Turning augmented reality from gimmick to marketing home run

Designing a game for one of the world’s biggest sports entertainment brands is just a dream for most recent college grads.

Yet weeks after getting his software development degree from Toronto’s Seneca College, Edgardo Arvelaez is already a step closer to making that dream a reality. As in, augmented reality (AR).

With guidance from Seneca instructor Daniel Stopnicki and Siment IT (a Toronto AR and mobile startup), Arvelaez created an AR game with fellow student Carmina Castillo and 2014 graduate Christina Danelon.

Here’s how it works: using an Android or iPhone camera, each player scans a special image imprinted on a drink coaster to generate the 3D image of an ultimate fighter on their phone screen; if two coasters are brought close together, an octagon fighting ring appears and the players can tap on-screen buttons to engage in a virtual match.

Now a major sports entertainment franchise has shown serious interest in buying or licensing the game. How serious? Serious enough that Siment founder Dan Wilchesky doesn’t want to publicize the company’s name just yet, for fear of jeopardizing a deal.

“This could be worth several hundreds of thousands of dollars a year in revenue,” Wilchesky said. “They’ve shown some interest and we’re in discussions now.”

How did a student project grab the attention of a global sports conglomerate? By baking marketing opportunities right into its code. This game is designed to be a marketing tool, not just a fun pastime.

Dan Wilchesky sees a future for AR so bright he has to wear shades.
Dan Wilchesky sees a future for AR so bright he has to wear shades.

Businesses can use the game for marketing in various ways: by licensing the game and branding it with their company name; advertising their products on the drink coasters; or placing their ads within the game itself (i.e., on the virtual octagon). The game might also appeal to sponsoring bars and restaurants because it encourages customers to spend more time and money in their establishments, Arvelaez explained.

We could soon see much more of this, as research suggests more businesses plan to add AR to their marketing arsenal.

In a global Economist survey released in February, 478 chief marketing officers (CMOs) were asked which future trend will “have the biggest impact on marketers by 2020.” Over one-quarter (26 per cent) named AR and virtual reality (VR). (VR immerses the wearer in a completely virtual, interactive 3D environment and usually requires a special headset; AR mixes the same kind of virtual visuals with images of the real world, often using smartphones or tablets.)

In another report out in February, ABI Research predicts the number of AR/VR devices will “explode” from three million units in 2015 to 55 million units by 2020. ABI expects 2016 to be a key “inflection” point for wider adoption of AR/VR technology. Digi-Capital released its own forecast in early April, calling for AR/VR to hit $150 billion in revenue by 2020.

But why has AR, thus far, been used mostly as a one-off tool rather than a widespread, long-term part of most marketing campaigns? It all comes down to cost and complexity, said marketing veteran Dave Haber.

“The cost and technical barriers to entry in terms of getting up and running with those types of initiatives are pretty significant. The ability to actually develop AR applications is pretty rare among a typical in-house marketing department. So in terms of (business) priorities it falls very low on the list,” said Haber, vice-president of growth and marketing at Montreal startup Breather, a sort of Airbnb for renting out quiet space.

But smartphone processors and wireless networks keep improving. That’s finally fueling the creation of more AR apps for mobile devices, making AR way more accessible to consumers, said Siment’s Dan Wilchesky.

“Maybe two to four years ago there was a lot of hype about AR … but we didn’t have the hardware available en masse to deliver the right kind of experiences. I think we’re really starting to see those (AR) applications now,” he said.

Haber sees AR marketing becoming more affordable if (or perhaps when) a technology giant like Facebook or Google offers businesses a simple DIY app to create AR ads. That would also help AR gain deeper traction as a marketing tool, said Haber, who has taught marketing courses at McGill University and consulted for clients like Telus and Unilever.

Edgardo Arvelaez

Until those cost and technology barriers come down, how should a business consider using AR for marketing purposes? Focus on function over flashiness, Wilchesky advises: “They have to look at AR as an authentic user experience that delivers value to the user – real value, whether it’s educational, entertainment or functional.”

Wilchesky said one valuable asset businesses can get from AR technology is analytics data about who engaged with their marketing campaign, when, where, how often and for how long. (Though little research has been done on the effectiveness of AR marketing, AR app maker Blippar claims its campaigns have an average engagement time of 75 seconds, 2.5 times longer than the average radio or TV commercial.)

Haber agrees businesses should use AR to actually assist customers rather than simply grab their attention. One of his examples is an AR app he helped create while head of marketing at jewelry retailer Ice.com: by allowing customers to virtually try on jewelry, the app aided shoppers in their actual purchasing decision. He also cites Yelp’s Monocle app, which uses a smartphone’s GPS to provide users with real-time reviews and directions for businesses nearby.

“There are ways AR can deliver real value,” said Haber. “But we’re just not there yet in terms of adoption.”

Wilchesky believes adoption will occur once AR is more accessible for consumers and affordable for businesses. But marketers will have to adjust their mindset, too, he added.

“It’s a very cool technology and the risk is you use it as a cool gimmick. But it’s far more than that.”

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Christine Wong
Christine Wonghttp://www.itbusiness.ca
Christine Wong has been an on-air reporter for a national daily show on Rogers TV and at High Tech TV, a weekly news magazine on CTV's Ottawa affiliate. She was also an associate producer at Report On Business Television (now called BNN) and CBC's The Hour With George Stroumboulopoulos. As an associate producer at Slice TV, she helped launch two national daily talk shows, The Mom Show and Three Takes. Recently, she was a Staff Writer at ITBusiness.ca and is now a freelance contributor.

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