The multi-billion dollar tech revolution transforming the future of marketing

Extended reality technologies are potent tools brands need to leverage fast to cement a competitive advantage. Seja Al Zaidi explores how these technologies might just be the real key to capturing a deeply engaged, emotionally connected audience in a world where consumers' attention spans shrink by the day.

Adapt, or die – that’s the advice given by numerous market leaders in the extended reality and gaming space, an arena leveraging innovative tech advancements to create profitable outcomes for marketers.

While terms like metaverse, Web 3.0, VR, AR, gaming and AI all seem to blend into one hazy conglomeration of intimidatingly futuristic tech-babble, they are truly distinct and potent individual tools that brands need to leverage imminently to cultivate a competitive advantage, and a deeper sense of loyalty and emotional connection with consumers.

Data released earlier this year revealed that just 36% of Australians are enthusiastic about a future of extended realities like VR, AR, and the metaverse – but the bolstered sales and engagement these technologies confer mean that brands are wanting to acclimate consumers, and fast.

This August, ARQ Group and Singapore-based NCS announced a partnership that would see the Singtel tech arm expand to Australia, with aims to create up to 15% more new tech roles by 2025.

To celebrate the partnership, the two firms took over The Lume in Melbourne, delivering the largest-ever metaverse event to be held on Microsoft’s AltspaceVR platform.

Metaverse exhibition at The Lume to commemorate the ARQ x NCS partnership.

The immersive, multi-sensory experience saw introductions of emerging technologies the firms are working on integrating more deeply into Australian businesses, including virtual reality (VR), augmented reality (AR), AI (artificial intelligence) and of course, Web 3.0.

Tristan Sternson – CEO of ARQ, which delivers advisory, design and managed services to more than half of Australia’s top 20 ASX-listed companies – is particularly enthused by a future wherein brands and events will be viscerally amplified by innovations in extended reality.

Sternson believes the data-rich ecosystem of Web 3.0 – which can be described as ‘the internet in 3D’ – will enable brands to cultivate ultra-targeted approaches to campaigns and advertisements, given the depth and breadth of information our digital identities will possess in the metaverse.

A world where ROI is turbocharged

In Web 3.0, digital identities will serve as robust sources of information on consumers’ interests, behaviours, inclinations and loyalties. Sternson explains that the metaverse will enable marketers to access data-informed digital identities, compared to general digital identity which might only show factors like location, age and ‘maybe gender’.

Digital identities will comprise of ‘a catalogue of preferences’, including which music, sports and hobbies individual consumers enjoy.

Tristan Sternson, CEO of ARQ Group.

While this exhaustive data opportunity may sound intrusive, Sternson believes it’s in the best interests of modern consumers: “people are time poor, they want the specific targeting more than ever before,” he says.

“You can have smaller segments of targeted customers with information from their digital profile.”

The new future of retail

Augmented reality technologies allow consumers to explore products, stores, services and spaces without having to go to a physical location. Throughout and after the pandemic, the “try-before-you-buy” experience has been adopted far more broadly, helping to legitimately resolve issues consumers were facing on their purchasing journey. According to IBM’s 2020 US Retail Index report, the pandemic has accelerated the shift to digital shopping by roughly five years.

AR applications can virtually simulate a try-on of a product, meaning customers don’t have to leave their home to see how a pair of earrings would suit their face, or go to Nick Scali to envision what a couch might look like in their living room.

Sternson believes the convenience of AR capabilities is a massive draw for both retailers and consumers, and perceives that the early adopters of AR innovations will come out winning on a number of fronts.

“Do I want a table in my backyard? Augmented reality will first help me see what it looks like in my backyard. I’ll take a photo, see how it looks on my phone, and buy it. I don’t buy any furniture now without using augmented reality. How good is that, before a huge, 3 metre timber table arrives at your doorstep?

An example of AR used to simulate how furniture products might look in a customers’ home.

