Apple Opens the Door to Consumers Through AR: What Does This Mean for Advertising?

By Dag Liodden, CTO of Tapad

Since the announcement of Apple’s iPhone 8 and iPhone X, there has been significant buzz about the phones’ augmented reality (AR) capabilities and questions about what it means for customers, developers, big brands, etc. Could this be what takes AR mainstream? Will this improve or complicate consumers’ current experience with AR apps?

At Tapad, we are considering similar questions, especially in regards to how these new AR capabilities will impact our clients and partners in the advertising industry. Since AR is an evolving space with what seems like endless possibilities we could explore this topic at length, but for the sake of brevity, have boiled it down to its impact on a very key area of advertising -- product placements. 

Product placements have thrived in the advertising industry for decades, mostly because -- if done appropriately -- they can be much less intrusive than formats like interstitial TV advertising, and can allow for much longer exposure times (e.g. if an actor wears a certain brand of clothing for the entire movie). However, there have historically been hang-ups with this kind of advertising, such as limited opportunities for targeting (except for the anticipated viewership demographics), the diminishing effect over time (a 10-year-old movie is unlikely to have product placements relevant to today), and the challenge of measuring the actual impact of these ads.

This is where AR has an opportunity to come in and operate under a similar guise to how product placement works today, but with some differences and improvements: 

  • For one, product placement in AR allows for a much less intrusive advertising experience than traditional advertising. One example is Snapchat’s “face swap” feature -- by branding a creative filter for this, advertisers are providing customers with both a unique experience while also gaining facetime with their audience.

  • AR advertising can be personalized and refreshed at any time, and measured like other digital advertising, which - as mentioned previously - are two key things that are not as feasible with traditional product placement. With more control over this personalization and measurement, brands can better know what product placements are truly resonating with audiences and make sure the content stays relevant over time.

  • The advertising can feel more native than current formats, in the sense that it can become a natural extension of content being consumed across even more digital channels. This ties back to the early example of Snapchat’s face-swaps. As the customer flips through the filters, it feels like a natural part of the experience and - based on the level of consumer interest - could even be adding value to their overall use of the app.

  • There is a lot of room to grow for AR. What we are seeing now is just the beginning, as more advanced AR with spatial recognition could allow for much more subtle placements, and at higher scale, allowing for multiple products to be placed in an AR space. For example, rather than just having a brand slogan stuck on top of a photo or a custom face swap, a branded cup of coffee could be placed in the person’s hand or on a table behind them, and an airline-branded plane in the sky in the background.

We can also expect the “real” innovation in AR not to be led by the platform vendors. While both Google and Apple are working to showcase AR adaptations, interactive innovations will probably pop up from independent app developers on the APIs that the vendors provide -- opening even more opportunities across various verticals for AR to make an impact.

In the end, as it is with most emerging technologies, only time can prove our current assumptions to be true or false, but one thing we can count on is that AR has the potential to profoundly change the way we interact with the world over the next decade. For those in the advertising space, we suggest taking this as a hint to watch how AR could open up monetization venues that are currently unthinkable.