Is Virtual Reality Viable for Marketers In 2016?

Consumer appetite for virtual reality is expected to grow in 2016, fueled by affordable mass-market headsets. What does the landscape look like for marketers?

Virtual reality is widely tipped to break through into the mainstream in 2016. For decades a technology with a checkered history of success, it is finally expected to make its mark on the consumer mindset, driven by the arrival of mass-market headsets costing less than a smartphone.

In addition to the Samsung Gear and Google Cardboard options already released, Facebook-owned Oculus Rift will ship its headsets by the end of the first quarter this year, and HTC Vive and Sony’s PlayStation VR versions will quickly follow.

Estimates of adoption by consumers vary greatly. In 2016 Juniper Research predicts 3 million headsets will ship globally, rising to 30 million by 2020. Analysts Piper Jaffray forecast sales of 12.2 million VR headsets this year.

Entertainment Will Drive Adoption

The figures highlight the inherent uncertainties surrounding new technologies but it’s the appetite for virtual reality among gamers and in entertainment that should drive adoption.

Henry Stuart, CEO of VR production company Visualise, says: “Gamers need to break the barriers for people to feel comfortable wearing the headsets.” So while 2016 will be the year everyone can access VR, truly mass uptake is unlikely immediately. “It will become more commonplace in 2017,” he adds.

By the end of 2016 mobile research company CCS Insight believes 360-degree video trailers will accompany all major new film releases. A key channel for distribution will be Facebook and YouTube’s recently launched 360-degree video networks.

Over the coming year, the user base for VR should therefore steadily build and while the audience will be small compared to those brands are used to on YouTube, “it will be highly engaged”, notes Karl Woolley, who leads the digital, VR and immersive content division for creative studio Framestore.

Emotional Depth

The appeal and benefit of VR for marketers lies in its depth of connection. Lying at the more extreme end of the alternate reality scale, VR essentially runs using game-engine technology to transport viewers somewhere else entirely, whether that’s a made-up world or a real-life place. Crucially, it allows viewers to make decisions to change the environment in which they are immersed.

This makes it distinct from 360-degree video, which cannot be manipulated, and augmented reality where viewers see the real world overlaid with different degrees of information and interactivity.

“Transporting customers somewhere is a far stronger and more tailored experience than other films and content,” says Stuart. “You can emotionally connect in a very direct way.”

Brand Experiments

Marketers are among the early adopters of VR. Entry-level cost is £20,000 and brands across multiple categories are testing the strength of experience it offers and figuring out the benefits it brings.

In November the New York Times dispatched 1.2 million Google Cardboard viewers to its print-edition subscribers asking them to watch its VR films on displaced refugee children in Lebanon, South Sudan and the Ukraine.

So-called “empathy VR” itself has become a new fundraising tool for the charity sector with Médecins Sans Frontières, for example, planning a VR campaign rollout in 2016 that includes teasers on Facebook 360, a roadshow and apps developed for Oculus Rift.

VR’s powerful storytelling capabilities are taking it into the public domain via visitor experiences too, such as at London’s Natural History Museum where it is being used as a new way to challenge how people think about the natural world.

Experience Selling

The technology lends itself well to experience categories. Travel giant Thomas Cook’s Try Before You Fly campaign put Samsung Gear VR headsets in key travel agents’ stores in the UK and Germany, allowing customers to experience New York City through VR.

Flight and hotel bookings made in the stores totaled £12,000 during the first three months of the campaign, giving Thomas Cook a 40% return on investment. There was also a 190% uplift in New York excursions revenue.

Marriott Hotels’ in-house Labs division is behind the brand’s experiments with VR as it explores future travel experiences and ways to counteract the stress points in the holiday shopping journey.

“There are two points of anxiety when shopping for holidays when it’s right to engage with guests in visceral ways,” says Daniel Klaussen, senior director at Marriott Labs. “Firstly deciding where to go, and secondly before you travel, when people want to know what their experience will be.”

The hotel group toured The Teleporter—a phone-booth sized kiosk fitted with Oculus Rift headsets and featuring content created by Framestore—around US cities in late 2014. Users were transported to Marriott hotels and to the beaches of Hawaii where content emulated the heat and sensations of the island’s beaches.

“The experience is transformative and expectations around the trip change,” says Klaussen.

When it comes to experience selling, virtual reality offers marketers multiple benefits: the opportunity to upsell, and the chance to bridge the gap between marketing and reality. With that come fewer complaints and improving metrics around customer satisfaction.

Driving Product Awareness

Fiat and Audi are among several automotive brands to incorporate VR experiences into new model launches.

In both cases VR has granted customers access to “virtual test drives” in locations where physical test drives are not possible, such as city-centre showrooms, at events and in the home.

Virtual reality is gaining traction as a good fit for brands in the fashion and lifestyle space too. Nike leveraged its tie-up with Brazil and FC Barcelona player Neymar for the launch of its Hypervenom III boot, while outdoor wear brand Merrell created an immersive “walk around” journey called TrailScape to promote its hiking boot Capra.

Fashion brand Tommy Hilfiger used Samsung Gear headsets in its New York flagship store to up the entertainment factor for shoppers, giving access to its catwalk show.

And in the UK, high street retailer Marks & Spencer trialed pop-up virtual reality showrooms targeting millennial customers, allowing them to drag and drop products from its new M&S LOFT homeware range to furnish a virtual room. A virtual avatar assistant was on hand to assist.

Department store retailer John Lewis, meanwhile, is understood to be experimenting with VR to create a walk-through digital catalogue of its home range, encouraged by the improved quality of the technology.

Making Good VR

The success of ongoing and future VR experiments in marketing will depend on content quality.

“When you’re building a new type of medium, which VR is, people will block anything that feels like an ad,” says Framestore’s Woolley. “If the content is good, however, people will engage.”

To that end, the starting point for any VR marketing conversations Framestore has lies in understanding the business challenge to overcome. “That could be to sell more product, reposition the brand, or simply to do something in VR that portrays you as forward-thinking and technologically innovative. Some brands want to do VR but sometimes it’s just not the right thing.”

Visualise’s Stuart advises an early conversation with specialists if VR is under consideration. “Sometimes we’ve seen [marketers] get buy-in for an idea from the business, but it’s one that won’t work in VR.”

Viewers can often feel unwell when watching poorly-filmed or thought-through VR content. “When VR is good, people forget it’s not real,” adds Stuart.

A Medium In Flux

It’s still early days for companies working in VR. “Nothing is established yet in terms of best practice and the interfaces are still being experimented with,” says Michael Hodson, CEO of US-based production house Only in VR.

New technology developments in VR, such as positional tracking (where viewers can walk around physical spaces), improving screen resolution, and touch controllers are coming into play; while Facebook’s support of Oculus will ramp up the social side. However, commerce applications are yet to make sense from an investment perspective.

VR is still very much a medium in flux. Yet as it becomes more available this year, the landscape for marketing and the level of interest among specific target groups should become clearer. “Marketers will be in a better position to judge which avenues are viable for VR,” says Woolley.