“Imagine you walked into a hardware store to buy a nail or hammer; you don’t know the difference between them all because there’s ten in a row. Imagine you held your phone up and it tells you all the information about each product. It just makes life so much easier,” Sternson says.

When asked if the innovative advantages of AR and VR in the customer experience would be reflected in profitability, Sternson said ‘100%’.

“It will be easier to sell a product. The cost of sales will be lower, the return rates [of products] will be lower, there will be an ability to buy more quickly.”

Luxury fashion marketplace Farfetch offers an AR-enabled try on service, an example of an innovation Sternson believes will curb customer return rates.

Sternson’s fundamental advice for brands is to inject allure into the experience; extended reality technologies are all about an enhanced, deepened, more immersive and titillating interaction, and marketers need to embrace that.

“Make it fun. Make it sexy, give people the opportunity to try it out.”

Why recycling assets for VR and AR might be the key to a deeper emotional connection

A study from Harvard Business Review showed that VR-trained surgeons had a 230% better performance than other trainees.

The study defines VR as ‘the use of computer technology to create a simulated environment, placing the user inside an experience. These platforms directly address the skills gap by providing immersive, hands-on training that closely simulates an operating room environment.’

The fundamental immersiveness of VR means it has untapped potential in the Australian market right now.

Angus Stevens, CEO and co-founder of Start Beyond, is passionate about the depth of connection and information retention that VR enables with consumers.

Angus Stevens, CEO and co-founder of VR and AR studio Start Beyond.

People remember information better in a VR context than in traditional learning environments,” Stevens says.

“The beauty of placing something in VR is that if you’re at an event or activation, immediately you can capture the persons’ interest a lot more. From a commercial perspective, what it allows you to do is to create a stronger emotional connection with the brand straight away. It also works really well if you’re wanting people to understand the product.”

Start Beyond is a VR and AR studio that creates content and learning solutions for organisations of all kinds. One of its platforms, Oncio, allows brands to upload assets and have them distributed in a VR, AR and Web 3.0 format. Those assets can then be recycled for use on other platforms, including the metaverse.

Though furor spread worldwide when Mark Zuckerberg announced his ambitions of an alternate-dimension metaverse enabled by big VR goggles, there are plentiful examples of perfectly benign, and extraordinarily innovative applications for VR – with Stevens noting modules they created for St John Ambulance CPR training as one.

VR used to augment the CPR training experience for St John Ambulance.

“If you don’t play in the VR space at a consumer level, you can’t elicit that emotional connection. If you’re doing a launch event, you can use VR to create a total buzz, but you can then recycle that content as 360 videos or slice it down for your social channels. Once you’ve built it, you can re-use it in a bunch of different ways,” Stevens notes on the versatility of VR-enabled assets.

“The competitive advantage that AR gives you is that it allows you to supplement existing assets with a whole new layer of information, and visualise it in a 3D format.”

AR and VR for education is widely becoming recognised as a powerful tool that can be leveraged by institutions, not for profits, FMCG brands, e-commerce businesses, airlines and so many more.

An AR project for ANTSO, where high school students scanned a periodic table to bring 3D nuclear science models to life.

Stevens notes that the 3D element of the assets fosters a ‘deeper emotional connection with the consumer’ – which appears to directly translate to a boosted bottom line, as corroborated by research that indicates 3D technologies in a brand’s online shopping experience can increase conversion rates by up to 40%.

“Already AR increases sales brands see in excess of 15-20% on average compared to their competitors – that’s a benchmark. If you want more engagement and cut through in the market, well, consumers want more AR content. It’s a richer experience which always converts to more sales. They want to shop online and have that AR option,” he says.

What does investment into this tech look like?

 “To do anything good at an entry level, you’re looking at about 50k and it goes up from there. This becomes content you can reuse on other platforms,” Stevens says, emphasising the utility of an initial investment into assets that can then be repurposed for use across all different formats.

“From an AR perspective, COVID QR codes have enabled everyone to understand the principles of AR much quicker,” Stevens says.

