March 2022 Archives

Virtual Reality Advertising

Posted on March 13, 2022March 15, 2022 by Austin

Virtual Reality (VR), often the plot device of futuristic science-fiction stories, has actually been around for some time now. Both YouTube and Facebook have been supporting the adoption of 360-degree videos since 2015, Nintendo’s ill-fated “Virtual Boy” was released way back in 1995, and Oculus (a company Facebook would later purchase for $2 billion) debuted their popular Rift VR headset on Kickstarter in 2012. Even so, VR should be considered an emerging market, as only now has the technology finally caught up to the demand. And as consumers are introduced to this new medium, there will be a virtual gold rush as advertisers seek out new ways of engaging with users.

VR content can be viewed in multiple ways. Smartphone users can view 360-degree content (content that has been recorded on omnidirectional cameras) by moving their phones around in real space, allowing them to view videos from different angles. The effect can also be accomplished on a computer by moving a mouse around. While using “low-cost” options like smartphones and computers can often be a fun way to interact with content (and has helped spark interest in VR), these options only offer users a limited VR experience. The driving appeal of VR is in its ability to create fully immersive experiences that don’t need to be grounded in reality, but in order to experience the full extent of what VR has to offer, users need to use a Head-mounted Display (HMD). These headsets combine many advanced technologies, like gyroscopes, motion sensors, spatial audio headphones, HD screens, and fast computer processors. The gyroscopes and sensors allow very sensitive tracking of the head, body, and hands. This allows the crisp HD screens to show a simulated world that responds to the user’s physical movements, just like the real world. Headphones with spatial audio capability allow directional sounds that envelope users. These components are important for creating immersive experiences that feel “real”; however, they have historically also raised the price of HMDs out of reach for the average consumer. Even though VR enjoyed lots of early hype, by 2017 reports showed consumer interest in VR was declining as a result of the high cost of the technology. Since then though, companies have been able to lower the cost of adoption drastically, while at the same time improving VR hardware and software significantly. This has caused a renewed spike in consumer interest as the hardware has now become affordable and accessible. According to Grand View Research, the global VR market will grow to 62.1 billion dollars by 2027. Currently, VR is most commonly used for entertainment applications such as video games, 3D movies, and social worlds. According to a study from Ericsson Consumer Lab however, shopping was the top reason users were interested in VR. Interestingly, 64% of respondents stated that their interest was in “seeing items in real size and form when shopping online”. That should be a call-to-action for advertisers.

We live in a distracted world. For example, an in-home eye-tracking study Facebook IQ commissioned revealed that 94 percent of participants kept a smartphone on hand while watching TV. This can make it difficult for advertisers to reach consumers, as their content often gets tuned out. However, VR creates a new world around users. A world free of distractions, with a tailored focus of attention and obligatory user interaction. More than that though, VR promises to re-define the advertiser-consumer relationship. In essence, VR could mean an end to the enraging ads of the past. Lithium Technologies recently polled 2000 customers aged 16-39, and the results showed that 74% of the interviewees found the advertisements in their social media feeds intrusive and irritating. Intrusive advertising alienates customers, however in the modern landscape it can be difficult to attract attention without becoming intrusive.

Unity believes the answer to intrusive ads is a “virtual room” users would be transported to for brief periods of time. This would allow users to experience advertising without it becoming a distraction to games or movies. While inside this room, users would be immersed in a fully interactive branded environment where they could engage with products or services. These ads could be targeted, allowing users the chance to interact with the ads they would likely be the most interested in. And creating in-person experiences will drive empathy, allowing advertisements to have a deeper impact. This won’t be the only method for advertising with VR, however. Product placement will allow advertisers to seamlessly embed ads within VR gameplay. For example, game characters could wear branded apparel, and in-game posters or billboards could portray real-world brands. VR could potentially change the hospitality industry as well by allowing hospitality brands to recreate aspects of their travel experiences in VR. Imagine being on the fence about what your next vacation should be, and then spending a few minutes enjoying a virtual luxury cruise: enjoying the sun, waves, entertainment, and service. This might be just the push a consumer needed to go ahead and book the cruise, and how convenient that they can order the tickets without even taking their headsets off!

VR Advertising is not without its limitations, however. Laws tend to lag behind technological advancement, but eventually they do catch up. We know already that the ASA treats video content with greater sensitivity than still images when it comes to rules on “harm and offense” or “social responsibility”. We should expect that VR ads will be scrutinized more severely do to their more immersive design. Precautions will need to be taken by advertisers to make sure ads are VR appropriate, as well as age appropriate. Another challenge is that the act of using HMDs is often culturally viewed as “dorky” due to how large and clunky the headsets tend to be, and how clumsy users can appear as they play virtual games. In order to achieve widespread VR adoption, advertisers will need to market the technology with positive traits like intellect, youth, and success. The focus will need to be on the content and experience of VR, and not how users look while they are wearing the tech. Also, as with any connected technology, it is only a matter of time before cybersecurity issues are raised. Up until now, VR hasn’t been widespread enough to attract the attention of hackers, but as adoption rates grow that will likely change. New technologies will require new best practices to be formed around cybersecurity, and users will have to choose how much risk they are willing to accept.

Even with these challenges, the benefits of creating immersive advertising for attentive users is too good an opportunity for advertisers to miss out on. Brands that are able to capitalize on this new medium will set themselves apart from their competitors. They will also have the opportunity to re-imagine the relationship between advertisers and consumers moving forward.

Hyper-personalization in Advertising

Posted on March 11, 2022March 17, 2023 by Austin

Hyper-personalization utilizes artificial intelligence (AI) and data harvesting to deliver targeted advertising content that is closely tailored for each user. It can be a useful tool in an advertiser’s toolbox; however, it also raises several privacy concerns, and there is an inherent risk of alienating consumers.

