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CIOs: Don't Bet On the Future of Augmented Reality Just Yet - Serious Insights

CIOs: Don’t Bet On the Future of Augmented Reality Just Yet – Serious Insights

CIOs: Don’t Bet On the Future of Augmented Reality Just Yet

A recent report from Camera IQ, The Gateway to the Metaverse: AR Marketing & Consumer Behavior in 2022, reported that 76% of consumers had used augmented reality. A slightly higher 78% said they were likely to share a brand’s AR (AR) experience with their community.

Reports like this should be considered directional, not definitive. Camera IQ makes its money in the augmented reality market, so it behooves them to discover overwhelmingly positive insights about their core market.

The report pronounces 2022 as the year of AR but reports only 29% of media agencies are buying AR ads. That is the percentage of agencies reporting buys. The number of AR ads remains very small compared to overall advertising spending.

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While investors want market share forecasts, the forecasts arrive disingenuous at best and dangerous at their worst. Fortune Business Insights put the virtual reality (VR) market at $4.42B in 2020. Four years earlier, a report from Grand View Research estimated the 2020 VR market to reach $15.8B.

Claims can be easily made around market forces not playing out as expected. And that would not be untrue. However, the foundational issue is that no forecasting company can accurately estimate market futures. The reality of the VR forecast was not just slightly off from 2016 estimates, but off by over three times. 

The Future of Augmented Reality: Inventing the future is a heavy lift

With the Bill Gates credo of inventing the future in play, start-ups find comfort in the hope for a self-fulfilling prophecy. Creating a new market proves a heavy lift in a world of uncertainty and turmoil.

Public companies caution investors not to hold them to their forward-looking statements because they can’t predict the future, not even a future over which they have some control. Oil pricing and production forecasts wildly diverge from reality, and all of them missed The Great Recession and the COVID-19 pandemic. 

While infrequent black swans that perturb forecast trend lines warrant forgiveness, no excuse exists for producers who have crafted scenarios for decades. They should regularly produce scenario-based forecasts grounded in speculation about how a wider swath of variables could affect prices or production.

Digging deeper into the future of Augmented Reality

Researching opinions that conclude 78% of consumers are likely to share AR experiences on social media offer a surface observation. Even with demographic information, it offers little more insight than a Twitter poll. Keep in mind that apps like Snapchat fall into the realm of AR. 54% of respondents in Camera IQ’s poll reported funny transformation effects or pretty or flattering visual effects as their augmented reality describes the market state. Though brands participate in Snapchat and gain visibility through shares, most Snapchat experiences do not include branded content.

Rather than look at singular forecasts for financial futures, an organization should examine a range of possible futures that account for uncertainty in very different ways. Scenario planning explores multiple plausible futures, giving investors a clear view of each model’s social, technological, economic, environmental, and political assumptions.

This means that organizations wanting to gain from future opportunities or mitigate future risks need to build better models. They need to build out scenarios that offer different future views by starting with purposefully varied assumptions about uncertainty. 

For example, the Camera IQ report mentions a Mindshare UK and Zappar study on “the neurological and brand impact of augmented reality.” It concludes that attention levels almost double with AR. It doesn’t say that at CES, at the height of hype about virtual reality, long lines formed at every experience. People waited for hours, though, to ride Samsung’s virtual experience that timed motion to VR images. 

However, the report doesn’t say that as engaging as the experience appeared, Samsung abandoned its VR products, and the initial hype around VR as a marketing tool has cooled significantly. Even as the pandemic drove Meta/Oculus VR sales, the market never developed to the level of earlier forecasts. In a world where everything became virtual, VR took a backseat to video conferencing.

Scenarios force exploration of subtleties, but they don’t force organizations to employ and execute on their insights. For example, virtual meetings were an early VR target. However, when the pandemic occurred, no VR companies were adequately prepared to deliver virtual meetings at scale. It was much easier to use a webcam and video conferencing software like Zoom, Webex, or Microsoft Teams, than buying a VR headset and testing virtual meeting betas.

The latest hype centers on the metaverse, looking back at what companies like Meta missed during the pandemic. Grand View Research sees that as a $678.8B market by 2030. Unfortunately, that forecast is probably wrong too. Even with corroborating reports, such as the one from Ericsson Emodo and that finds AR ads more intriguing than traditional ads, the data represent a sliver in time that is now in the past—a moment also very early in the technology’s emergence. But given no data from the future, no one can test the forecast’s accuracy until 2030, and consumer intent also remains for future verification.

Rather than buy reports, organizations should build scenario models that let them investigate alternative cases, such as a world where people have grown bored with traditional at-a-distance experiences and flat ads with an AR pivot that keep it relevant.

Or a world where AR exists only to serve another technology, perhaps one in which physical sensors and digital assistants dominate the technology landscape.

Or a scenario where AR exceeds the wildest of expectations and becomes an overwhelming factor in nearly every human experience, complete with backlash and the onset of regulatory constraints.

Or does AR simply become another tool like headphones or a calculator that we call on when needed—that we trust and own but with which we have no special relationship—a tool to be used when required?

Scenarios become the lens through which those professing thought leadership and foreknowledge create a context that says more than we asked 300 people what they thought; it says we thought hard about this problem and crafted viable, alternative futures, with forecasts aligned with the narrative. Scenarios convey the humbleness of an organization in the face of uncertainty—they demonstrate its willingness to admit what cannot be known. Scenarios exhibit a commitment to invest in employing every tool to explore possibilities, mitigate risk, and leverage opportunities.

Living in an unevenly distributed future

The actual future, the one we eventually live through, will play out as a combination of possible futures, not an average, but a convergence. But, as William Gibson points out, the future will also be unevenly distributed. Not everyone will experience the same future at the same time. 

From programmers to marketing support teams, technology contract workers worked from home and navigated a plethora of software systems specified by their clients for years. As a result, they were far more prepared for the work from home phenomenon created by the pandemic than were workers who usually commuted to an office every day and used only the specified corporate technology stack. Technology contractors already lived in a future that everyone else moved to in March of 2020.

Should marketing leaders embrace the positive speculation that three-quarters of all consumers will prefer AR ads? Will an organization jumping on the AR ad bandwagon lead others to follow and uphold the forecast? Maybe. Many factors will be in play, and only looking back will anyone know how the pieces eventually lay out. 

Strategically, organizations need to think of AR as a marketing tool and test it to see if it meets needs and achieves goals. Chances are it will do both in some areas, but that it will remain just a tool, not become The Tool, at least not over time. Scenarios not only test ideas; they also inspire them. The most effective organizations will develop scenarios to inform and test hypotheses about how to engage customers.

Exploring the future of AR: Are you ready?

Will your organization be an early adopter of AR ads and drive the wave, or will AR fall into a sea of indifference with other tools that fail to fulfill their promise? If you just look at the numbers, you will probably jump in at the wrong time.

However, those who build scenarios and effectively monitor the future by paying close attention to what actually happens will have a better chance of delivering a product or message at the right time through the right technology.

There is no data about the future. But actively engaging your imagination and combining that with diligent monitoring of the present pays more dividends than market reports that usually offer little more than statistically disguised guesses.

Did you enjoy CIOs: Don’t Bet On the Future of Augmented Reality Just Yet? If so, for more serious insights on the metaverse, AR and VR click here.

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