“But the beauty of AR is that you don’t need an ugly QR code to trigger that content. If there’s enough distinct elements to that design, the phone will recognise it as a marker. Existing brand assets can be used as markers.”

Sternson mentioned that traditional advertising formats like out-of-home are slowly but surely implementing research and investment into AR as part of their digitisation strategies.

“I’m sure the oOhmedia!’s of the world are investing heavily in [AI, AR]. I’ve seen billboards where you can walk past and it can recognise your age and demographic and change the marketing to be specific to you,” Sternson says. 

Snapchat’s recent AR billboard in Los Angeles.

When asked what would become of brands and agencies who remained firmly rooted in their inertia, Stevens says: “No one wants to look like they’re opposed, so disagreement is expressed as silence.”

“The conservatism is an easy path to tread, but also a more short sighted one.”

Gaming: no longer a niche universe inhabited by ‘basement dwellers’

In 2019, something strange happened. Everywhere I went, I saw children of all kinds performing some sort of convoluted, incomprehensible impromptu dance – in public. To my embarrassment,  my 13-year-old nephew once even started doing it mindlessly while waiting beside me in a line at the mall.

I soon learned these kids were imitating dances their avatars would perform in Fortnite, a game that has over 253 million users globally. The dances held such a significant cultural and social cachet, that performing the elaborate ritual conferred some sort of connection to the vast, tightknit, deeply engaged community in the game.

The experience of seeing gaming affinities spill into reality was surreal. More widely, the perception that gaming is solely for pizza-faced, socially awkward neckbeard teens is starting to fall apart, with many marketers quickly realising how broad and diverse the gaming market actually is.

Fortnite dances.

“The surge in gaming activity, especially over the past couple of years, has shed a light on how popular and demographically diverse gaming really is,” says Cristina Forlani, marketing and new business director at creative agency We Are Social.

“Gamers are no longer the basement-dwelling teenagers unfairly characterised by popular culture. The average Australian gamer is now 35 years old, and the gender split is quite balanced, with 46% of women identifying as gamers. People of all ages spend time gaming regularly, and 42% of 65-year-olds play in some capacity.”

“Gaming is now bigger than most marketers realise. In 2021 the global gaming industry reached $203 billion USD in total revenue, beating the global film industry by 11%,” Forlani says.

“Here in Australia, the total audience of gamers has now reached over 17 million, and they spend more and more time playing, now close to 8.5 hours per week. Gaming has officially passed its ‘niche’ stage, and has a large and immersed audience that marketers should definitely consider tapping into.”

“The interactive and fast-paced nature of video games means players and viewers give their undivided attention to game play,” says Ricky Chanana, head of sales AUNZ at global gaming and livestream company Twitch, which has seen its viewership skyrocket in May 2020, maintaining those heightened user figures well into late 2022.

Data from a research collaboration between We are Social and Twitch found that in 2021, global gamers averaged 8 hours and 27 minutes of playtime weekly, increasing 14% from 2020.

Drawing on a recent, successful example of gaming marketing, Chanana says: “To promote their new mascara, the Colossal Curl Bounce, Twitch presented Maybelline with an opportunity to not only engage popular streamer /Fasffy for a dedicated make-up stream, but also create an interactive community experience whereby viewers were able to choose every part of their look using Twitch’s poll feature.

“Twitch also created a custom chatbot enabling viewers to click-through directly to purchase the Colossal Curl Bounce for themselves. Ultimately, this campaign saw great success, outperforming metrics by as high as 89%, and sent sales skyrocketing with +31% increase in Maybelline brand searches on Amazon and +15.6% increase in glance views. Suffice to say, the product ended up selling out on stream.”

Brands are slowly siphoning traditional media budgets to dip their toe into gaming

Given that gaming communities comprise of uniquely engaged users across vast demographic segments, many agencies and brands are hastily and haphazardly trying to gain the first mover advantage with their gaming campaigns and marketing activities.

