How is AR Advertising Developing? What are best practices? What’s the revenue outlook? 

ARtillry’s latest intelligence briefing examines the AR Advertising, including campaign strategies, results, and where the sector is headed. Preview the report, subscribe to access it in full, or purchase a la carte.


Executive Summary

One of the many areas projected to be transformed by immersive computing is advertising. The visually-immersive nature of technologies like AR and VR can offer advertisers new ways to spotlight products, and to engage prospective customers in deeper ways than two-dimensional media.

For example, advertisers can create AR campaigns that let consumers visually infuse products in the world around them, as captured through their smartphone’s camera. Several brands like Nike, Home Depot and Michael Kors are already experimenting with – and learning from – such campaigns.

Beyond graphical AR overlays, advertisers will soon be able to participate in a related area: visual search. A close cousin of AR, this is represented by tools like Google Lens, which let users point their smartphone cameras at objects around them to contextualize (or purchase) those items.

Altogether, AR ad formats are beginning to map to existing 2D ad formats that advertisers have been using for years. For example, branded graphical AR overlays are analogous to display advertising, while visual search can carry similar dynamics and user intent as search advertising.

But the opportunity is to go much deeper than these legacy formats in both creative capacity and effectiveness. Indeed, brands that have experimented with AR-based promotion already see favorable engagement and conversion metrics, such as 11x increases in product purchases.

Simplified view: Full year-by-year detail and category segmentation available in full report.

The opportunity is further fueled by vested interest of tech giants. Tech’s “four horsemen” – Google, Apple, Facebook and Amazon – are especially keen on AR. Those specifically built on ad revenue (Google and Facebook), will fight to ensure positioning in advertising’s next visually-immersive era.

Resulting competition will accelerate innovation, investment and market timing for AR advertising in general. Indeed, one point of confidence ARtillry Intelligence holds for AR’s overall revenue generation and opportunity is the level of motivation behind these tech giants to make it happen.

But it won’t be without challenges and question marks. Though all of the above stands to reason and quantitative analysis, one wild card is advertiser adoption. They’re a famously laggard constituency of the tech ecosystem, and the survey data we examine in this report indicates their AR uncertainty.

There are also practical hurdles. Though mobile AR’s addressable market is 762 million smartphones at the time of this writing, the actual market is a subset of that. Active AR users are relatively few, and session lengths are small, due to factors like arm strain, which diminish ad inventory.

All of these variables converge to drive $2.6 billion in AR ad revenues by 2022. But how will this materialize? What campaign tactics work? And what does it mean for developers, media companies and anyone vetting AR. This report answers such questions and dissects the AR ad opportunity.



 

Price: $499 (w/ analyst briefing) $299 (w/o briefing)

This report is available by subscribing to ARtillry PRO, or purchasing a la carte. The individual report price is $499. including a briefing with the report’s author to discuss takeaways and answer any questions you may have. It can also be purchased without a briefing for $299.

 


Excerpt: Signs of Opportunity

Whenever tech revolutions come along, they affect – and create opportunity within – several aspects of our lives and work. This was the case with the PC, commercial internet and mobile revolutions. One of the areas most transformed by these technology shifts has been media and advertising.

Advertising specifically has been completely transformed by the Internet, which was then further catapulted by the distribution, formats and strategies developed in the smartphone era. ARtillry Intelligence believes the next advertising inflection will happen with immersive media such as AR.

AR’s visual orientation and interactivity align with advertising’s core goals. It can enhance “upper funnel” (e.g. awareness) ads by letting consumers playfully interact with products. And “lower funnel” actions (e.g. conversions) are achieved by contextualizing products at or near the point of purchase.

Further boosting these qualitative attributes are quantitative measures. The advertising opportunity piggybacks on AR’s scale: ARtillry Intelligence pegs mobile AR’s installed base at 762 million smartphones at the time of this writing. This is key, given that brand advertisers are reach driven.

Beyond high level or theoretical advantages, we’re seeing proof points that these factors translate to real results. Among several key performance indicators (KPIs) detailed later in this report, AR can boost consumer purchase intent by 11x and time spent with media by 2.7x, according Houzz.

Influential tech giants are also investing heavily in AR advertising, providing further confidence in its opportunity. Ad-dominant business models at Facebook and Google have motivated significant resources to ensure positioning in advertising’s next era, thereby accelerating the AR industry overall.

But it’s not all positive signals. Advertisers will be slow to adopt (as they often are), and already indicate some uncertainty. And mobile AR presents challenges such as diminished ad inventory through short session lengths, which can result from arm fatigue and other form-factor realities.

Further jeopardizing available ad inventory are questions of reach. Though the installed base of compatible AR smartphones is sizeable, as noted, a more relevant figure is active AR users. That figure stands at about 158 million users today, which is fragmented between different AR apps.

So where do all of the advantages and potential drawbacks come together and indicate the path forward? We’ll examine all the factors in the following pages, including bull and bear perspectives, and our ultimate revenue outlook. But first let’s examine the types of mobile AR ads developing today.


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Price: $499 (w/ analyst briefing) $299 (w/o briefing)

This report is available by subscribing to ARtillry PRO, or purchasing a la carte. The individual report price is $499. including a briefing with the report’s author to discuss takeaways and answer any questions you may have. It can also be purchased without a briefing for $299.

 


Methodology

This report highlights ARtillry’s Intelligence viewpoints, gathered from its daily in-depth coverage of the XR sector. To support the narrative, data are cited throughout the report. These include ARtillry Intelligence original data, as well as that of third parties. Data sources are attributed in each case.

For market sizing and forecasting, ARtillry Intelligence follows disciplined best practices, developed and reinforced through its principles’ 15 years in tech sector research and intelligence. This includes the past 2.5 years covering AR & VR exclusively, as seen in research reports and daily reporting.

AR advertising figures specifically include money spent on paid AR campaigns, such as the examples cited early in this report. Figures do not include general “marketing” spend, such as brands that develop their own AR apps. The latter is measured in our forecast under enterprise AR software.

Furthermore, devising these figures involves the “bottom-up” market-sizing methodology, which involves granular ad revenue dynamics such as campaign pricing and spending. More about ARtillry Intelligence methodology can be seen here, and market-sizing credentials can be seen here.

    


Disclosure and Ethics Statement

ARtillry has no financial stake in the companies mentioned in this report, nor received payment for its production. With respect to market sizing, ARtillry remains independent of players and practitioners in the sectors it covers. It doesn’t perform paid services or consulting for such companies, thus mitigating bias — real or perceived — in market sizing and industry revenue projections. Disclosure and ethics policy can be seen in full here.


Preview the report, subscribe to access it in full, or purchase a la carte.

Price: $499 (w/ analyst briefing) $299 (w/o briefing)

This report is available by subscribing to ARtillry PRO, or purchasing a la carte. The individual report price is $499. including a briefing with the report’s author to discuss takeaways and answer any questions you may have. It can also be purchased without a briefing for $299.