As modern technology and communication systems change the nature of business, various organizations have attempted to integrate them into their marketing strategies, hoping to have a positive impact on consumer buying behaviour. The main challenge in these efforts, however, is identifying the best solution to positively increase market attention and spur purchase action. One current IT innovation involves using augmented reality (AR) technology to engage with consumers. Pepsi, for example, made headlines as an early adopter of AR technology in 2014, when it made waiting for a bus in the U.K. a lot more interesting by turning a London bus shelter wall into a fake window that caught the attention of commuters by making it look like the street was under attack by flying saucers. The recent Pokémon Go craze, in which digital creatures are inserted into a physical space appearing on the user’s smartphone, is another instance of expanding AR applications.
AR technology can also enhance everyday marketing materials by infusing them with highly interactive multimedia experiences or 3D models of products. In the digital world, AR applications allow marketing and advertising to be enhanced using messages, videos, animations and website links that can be accessed by consumers using mobile devices such as smartphones and tablets.
Nevertheless, despite all the media hype over high-profile uses of AR technology, it remains unclear just how effective the augmented reality solution has been as a marketing and advertising tool in the retail sector. This paper attempts to help answer this key question by highlighting results of a research study based on two online surveys conducted with a sample of general retail consumers and a group of marketing executives. The Canadian Marketing Association (CMA), a key partner in this project, provided access to LoyaltyOne, a global administrator of customer loyalty programs, which permitted our research team to contribute a short questionnaire to a comprehensive location-based technology services survey administered to a sample of its members. Some questions allowed for multiple responses, resulting in total percentages exceeding 100 per cent in some cases. In other cases, percentages do not add up to 100 because of rounding error. To help us assess the use of technology and digital media in marketing organizations, research firm Ipsos conducted a marketing manager survey using the CMA membership and Marketing Magazine subscribers.
Table 1 provides a profile of the respondent sample and a breakdown of the demographic variables. This sample corresponds to the Air Miles Collector panel used by LoyaltyOne in its consumer survey. In total, 4,424 members of the Collector panel were asked to complete the AR online survey. Over 1,090 responses were received, yielding a response rate of 24.7 per cent. However, 29 incomplete or erroneous surveys were removed. The sample was subjected to a three-factor (i.e., geography, age, and LoyaltyOne segments) weighting procedure by LoyaltyOne to ensure that the sample was representative of the Air Miles Collector Panel. Hence, the final sample size comprises 1,056 respondents from across Canada. For the managers’ survey, a total of 306 marketing-related organizations from the CMA membership and Marketing Magazine subscribers responded to the AR portion of the Ipsos questionnaire. These were further broken down according to the two types of business they represented (meaning marketing function or marketing agency).
Sample Demographics (n=1056)
CONSUMERS & AR TECHNOLOGY
Survey respondents were asked about their familiarity with the AR technology. As seen in Table 2, the results show that 57 per cent had at least a minimal familiarity, while 42 per cent had no familiarity at all. These proportions tended to be consistent across genders, but a slight age difference was noticeable, with 76 per cent of respondents aged 18–34 indicating AR familiarity, while people 35–54 years old and respondents over 55 indicated lower levels of familiarity (64 per cent and 40 per cent, respectively).
Awareness of AR Technology (n=1056)
As shown in Figure 1, almost three-quarters of respondents who indicated familiarity with AR had seen the technology (37 per cent on a mobile device and 34 per cent on a PC). Likewise, 40 per cent of respondents had seen AR applied in various advertising media. These proportions generally held for breakdowns by gender but were marginally different for the age groups, with more younger-group respondents having seen AR in action.
AR Technology Consumer Visibility (n=766)
As shown in Figure 2, comparatively fewer respondents reported actual experience with AR. Of those familiar with AR, only 41 per cent had used the technology, primarily through a mobile device (18 per cent) or PC (14 per cent). Younger respondents had the most experience with AR (57 per cent), whereas older respondents had the least (22 per cent).
AR Technology Consumer Usage (n=766)
Users of AR were asked about different ways of employing the technology. As shown in Figure 3, many users (27 per cent) had used AR to gain information about products and services, while relatively few had visited a retailer (7 per cent) or made a purchase (8 per cent) because of their AR use. However, most AR user respondents (34 per cent) indicated that they had used AR for some other purpose instead of those stated in the questionnaire. Hence, the current application of AR by actual users in retail settings seems relatively narrow, and the larger consumer population may be concerned about how the technology would be used.
Consumer Reasons for Using AR Technology (n=766)
Overall, our study reveals consumers generally have a fairly high level of awareness about AR technology. Moreover, it confirms that members of the younger generation are more familiar with and accepting of the new technology. If you look at smartphone adoption data, it is no surprise that the younger generation is more inclined towards technology awareness and usage. Research conducted in Canada by Catalyst and GroupM Next reveals that consumers in the 18–34 age group have the largest share of smartphone ownership, at 44 per cent, with a bigger percentage of smartphone owners leaning towards the upper range of this age group (25–34). The Catalyst study also concluded that millennials (18–24 years) are more likely to use mobile apps compared to the older generations.
All respondents to the consumer survey were asked about the likelihood of their using AR in various ways. The results show that over half (55 per cent) indicated that they were likely or very likely to use the technology to check the availability or inventory level of desired products in retail stores. Similar proportions were evident for the different demographic groups, although older respondents were less likely to do this. A similar number (53 per cent) were also interested in using AR solutions to explore personalized offers, such as discounts on frequently used merchandise. Substantially fewer respondents (13 per cent) were likely to use AR for integration with social media applications that can share consumer information with other people or as a “virtual dressing room” (26 per cent) to try on clothing through a smartphone or tablet. Men and younger respondents reported a greater likelihood of using AR for these purposes.
