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Research

Advertising In Virtual Reality: Market And Standards

Иван Смирнов

«Virtual reality» still sounds like a technology from a sci-fi movie to most of the people around the globe. VR market is in the infancy and, despite the business interest to the technology is rapidly growing, the excitement is being spread only inside the gaming community and is left unnoticed beyond it.

Because the core audience has its specific interests, virtual reality is usually associated with console devices. Oculus, HTC Vive, Playstation VR — each of them is a console-based HMD (Head Mounted Display) requiring connection to a PC or a game console. However, amid the topic, to talk about the VR realization on the mobile devices is more logical. Despite the fact that the console-based HMD superiority (playback quality and interoperability with virtual content) is undeniable, the Cardboard principle already provides VR-content producers with the real opportunity to transmit and, which is much more important, to monetize their content via the multi-million audience of smartphone owners. We shall therefore speak about Cardboard and All-In-One devices, which operate on the same basis and are more accessible to ordinary users.

VR/AR market provides new opportunities both for consumers and business. It allows you to promote products and to make a profit from the VR-content, complements the traditional media formats and creates new ways of consumption in the broadest sense of the word.

Along with the gaming projects and show-business, advertising has become one of the pioneers of virtual reality — promo clips in 360° format and VR-glasses branded by McDonalds and Coca Cola have become an impressive marketing ploy. However, in these projects VR-technology is nothing but a tool.

We will show how VR is turning into a full-fledged platform for doing business.

Market Overview

VR-app market for mobile devices is just beginning to emerge, but some trends can already be identified. Having counted the number of VR-applications in each category of Google Play, we got the easily-predictable results: 75% — «Games» and «Entertainment», 10% — «Education» and «Travel and Local», 10% — Utilities and 5% — other categories.

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Excluding the apps from «Education» and «Travel and Local» categories which can be used for promoting certain business, the rest of the products can be monetized only via advertising, IAP or paid access to their functions.

The question of content monetization for the market of virtual and augmented reality is more relevant than ever. And the hardware manufacturers are in a better position than producers of content. More than that, the latter ones are facing the difficulties which in the context of mobile devices can be defined as hereditary. Primarily, because the software is still unable to support the new ways of user interaction with content, staying behind the hardware in the technological race.

Market Problems

Lack of audience is only a temporary problem, so we will focus our attention on 3 other difficulties to monetize VR-content:

  • Smartphone owners are accustomed to free content. People don’t like to pay for mobile apps, especially in mass market games segment, such as Angry Birds and Clash of Clans. Even Mario Run is not likely to change the game.
  • Limited user experience in the app. IAP is available in the VR-app but the whole process is too difficult: to complete the purchase it is necessary to remove the helmet or to close one eye while trying to click the button via controller.
  • Obsolete ad formats. If you've ever tried to play the mobile VR-games you might have faced the advertisement having appeared in the form of regular flat banner over the game picture. Perhaps, some of you even tried to insert the ad into the app. To do something with this banner, without removing a helmet, is almost impossible.

The first issue cannot be solved by using any hardware — the mass game market has come to this model for some reasons. Two other problems are interconnected due to the lack of standards. Let’s dig deeper into the advertising standards.

Standardization: How It Should Work

Those, who have worked with the advertising aggregators, know that it is a long way for a banner to get into the app: SDK — Aggregator — Ad Network — Advertising Agency — Advertiser.

For example, the advertiser wants to promote the new line of VR-devices. He asks the advertising agency which then creates banners and videos, adds them into the ad network, sets up the targeting configuration and launches the campaign. After that ad network holds an auction, which data is received by the aggregator that chooses the banner from this ad network and sends it into the app with built-in SDK — and the user is finally shown the ad.

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But, who is in charge of the new standards? The majority of ad networks are working  by standards developed by the Interactive Advertising Bureau. IAB is a public organization uniting the giants of the global media industry.

The very first standards were developed for the Web. Later were accepted the updates, describing the interaction between the mobile ad market participants. Now the IAB is busy with implementing the standards for new ad formats — draft specification is put on the open access. Among other things, the document includes the standards for advertising in VR- and AR-environment. Every professional could have proposed his/her amendments since September 2016, the final version will come out in early 2017.

In addition to VR/AR, the new standards describe pictures and video in 360° format, vertical video and Emoji.

How can it help? With the introduction of common standards for the market will be able to quickly increase the volume of ad traffic. Ad networks will be aware of how to transmit new ad formats while SDK will be able to launch them. The process will not be quick, but the first step has been already made.

Of course, there are minor problems too, but solving them also will contribute to opening a huge perspective for VR market. Yes, it’s about the Web and its integration with virtual reality. Custom browsers, compatible with VR, can already be found in stores — equipped with the virtual keyboard, they show the mobile version of websites. However, the major browsers, supporting the VR-environment, are presented in the nightly builds and their specifications are still available only in draft version. The time, when the full version of WebVR will work with browsers on all mobile devices, hasn’t come yet. And it means, that the issue with the CPA-based model of payment will exist, until users will be able to go out of the app to the website and to download an app, or, to make a purchase, without removing a smartphone from the helmet.

WebVR project is available via the following link: https://webvr.info/

In this article we’ve made a brief overview of the VR-applications market and have figured out the reasons for the existing problems. The next part of our series of articles on advertising in VR will show how the problems, mentioned above, are being solved today. And more, you will get acquainted with the companies, already working in the sphere of virtual reality, and see several real case studies.

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01.02.2017