To date, there are over 1 billion augmented reality (“AR”) users and 171 million virtual reality (“VR”) users worldwide, a number that continues to increase as more industries turn to AR and VR to create immersive user experiences. Companies are offering stand-alone experiences that integrate augmented reality and virtual reality at events, such as Samsung and Live Nation’s broadcast of a VR Coldplay concert, as well as through in-store location based applications to encourage a seamless “try before you buy” approach, like Gucci’s AR apparel and accessories try-on app. AR and VR are shaping the future of advertising and influencing our purchasing decisions. As a society with limited attention spans, these immersive experiences may be the answer to cultivating brand awareness and fostering consumer loyalty.
Distinguishing Augmented Reality from Virtual Reality
While often grouped together, AR and VR are actually distinct technological offerings; on the one hand, augmented reality adds elements to the real world, by projecting images onto the user’s environment through a lens or a headset, like the popular Microsoft HoloLens or Magic Leap One, while the user remains engaged with the real-world. Virtual reality, on the other hand, uses a wearable device, like the Oculus Quest or Sony PlayStation VR headsets, to create an alternative reality and provide users with a fully immersive experience. By the end of 2023, it is predicted that over 30 million headsets will be sold annually and that consumer hardware will be the largest amount of AR and VR spending globally.
Brands Successfully Integrating AR and VR into their Promotional Campaigns
Brands are using augmented reality and virtual reality to create more targeted and personalized experiences for their customers, while simultaneously increasing brand awareness and collecting real-time data on consumer preferences. One survey showed that 53% of respondents would be more likely to purchase from a brand that sponsors a VR experience and 62% would feel more engaged with a brand that sponsors a virtual reality experience.  We have seen numerous companies successfully utilize immersive experiences in connection with their brand messaging and sales experience, inundating (passively and actively) consumers with branded content and objects; Topshop launched Kinect Fitting Room, a virtual fitting room in which shoppers can “try” different items of clothing; Patron launched The Art of Patron, a Virtual Reality Experience, giving customers a “live” personal tour of its Hacienda distillery; and IKEA launched IKEA Place, allowing customers to place furniture from the IKEA catalog in different rooms around their homes.
How Consumers are Responding
Social engagement, accessibility and convenience are seen as driving factors behind consumers’ willingness to participate in AR and VR experiences. A Nielsen survey found that global consumers are most interested in using augmented reality and virtual reality to both assist and enhance their daily lives, which includes using AR and VR technologies to assist with their purchasing decisions. Most importantly, AR and VR technologies are offering greater accessibility by removing traditional barriers to entry, such as cost and time; you can now visit the Great Pyramids of Egypt, sit courtside at an NBA game, and travel to several different countries – all from the comfort of your own home.
Despite the promise of a more customized user experience, the slower-than-anticipated adoption of AR and VR by users has been attributed to cost, form of headsets, and an overall lack of widespread demand by consumers for AR and VR experiences. Nonetheless, the video gaming industry has been the most successful at integrating augmented reality and virtual reality to enhance the gaming experience, and to date, AR and VR games (think: PokemonGo, Beat Saber, etc.) make up the second largest amount of AR/VR spending after consumer hardware. We will need to see improved user experiences and offers of more affordable hardware to drive user growth and adoption across a variety of business and entertainment industries.
Some Legal Considerations
- Protecting Your Intellectual Property: Ensure that your software, logo, images, trademarks, slogans, phrases, and hardware are sufficiently covered in both augmented and virtual realities and understand who will own the user-generated content (i.e., photographs, music, and videos created and integrated by users into the AR and VR world).
- Compliance with Data Protection Laws: Evaluate your terms of service with the end user; how is their data collected, stored, and shared with third parties? User data allows brands to understand their consumers behavior and preferences, which allows them to target advertisements and increase their revenue – so, protection and compliance is essential.
- Avoid Misrepresenting Products: The Federal Trade Commission prohibits deceptive or misleading practices in advertising, which includes, as an advertisement relates to description, images, pricing, and delivery. Integrating virtual or digitally enhanced images may be misleading and companies must take extra caution to avoid misrepresenting products that may influence a consumer’s purchasing decision.
The future looks promising for augmented reality and virtual reality and AR and VR have created an entirely new landscape for advertisers to reach their target demographic and for brands to educate, sell and train consumers on new products. We anticipate that users will soon see third party advertisements, products and branding appear in their virtual worlds given the cost-effectiveness for reaching the mass population; however, the timeline on which this will happen will be largely dependent on user adoption and affordability of hardware in the marketplace. In the meantime there are many compelling reasons to incorporate Virtual Reality and Augmented Reality into your life, entertainment, and marketing and promotional campaigns.
 USC § 45(a) (Section 5 FTC Act).