A clear delineation in terms of the future potential use of AR is revealed in the results. Indeed, consumers seem to view the supplying of product information and promotional opportunities as a possibly important use of AR, but they also seem skeptical about other AR applications. And while consumers familiar with AR currently use the technology to gain information about products, services, brands and companies, it is interesting to note that this usage does not appear to have translated into purchase decisions or retail store visits in any significant way.
AR technology has had to keep pace with web-to-mobile change and it now faces change related to wearable technology platforms. As our research shows, consumer concerns over privacy and security also create challenges. Nevertheless, AR technology has witnessed immense growth in recent years and the growth potential of AR marketing and advertising applications remains significant. There were 60 million mobile AR users worldwide in 2013 (who downloaded 118 million AR apps) and this user base is forecasted to increase by 2018 to 200 million users who will download 3.5 billion AR apps. According to a report by Technavio, the global mobile augmented reality market for marketing and advertising will grow at a compound annual growth rate of almost 106 per cent from 2015–2019.
MARKETING MANAGERS & AR TECHNOLOGY
The managers’ survey was aimed at measuring the awareness, use and future intentions of marketing-related organizations with respect to AR technology. The results (Figure 4) indicated that out of a total sample of 306 marketing managers, only 12 per cent reported using AR in their organizations. Of the rest, 27 per cent had never used it, while 50 per cent had no intention of using it and 11 per cent were not even sure they understood the technology or its applications.
Use of AR (n=306)
Out of the 36 respondents who indicated their organizations use AR, 61 per cent used it for marketing purposes, with 50 per cent using it for advertising and 33 per cent using it for entertainment and sales. These figures shifted slightly depending on the type of business. When asked about future use of AR, 82 respondents signified that they planned to use AR within the next 12 months. Almost three-quarters chose marketing as their primary interest for AR, regardless of industry specialty. Advertising was the next most common activity.
Organization Success with AR Technology (n=36)
Further, out of the respondents whose organizations currently used AR, 27 per cent reported that the program was successful, while 39 per cent experienced limited success and 33 per cent were not sure about the results (see Figure 5). These results were relatively consistent over the various types of organizations.
Finally, a third of respondents using AR for marketing believed their program was effective or very effective, although 42 per cent felt that the effectiveness of AR technology was limited, and a quarter weren’t sure about the effectiveness of AR technology in their marketing program (Figure 6).
AR Technology Effectiveness (n=36)
Interestingly, while there did seem to be some promise in the future, with 82 respondents planning to use AR in the coming year, the usage of the technology was minimal within the current sample. Only 12 per cent of managers surveyed reported using it while a large base remained unaware of the technology.
Despite the advantages and growing market for AR, there has been very limited research to explore consumers’ awareness, use and experience of AR. Being a preliminary study, this research effort renders two important implications for marketing managers.
First, relatively large proportions of consumer respondents display familiarity with AR to varying degrees, but a rather small number have actually used the technology. The consumer knowledge gap corresponds to the limited deployment reported by marketers in our managers’ survey, where more than half the organizations surveyed reported not having used the technology. This finding could be an opportunity for marketers to differentiate themselves by identifying applications and opportunities to use AR in interacting with their current and potential customers.
Second, our study demonstrates that consumers who have experienced AR have primarily used it to receive advertising messages and locate information about products and services. Again, this result is consistent with how organizations have used the technology mainly for marketing and advertising. Since the consumer experience has been strong enough for them to recall the use of AR, we can conclude that they would like to receive customized information and offers from companies using this technology, which can widen the marketing horizon by creating brand awareness, product preferences, pre-purchase product trials and social interactions.
However, although AR technology can take consumer experiences to a whole new level, here is a word of caution for marketers — consumers may not be very receptive to messages that invade their personal or private boundaries.
For marketing managers, our research and the current state of the market also offer the following takeaways:
- The use of augmented reality technology in the field of marketing and advertising is inclined more towards a pull marketing strategy than a push marketing strategy.
- AR leads to the creation of perceived experiential value and, hence, it can play a vital role in customer satisfaction.
- As one of the vehicles that can be used in online and mobile marketing, AR can help organizations tailor marketing efforts to the needs and expectations of consumers in a more interactive experience.
While our study suggests that AR can enable retailers to create an effective and enjoyable interactive customer experience, we obviously remain in the emerging stage of AR technology and its applications for marketing. And the early results for using AR as a tool to engage and enhance customer interaction are not encouraging, Awareness issues need to be overcome before AR reaches its full potential. Besides being new, market adoption is also currently limited by a lack of a single platform (although developers such as Blippar, Aurasma and Metaio are working on platforms that are yet to become mainstream).
Nevertheless, as industry experts point out, the future potential of AR technology to rule the digital universe cannot be ignored. This view is supported by relatively recent acquisitions and investments by major tech companies such as Apple and Google. Furthermore, as evident from the data provided, consumers are clearly becoming familiar with AR technology through online advertising media. Hence, growth in online advertising is both a platform and a driver of AR technology, which itself “augments” online advertising. In other words, as AR technology becomes more widespread in its marketing applications, it will lead to greater consumer use and engagement with the technology itself.
For marketing managers, this means they cannot afford to remain in an inertia mode. Despite the existing overload of digital marketing tools available, we conclude that it is now time for organizations that want to remain competitive to explore the adoption of AR technology and move to keep pace with the new generation of high-tech customers