How Virtual Reality Is Impacting the Ad Industry

How VR is impacting the ad industry

Many businesses have already begun incorporating VR into their advertising campaigns, including these innovative applications.

Try-before-you-buy campaigns.

With the advent of VR, window shopping is a thing of the past. Customers no longer have to imagine what their dream couch would look like in the living room or how the latest makeup would appear on their face.

Many B2C companies have implemented VR try-before-you-buy campaigns. These campaigns allow customers to use their phones to “place” the company’s products in their life to see what they look like. L’Oreal has a virtual makeover app called Makeup Genius; it allows customers to pick and choose a variety of hair colors and makeup styles from their phone’s camera. Similarly, Wayfair’s app offers an AR function called View in Room 3D, which overlays images of its furniture into the customer’s living space.

Branded AR filters.

Custom AR filters are becoming more popular with social media users. Platforms such as Snapchat, TikTok and Instagram have enabled AR filters that any user can make. Companies have also created custom filters to advertise their brand through AR. This creates awareness with minimal effort across mediums. Plus, it does so just by the creation of a simple filter for users to have fun and interact with.

Take, for example, the Barbie movie of 2023. Ahead of the film’s release, Warner Bros. Pictures partnered with Snapchat to create a Barbie Wardrobe AR lens. With it, users could “wear” iconic outfits from the movie.

Virtual rooms.

VR allows companies to connect with customers on an experiential level. Examples include 360-degree VR videos, immersion-style test drives and brand-related product experiences.

VR advertising has an inherent advantage over traditional advertising: It places users in a distraction-free environment. Thus, companies are incentivized to create high-quality content to engage the viewer for as long as possible. A virtual room differs from other forms of VR advertising, such as a 360-degree immersive video experience. With the former, the user is interacting with the content the entire time they’re inside the room. [Learn more about how to combine traditional and digital marketing approaches.]

Interactive and impactful storytelling.

More traditional forms of media support linear storytelling: There’s a clear-cut beginning, middle and end of the overall advertisement. With VR, the user has autonomy within the story and can look and go anywhere.

Another way VR is transforming business storytelling is by recreating in-person experiences — evoking an impactful positive emotional response. These marketing techniques are more efficient at captivating audience feelings; they go beyond a person sitting on a couch and watching an ad on television. The more positive emotions captured in the personalized VR advertisement, the better the ad engages and makes an impact on the consumer.

The future of VR and advertising

As with any emerging technology, VR’s capabilities — and subsequent impact on the advertising industry — could extend far beyond current applications. Here are just some of the ways VR could shape the future of advertising.

Hyper-personalized ads.

The combination of VR and artificial intelligence (AI) poses immense potential for highly personalized advertisements. AI can already collect and analyze data on a user’s preferences and shopping patterns at scale. In the future, advertising professionals can incorporate this data into their campaigns — potentially in real time as the technology continues to develop.

Immersive live event experiences.

VR may currently be most associated with virtual experiences. However, VR/AR technology could also boost advertising opportunities and revenue in the live event sphere. For example, if a brand is sponsoring a live festival, the company could overlay virtual ads and digital coupons for its offerings via AR technology. Similarly, businesses hosting live events could augment the experience with various virtual offerings, including compelling visuals and “gamified” activities.

3D virtual storefronts.

A natural extension of the try-before-you-buy and virtual room phenomena, 3D virtual storefronts are designed to simulate an in-person shopping experience. Customers could interact with a brand’s offerings as if they were in a physical store, including trying on items or viewing product demos. Brands could use their 3D virtual storefronts to experiment with different layouts and offerings. Also, they could provide a wider range of goods without relying on physical inventory.

Ad monetization.

VR advertising has skyrocketed in popularity and engagement over the past few years. VR advertisements have higher brand recall, quality impressions and other ad display metrics than traditional advertising. One of the key factors of advertisements in the virtual world is immersion; it can create high engagement with many ad types and offers an opportunity for companies looking to expand their marketing horizons. Possible avenues of revenue for advertisements may include in-app purchases, as the level of engagement for virtual advertisements further increases. VR has followed the path behind video, social media and mobile applications, and games, with similar patterns of ad acceptance as the platform matures.

VR and AR are still developing

VR and AR are still new forms of technology. Early adopters say that this tech will change the way we consume media. If it does end up becoming a major entertainment medium in America, advertising and marketing will likely follow. If marketers can self-monitor, a user’s experience won’t be ruined by advertisements. Instead, built-in ads and immersive virtual-room-type experiences will allow consumers to interact with products while they’re enjoying content.

“The interest [in VR] is very deep,” said Julie Shumaker, former chief revenue officer, Create at Unity Technologies. “The good news for any of us in the ecosystem is, unlike many ads that tend to be almost completely driven by the agency world, this seems to be a consumer experience driven by the brands themselves.”

Matt D’Angelo contributed to this article. Some source interviews were conducted for a previous version of this article.