Pokemon GO Is So Last Summer. What’s Next For Augmented Reality?

It wasn’t until Pokémon GO exploded onto the scene a year ago that consumers and marketers were introduced to the potential of this revolutionary technology. So where are we 12 months later?

Image credit: Su—May, CC BY 2.0, changes made.

As technologies go, augmented reality (AR) is not new, but it wasn’t until Pokémon GO exploded onto the scene this time last summer–quickly becoming the most used mobile app in history–that consumers and marketers were introduced to the potential of this revolutionary technology.

Although not anywhere near the top 10 in terms of marketing spend today, Pokémon GO points the way to a future where the real world and the digital world meet–helping consumers make better informed choices and companies make more sales.

“I would say we are not quite at the point where we’re seeing mass adoption in marketing yet, but there are a lot of use cases,” said Zontee Hou, a senior strategist at Convince & Convert, a digital marketing advisory firm. “The reason we’ve been talking around AR for a while but not necessarily seeing much of in-play is we have a chicken-and-egg problem.”

In other words, consumers need to first have the devices and apps before widespread adoption can take place. But apps and content to display via those apps are expensive to develop, and killer ones, such as Pokémon GO, are few and far between. Many of today’s devices will not work well with advanced AR. For example, Google’s Tango technology, which overlays images and information on your surroundings wherever you point your phone, is only available on two smartphones, one from Lenovo and the other from Asus.

“Marketers want to be cutting-edge, but it’s difficult to sell the ROI to the C-suite,” Hou told CMO.com.

Billion-Dollar Leaps And Bounds

Even so, according to technology consulting and analysis firm Gartner, the “heightened emphasis on customer experience means that by the end of 2017, one in five leading global retail brands will use AR to enhance the shopping process, resulting in dramatically higher levels of customer engagement.”

By 2020, the combined market for AR and virtual reality (VR) technologies will be $144 billion. This represents a CAGR of 198%, according to analyst firm IDC. This year’s spending is expected to come in around $14 billion, up dramatically from 2016, which saw just $6 billion in AR/VR spend.

“The industry use cases that will attract the largest investments in 2017 are retail showcasing ($461 million), product development ($267 million), and industrial maintenance ($249 million). By 2020, online retail showcasing will join retail showcasing and produce development as one of the largest use cases with a five-year CAGR of 403%,” IDC stated. “On the consumer side, AR games will experience a CAGR of 287.4%, making it one of the fastest growing AR/VR categories over the forecast period.”

The number of attendees at Augmented World Expo’s annual AR and VR show, last month in Santa Clara, Calif., mirrors these trends. This year organizers said they had as many attendees in the Expo’s first two days as in all of last year.

Everything Old …

Some companies, including Ray Ban, have been dabbling with AR as far back as 2008. But overall, marketers have viewed AR as a novelty, limited to tightly constrained and controlled use cases.

This is because “there’s not a lot of devices to consume that content,” said Mark Asher, Adobe’s director of corporate strategy. “There’s no [Microsoft] HoloLens [mixed reality AR-VR headset] out there. If anything, it’s mostly about the smartphone.”

That’s not to say smartphones won’t be the platform of choice. With billions of them in use today and Google Glass (basically a wearable heads-up display) an ultimate failure in the marketplace, smartphones are the most obvious development platform for the first wave of truly useful applications.

In 2014, McDonald’s made good use of smartphones to help counter negative impressions in Australia about where the company was getting its ingredients. When a customer scanned the packaging with his phone, it showed data about the store and region and then played out a little experience on where the food was sourced.

“It was very cool and endearing, and it created some positive impact for the brand,” Asher told CMO.com. “It wasn’t transactional, but it was still marketing because they were trying to create brand loyalty through this experience.”

Ana Javornik, a lecturer at Newcastle University Business School in the U.K. agreed that marketers, while seeing the benefit of AR, must move deliberatively or risk wasting their time. Writing for the Harvard Business Review in April 2016, she stated: “The real mission for commercial AR is integrating the technology so that it enhances the customer experience—makes it easier, more fun, and more convenient. … So rather than thinking of how to overlay as many places as possible with additional virtual content, the key to understanding AR is defining the specific activities where it can create real value.”

Use Cases Today

If you truly think about it, the potential use cases for AR are extensive: Uber used it in Munich a few months ago to promote its ride-sharing service. Snapchat World Lenses lets users overlay the real world with all sorts of fun filters. Lowe’s is trialing an in-store item locator service based on Google’s Tango technology to help people find what they are looking for without asking for help. L’Oréal Paris’ MakeupGenius app lets customers try on makeup using their iOS or Android smartphones.

Search “augmented reality” on YouTube, and you will find videos dating back years. But, again, these remain custom, one-off experiences. Widespread adoption when AR could be as common and ubiquitous as say, a company’s website, is still years away. But AR is on a similar trajectory to the early days of the web.

What many of these use cases have in common are the reliance on image recognition technology to kick off the experience, said Zsofia Kerekes, product and marketing manager for Catchoom, a provider of image recognition and AR tech to marketers.

“They are looking to the tech to propose innovative experiences for their clients,” Kerekes told CMO.com. “I do think there is a side to AR that is about providing more enjoyable experiences. There’s definitely a joy factor of using AR.”

Just The Beginning

By all accounts, AR has a bright future in marketing and elsewhere. The usefulness of the technology is obvious and compelling. In an interview with the U.K.’s Independent newspaper in February, Apple CEO Tim Cook likened AR to the smartphone: a foundational technology that is immediately useful to and usable by the average consumer; knows no boundaries based on age, culture, or geography; and has the power to transform in a very positive way how people interact with the wider world.

“I’m excited about augmented reality because, unlike virtual reality, which closes the world out, AR allows individuals to be present in the world, but hopefully allows an improvement on what’s happening presently,” he said. “I regard it as a big idea, like the smartphone. The smartphone is for everyone; we don’t have to think the iPhone is about a certain demographic, or country, or vertical market. I think AR is that big.”