said they’d be more likely to purchase from a brand that sponsors VR.(21)

Media Coverage

360 experiences also seem to attract significant media attention — allowing brands to boost their reach. Research showed, for instance, that 62% of the media coverage of Gatorade’s ‘Bryce Harper’ 360 video specifically mentioned innovation/technology.(22)

Improved Audience Engagement

When used effectively, XR technology also has the capacity to improve audience engagement in a variety of ways.

E.g. XR experiences allow you to gain the user’s undivided attention. For the duration of the experience, there are no distractions & no background chatter. As long as they have the headset on, their sense of sight and sound is entirely at your disposal, and the brand experience can play out in a highly-controlled, uninterrupted form — a difficult feat in the age of the smartphone.

New Forms of Interactivity

It’s also important to note how XR technology can allow for different ‘kinds’ of audience engagement than traditional media — some of which could have radical effects on the purchasing process.

Consider, for example, the augmented reality company ‘Modiface’, which was acquired by L’Oreal in 2018. Traditional beauty ads (print, tv etc.) generally entice consumers to buy by showing the effects of products on models/actors. Audience engagement/interaction is limited to being a spectator.

‘Modiface’, however, goes a step further. It allows users to scan beauty products in-store or online using their phone, and then apply the chosen products to their own faces using AR. It gives them the power to control and customise the ad experience by making them an active participant in it.(23)

The effect is to potentially revolutionise the way customers buy by allowing them to rapidly test products in a personalised way before they purchase them.

TAKE THE NEXT STEP

Immersive technology unveils a wealth of new opportunities for telling stories and communicating messages. However, these opportunities do not come without their own challenges.

The emerging immersive industry may no longer be the wild frontier; but it’s still important to truly understand the capabilities and limitations of the technology before committing large budgets.

For more information about marketing your XR products or using XR as a marketing tool, contact Virtual Umbrella today.

Contact Us

Email: bertie@virtualumbrella.marketing
Phone: +44 (0) 7403082518

Email: samantha@virtualumbrella.marketing
Phone: +44 (0) 07392003017

References

1 Viget,XR: VR, AR, MR — What’s the Difference?, 2017

2 Merriam-Webster, Augmented reality, 2019

3 Merriam-Webster, Virtual reality, 2019

4 Foundry, VR? AR? MR? Sorry, I’m confused, 2017

5 Trends 2.0" by Crowd DNA (Facebook-commissioned study of 11,300 people across AU, BR, CA, DE, FR, ID, IN, KR, NG, UK and US), Sep 2018. Millennials are defined as people aged 24–33 and boomers are defined as people aged 54+.

6 Statistica Survey

7 Greenlight Insights, GlobalWebIndex

8 YouVisit, Google Consumer Survey, 2015.

9 YouVisit, Google Consumer Survey, 2015.

10 Nielsen, U.S Games 360 Report, 2017.

11 YouGov, VR: A Deeper Perspective study, 2017.

12 Perkins Coie, Industry Insights into the Future of AR/VR, March, 2018.

13 Capgemini

14 YouVisit, 2015

15 Statistica survey, 2017.

16 Perkins Coie, Industry Insights into the Future of AR/VR, March, 2018.

17 Schwartz, A. How do we explain VR to someone who hasn’t tried it?, 2016.

18 Terdiman, D. Here’s What Needs to Happen for VR to Go Mainstream, 2017.

19 Touchstone Research & Greenlight VR, VR and Consumer Sentiment, 2015.

20 Greenlight Insights Survey, quoted in Koetsier, J. VR Needs More Social: 77% of Virtual Reality Users Want More Social Engagement. [Online]. [Accessed 12th November 2018]. Available from: https://www.forbes.com/sites/ johnkoetsier/2018/04/30/virtual-reality-77-of-vr-users-want-more-social-engagement-67-use-weekly-28-use-daily/#3e77979318fc

21 Greenlight VR June 2016 Study, referenced in Swant, M. New Study Says People are More Likely to Buy From Brands That Use Virtual Reality. [Online]. [Accessed 12th November 2018]. Available from: https://www.adweek. com/digital/new-study-says-people-are-more-likely-buy-brands-use-virtual-reality-172557/

22 Touchstone Research & Greenlight VR, VR = Immediate Social Impact Infographic. [Online]. [Accessed 12th November 2018]. Available from: https://touchstoneresearch.com/vr-and-consumer-sentiment/20 Perkins Coie, Industry Insights into the Future of AR/VR, March, 2018