Brad Manuel and Indy Khabra are co-founders and co-CEOs of gaming marketing and gametech company Livewire, which devises strategies for brands looking to make their foray into the lucrative world of gaming.

“We see gaming continue to become a growing sub sector of marketing,” says Khabra, noting the significance of the opportunity meant that brands would need to deploy a seamlessly integrated strategy to see real ROI and success. 

Brad Manuel and Indy Khabra of Livewire.

“Gaming specific data, ad technology and gaming media continue to take innovative steps forward, allowing marketers a way to connect with their target audience at scale. We’ve seen this in programmatic with TV to CTV, OOH to DOOH and radio to digital Audio over the past 10 years,” Khabra adds.

“Look, the younger generation is the most marketed to generation to ever exist. They know good and bad advertising. They know when a brand just reuses their TVC and puts it on Twitch. They know when an influencer is being told to read something that doesn’t authentically feel like them. The thing is you’ve got to do it authentically, you don’t need to be trained in marketing to know that,” says Manuel.

Manuel addresses the misguided and under-researched approach a lot of marketers tend to possess, which hinders them from seeing real results in their gaming marketing.

“Getting a really good understanding of who the audiences they’re trying to talk to” is critical, Manuel notes.

“Someone will go to you and say, ‘hey, you’re the one that plays Fortnite in the office, we need to do something in gaming for this client. Here’s $100,000.’ Or they’ll be like, ‘yeah, I love e-sports, let me go sponsor an e-sports team.”

“Putting an ad in a game might seem fun for a brand, but requires in-depth knowledge before selection. We always consider if a player is going to love or hate that placement and whether the sub audience will engage with the creative. Our research shows 70% of the gaming audience enjoys or is neutral about in-game advertising with the right targeting, creative and format, so this is a key focus of ours,” Manuel adds.

Product placement in a video game, a strategy which has been deemed effective for in-game marketing.

Remarking on learnings from the recent Roblox Development Conference, Khabra says: “We find our brands sit within a gaming maturity index. Some are trying gaming marketing for the first time, while other brands are investing to accelerate their position in the gaming ecosystem, so budgets vary at the moment. But for entry points, I think it’s achievable for brands to start thinking about adding gaming to their overall marketing plan.”

Manuel notes that marketers, having noticed the potential of the gaming market, are starting to shrink their budgets for traditional media and diverting it to exploration of gaming instead.

“Brands and media agencies are now starting to consider lifting 2-3% of TV, radio and OOH budget out of those areas where they know they’re over indexing on the same audience. But they don’t know where else to put it, so they look at going into gaming, because it’s a new audience for them.”

Audience measurement was pegged as a key draw for brands: “Traditional media is saying that their numbers are always going up, which seems unlikely given that the younger audiences say that they’ve never used those channels before. All those things are growing at once, but eventually, the data will become cleaner, and likely, whoever has the cleanest data wins. And gaming has very clean data. Because it’s IP based data.”

Gaming possesses a ‘highly-engaged, difficult to reach, influential, social, tech-savvy’ audience

Chanana notes that the level of immersion and engagement in gaming versus traditional media or streaming is starkly different. While the attention economy has whittled consumers’ ability to remain engaged in media, Chanana firmly believes gaming is bucking this trend with the millions of devoted gamers immersing themselves completely in the experience regardless of demographic.

Twitch streamer.

“When you are playing, watching or engaging with gaming content, as a user you are leaning in and immersing yourself into the experience rather than just passively viewing. In a world where attention is to engagement what viewability is to impressions, it means that gaming will outperform all other marketing channels,” Chanana adds.

“The quality of the attention, passion and engagement of the audience inside gaming environments is significantly increased due to the organic nature of in-game advertising formats, compared to static forms of advertising which are expected advertising placements. It’s very different to mindlessly driving by billboards,” Manuel says.

“Social currency has changed so much that gaming is now very much embedded into everyday conversations,” Khabra says.


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