Consumer Electronics Show

Ad Age @ CES: 5 Things We Learned About AR and VR

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Ad Age @ CES

Overheard at CES: "It's spring for AR—and winter for VR."

While that may be a gross simplification, it's clear here on the ground in Las Vegas that augmented reality is having a moment.

VR and AR are, of course, two different things. A broad-brush breakdown for the neophytes: virtual reality is an immersive, virtual, non-real world experience, most often accessed with a headset like Occulus Rift. AR is augmented reality: digital items overlaid on photos or videos of the real world, usually on your phone. Think Pokémon Go. At CES this year, we're also hearing terms like MR (mixed reality) and XR (extended reality). Where there's emerging tech, there's a lot of jargon.

We discussed the topic with some of the top content creators, disitributors and thinkers in the medium. Watch the video above to see what they had to say.

Meanwhile, here are a few takeaways for brands, agencies and publishers alike:

1. There are current, practical consumer uses for AR

Pokémon Go was more than fun and games. Miles Perkins says it got his 10-year-old son off the couch, and outside and walking. "He had me drop him off three miles away!" says Perkins, the VP of marketing and communications at Jaunt, a VR content production and distribution company.

Pokémon Go was also proof of concept. There are, it turns out, more practical uses for augmented reality than grinding it out to catch 'em all. For example, Wayfair, an online home decor company, has an app that gives customers the opportunity to preview a potential purchase by superimposing furniture into their homes. "This is just scratching the surface," says Mike Festa, head of research for Wayfair Next, the company's innovation division.

2. Still, no one really knows where it's going to end up

"Anybody who tells you anything about immersive VR is lying—including myself," says Perkins. The medium is not TV, he says, and it's not cinema—it's its own thing. "People are going to try different things. You're going to start to see traditional methods of delivering shattered and broken." It is, he says, going to get funky.

The next iteration of tech, says Festa, will not only allow someone to see how a couch might look in a two-dimensional rendering of your living room, you'll be able to anchor that digital display on the screen and virtually walk around it for a 3-D preview.

A CES attendee wears a Lenovo's augmented reality headset.
A CES attendee wears a Lenovo's augmented reality headset. Credit: David Paul Morris/Bloomberg

3. The phone will likely drive the evolution

The tipping point is going to be mobile computing power, predicts Will Wiseman, chief strategy officer of media agency PHD. "The biggest barrier to the growth of AR and VR has been that the technology environment that the everyday consumer lives in and is native to doesn't support it," he says. "Two years from now we're gong to be talking about 5G from a mobile computing perspective. ... The average consumer will be using a device where they can interact with AR at a speed that's seamless to their experience."

That will dramatically change the game in ways that are both foreseeable (download an entire "Star Wars" movie during your next staff meeting) and in ways that are not.

4. But the tech isn't the whole story

Perkins likens the emerging tech to fire, which needs three components to thrive: Heat, oxygen and fuel. What AR and VR need to thrive—and it's only a matter of time, he says—are the tools that allow creators to create without limitations; distribution with minimal friction; and, finally, the audience. "You can dress something up with all the tech in the world, but if the content isn't great, it's just not going to be great," he says.

There's a bit of a chicken-and-the-egg problem in that it's hard to make great content without an audience, and hard to build an audience without great content. In time, some say, the tension will resolve itself.

"We almost adopt without knowing it," says Wiseman, who points to Google Home and Alexa as examples. "We've now had tens of millions of consumers who have bought what we consider a smart speaker … and demystified it for the consumer." AR is similarly going to flourish on a device we're already using "when it enhances an experience we're already doing but not doing enough," he says.

5. Meanwhile, it's the Wild West for brands

In streaming video, brands understand who's watching and what they're watching, but they don't really know for sure where the audience's attention is: "It could be on the screen and they could be off brushing their teeth," says Perkins. "In [VR], I know exactly where they're looking, every tenth of a second." The data, of course, is randomized and anonymized. But brands that have a piece of content in the virtual space will know whether it gets seen and, ultimately, if it was effective.

Already, Gannett is finding that audiences are more engaged with branded content in the virtual space than they are with standard video. While that might be chalked up to the novelty factor, the publisher believes there's an opportunity for brands to forge a deeper connection with an audience—if the content is good. Kevin Gentzel, chief revenue officer for Gannett's USA Today Network, points to a 360-degree branded video his team created for Google's Nest that put the viewer inside a burning home. The video, published in October 2016, was the most-viewed piece of video content across the entire USA Today Network, says Gentzel.

"In this first inning of virtual reality, the partners and brands we've been working with, we're the ones together inventing what an ad product can be in this space," he says. "There aren't standards for ads in the virtual space yet." To the early birds, then, go the worms.

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