Hyper-personalization is an evolution of personalized marketing, which consisted of such practices as adding a first name to an email opening line. However, personalized marketing never attempted to understand the individual preferences of each customer. Instead, it merely created the appearance that marketing messages were aimed at the individual. On the other hand, a hyper-personalized version of that same email might take a customer’s browsing behavior and location data into consideration, to offer products or services that would likely be of more interest to that particular customer. A hyper-personalized approach could also make use of real-time data, to make recommendations that were perhaps only relevant for a small window of time. For instance, a person who spent their morning googling car reviews, might be more receptive to an ad that promoted a local car dealership.

Before venturing into hyper-personalization, relevant consumer data must first be gathered. This data can be harvested from a variety of sources, including social media, browsing tracking, purchase history, consumer trends, and data from IoT (internet of things) devices. Take Amazon for instance: their hyper-personalized recommendation engine is responsible for over 35% of their conversions. The engine’s algorithm is called ‘item-to-item collaborative filtering’ and it suggests products based on four data points:

Previous purchase history
Items in the shopping cart
Items rated and liked
Items liked and purchased by other similar customers

Using these data points, all harvested from their own site, Amazon can create a detailed user profile and then email this user ads that are specifically relevant to them. Thus, greatly increasing the likelihood of success.

Once consumer data has been collected and analyzed, companies can then segment their consumers into different subgroups. These subgroups can be based on a variety of factors, including demographics, location, brand interaction history, satisfaction, average amount spent, etc. Segmenting will allow for targeted communication, which will increase the potential for conversions. When customers are given offers that are unique to them, it’s likely that a solution will surface to their problem.

Returning to the idea of using hyper-personalization to promote local car dealerships, let’s take a look at an innovative way it could be used. Imagine a car dealership wanted to increase sales, they could target local consumers who had recently searched for car reviews, directions to a car dealership, or directions to a mechanic (if they are experiencing car problems, they may respond positively to messages to buy a new car). Once the car dealership had a group of local consumers that were likely interested in buying a car, they could then segment this group into subgroups based on their income levels, demographics, and browsing behavior. This would allow the dealership to send promotional content that included the specific vehicle (perhaps even in the specific color) that would mostly likely appeal to that consumer.

There are challenges when it comes to hyper-personalization, however. Hyper-personalization requires a modern digital infrastructure. Most legacy systems fail to offer this capability, so many traditional mom-and-pop retailers (who may not have the resources to overhaul their existing platforms) have trouble adopting this new approach. There are also huge limitations that come from increasingly strict privacy regulations and consumer adoption of data protections. Consumer privacy laws, such as the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR), are putting cookie tracking at risk (the key component to tracking consumer behavior online). Free adblocking plugins and proxy servers can also be utilized by any consumer concerned about their data privacy, nullifying data collection and making hyper-personalization impossible. Users also often share devices, making it difficult to create a reliable user profile based on browsing behavior in those cases. Then there is the danger of eroding trust in brands if they appear to be too invasive. A poorly designed hyper-personalization campaign could push consumers away, if the communication makes it seem as though the brand has been spying on them. A recent survey showed that 86% of consumers are concerned about their data privacy, with 40% claiming that they don’t trust companies will use their data ethically.

Even with these challenges, hyper-personalization can be a profitable tool when utilized intelligently. Knowing the behavior and interests of your audience in real-time is very valuable, and new methods of capitalizing on this information are still being developed. Brands who are unwilling or unable to put hyper-personalization to use in their advertising strategies, will be at a disadvantage to brands who use it successfully to cleverly communicate with their audience.

Advertising: Research Vs. Creative

Posted on March 10, 2022February 2, 2023 by Austin

Louis Cheskin (pictured above reclining in his chair, mid-thought) was an innovative marketing researcher who spent most of his life advocating for the benefit of using research to determine successful packaging and advertising. In the 1930s, he founded the Color Research Institute of America in Chicago. He also authored many, many marketing books that are quite difficult to track down now (I’ve only managed to find three so far). In his books, Cheskin makes the claim that the success of advertising can be accurately determined beforehand through research, and it seems that he was renowned in his day for his accurate predictions and startling ROI. His research methods focused on analyzing the unconscious psychological responses of test audiences. In his writing, you can feel the utter contempt Cheskin had for the prevalent notion that advertising should value artistic merit foremost, and blamed bad advertising on creatives who tried to express themselves artistically instead of promoting the brand using quantifiable methods.

On the other hand, there is Luke Sullivan. Sullivan spent 32 years in the ad business at elite agencies like The Martin Agency and Fallon, was afterwards a professor of advertising for many years, and authored the popular advertising book “Hey Whipple, Squeeze This“. In his book, Sullivan takes the exact opposite stance from Cheskin. He found no merit in researching ad campaigns beforehand to determine their likelihood of success. Like Ogilvy before him, Sullivan found research a pesky thing that only created road blocks to his creativity. Instead, Sullivan advocates that ads should value creativity over profit; that even if an ad was successfully profitable, if it doesn’t have artistic merit then it should be thrown out. He states that the alternative would be a world full of annoying, soul-draining (though ultimately effective) ads.

Who was right? My inner artist wants to side with Sullivan; a world full of uncreative, uninteresting advertising seems terribly dull, and there is something special about an ad that transcends to become a work of art. But art at the cost of profit seems too high a price to pay. Cheskin valued applying the scientific method to advertising so that each move was calculated and precise, with results that were predictable. Even still, he recognized the value in ads also being creative, but only if creativity was used to make an advertisement more effective.