How augmented-reality ads could change everything

Editor's note: This is a guest post by Russell Horowitz, whose bio is below.

When Volkswagen launched its augmented-reality campaign for the 2012 Beetle, I have to admit: the cool factor reeled me in.

Ad copy flashed across my screen, interspersed with money shots of the car's interior.

"...it only made sense to launch it by doing something unexpected..."

Tell me more!

"...the advertising should be as impressive as the car..."

Yes!

Then, this directive:

"Just grab a phone or tablet, download the AR app..."

Huh? Oh.

As you can imagine, I did none of this. I did not download Volkswagen's augmented-reality app, drive to a Beetle billboard, and point my mobile device at it to "let the show begin." (I found out these particular billboards were only up in Canada anyway.) I had to settle for watching other people in the video look at augmented-reality images burst to life on their phones and tablets -- a less-than-vicarious thrill.

Certainly, augmented reality, or "AR" as it's more colloquially known, has improved in the past year since the Beetle campaign ran. Applications have gotten slicker; processors on mobile devices have gotten more powerful. But the barriers to widespread adoption? Still there.

After more than 15 years in the digital advertising industry, I've seen many trends come and go. (PointCast, anyone?)

That said, I do believe using AR in advertising could fundamentally alter the way consumers interact with brands. AR has the potential to offer a hyper-targeted, full-immersion experience, unlike anything we have ever seen before. These ads, embryonic as they are right now, can offer an exciting, space-age-type experience for customers. Advertisers rightly want to monetize that.

Let's take a look at the forecasts. Juniper Research, a company specializing in mobile data, predicts that AR-paid app downloads, subscriptions, and advertising will generate global revenues of $1.5 billion by 2015. That may not sound like much in the broader scheme of things. But consider this: just three years ago in 2010, AR brought in less than $2 million in global revenue.

Using AR technology to superimpose 3D digital graphics on real-life objects has actually been around for years in various forms -- the military and medical sector were early adopters -- but a lot of innovations are emerging now in the general market, with wearable tech like Google Glass taking center stage.

Increasingly, advertisers are experimenting with AR and for good reason -- that always-enticing cool factor. Toyota, Starbucks, and Kellogg's are just a few big-name examples of brands that are testing the waters. General Mills came out with an AR campaign for Lucky Charms on St. Patrick's Day where you could download an app, chase virtual marshmallows, and enter to win a $10,000 pot of gold.

Ikea added AR features to its 2013 catalog for "more home furnishing inspiration" where customers hover their smartphone over a picture and, for example, see what's behind a cabinet. IKEA was a finalist for an Auggie Award in June, a competition which highlights AR innovation, but was bested by a guerrilla marketing campaign from Gold Streetwear, an Italian clothing brand. The brand put stickers in secret places around Florence, "places that only skaters, writers and parkour runners know well." If you happen to stumble across one of these special stickers and point your smartphone at it, you'll unlock the AR experience, which constitutes the "G" of the Gold logo swimming around like a sperm. (Their description, not mine.)

All of this is well and good. But what happens once the novelty of AR inevitably wears off? How inclined will we be to hold up our smartphones and wait as yet another product-pushing optical overlay appears?

If the purpose of advertising is to get our attention, and our attention is in shorter and shorter supply these days, then AR has three major challenges to solve:

Gimmickry
The opportunities with AR now seem infinite. It's the shiny new thing in advertising and who doesn't love shiny new things? But guaranteed, that's bound to wear off. You may get a lot of people to interact with your ad initially, but how many will turn into actual customers? This is the kind of soft return on investment on budget spend that does little to move the needle on advertising performance, which is ultimately where it needs to go for big dollars to move.

Practical limitations
Right now, the user experience for AR is poor -- to say the least. Most smartphone users have to install an app and hold their phones in front of an ad before the "magic" begins. That's simply too much to ask of consumers. Also, AR is so new that the consumer learning curve is fairly steep. Google Glass has been getting ink, but the jury is still out, way out, on whether people are going to go for it.

Time
The success of AR will come down to how it impacts one of our scarcest resources -- time. If AR technology doesn't connect to natural actions or behaviors, it could prove irrelevant pretty quickly.

The question I always ask about any new technology is this: Will it make my life easier and more efficient? The iPhone, for instance, has allowed me to be more nimble and respond to urgent questions or issues anytime, anywhere. That's good and bad, but for the purposes of my work, I'd say it's mostly good. (Although you might get a different answer from my wife.)

With AR, I'm unconvinced now that it's going to make my life easier or more efficient. At worst, I could turn into a Glasshole. At best, I suppose it offers a brief escape from my daily demands.

All I need to do is figure out where the nearest AR-enabled billboard is and point my smartphone at it. On second thought, I could just wait for my Ikea catalog to arrive.

Better yet, I think I'll cross the pond to Italy and see if I can find one of those Gold stickers on a wall somewhere...