Before we dive into this VR Ad Platform idea, we first need to look at how the digital advertising and website publishing industries currently work. The reason why will be much clearer towards the end of this article, but from a high level, I think VR advertising is going to follow a similar path in many ways to how the digital ad industry evolved… just much faster and with a few big innovations.
Alright, let’s dive in.
There are over 1,000,000,000 websites online now. One billion! People start these websites for a billion different reasons too, but a large percentage take the plunge with the hope of making money. So, how does a website make money?
Since the idea I’m writing about relates to digital advertising, let’s focus in on the Digital Advertising industry as a whole a bit more.
Online advertising is a $75+ billion a year industry in the US and growing fast. It’s projected to be a $100+ billion a year industry by 2019. It’s also, by far, one of the most common ways websites make money. Display & Social advertising account for 50% of that $75 billion. The rest is split up between search (Google AdWords) and email marketing.
Let’s dig into Display and Social ads a bit more and think about it from the perspective of the websites that make money from that ad spend: The “publishers”.
Let’s say you have a website with a decent amount of traffic. Here is how you can get into the advertising business:
In case you didn’t know it, Google makes a ton of money from AdSense (way more from AdWords, but a lot from AdSense). Any time you browse the web and see pop up ads or ads on the top or right hand side of the page, you can most likely thank Google for that.
Third party ad systems like Google AdSense are actually pretty brilliant, though. For publishers, it alleviates many of the biggest pain points of managing ads being displayed on your website. Think about how big of a pain it would be to find advertisers, negotiate a deal with each them, and then actually run the ad campaigns on your website. Pain. In. The. Butt.
It also solves a lot of pain points for Advertisers as well. By working with a huge third party ad platform, you are able to tap into a network of millions of websites with a few clicks and you don’t need to work out individual ad deals with them.
Companies like Google also make use of machine learning and “big data” to try and automatically improve the performance of your ad campaigns by showing your ads to the right people at the right time.
In the end, publishers and advertisers are happy because this third party system solves a bunch of pain points and offers benefits they couldn’t get otherwise. Win-Win-Win. Pretty Neat!
Virtual Reality Product Placement Advertising Platform
Ok, now that I’ve caught you up to speed on how digital advertising works, let’s start talking about what the future might look like if & when Virtual Reality is ubiquitous.
If VR keeps advancing and continuing down the path it is going, it’s pretty safe to say that we will someday have 1,000,000,000+ virtual reality “spaces” and/or “experiences”. Possibly more. To reach those kinds of numbers, we would need to have millions of independent virtual reality creators just like we have for websites. Obviously I could be wrong, but with the way things are trending now, that idea doesn’t seem too outlandish.
If we have millions of independent VR creators, how will they be rewarded for their efforts? My guess is we will see many parallels to our current digital marketing and website ecosystem: Ecommerce, Digital Ads, selling VR experiences, etc. That’s why I covered those details earlier in this article.
Here is where I think VR advertising might be able to “one up” website advertising, though. Imagine being an independent VR creator. You spend countless hours creating this entire world/experience. Now, you need to figure out how to monetize it. How will you do that?
Ecommerce? Maybe. I think it might still be too earlier for that. I’m not sure I want to buy things in a VR experience in the “traditional” way I would online right now. I feel like VR would kind of get in the way vs. being something amazing. That could change quickly as the technology continues to evolve and expand, though.
What about ads? I think that makes the most sense currently. However, it’s kind of like the early days of managing ads on websites. Right now, you would basically need to code the ad somehow into the VR experience or do some kind of pre-roll or other form of interruption marketing. This is the equivalent of a website “putting ads up and taking them down”.
Here is where I think things could get pretty cool very fast for independent VR creators. Imagine if you could take a snippet of code and drop it into your VR experience and that code used machine learning to start identifying “objects” and “things”. What if that car you coded into your VR experience driving down the road is indeed identified by this 3rd party ad platform as a “car” and then transformed into a yellow and black 2016 Corvette Z06. What if it picked that car because the person interacting in your VR experience just visited Corvette’s website last week?
What if a different person interacting in your VR experience visited the Mercedes website and instead of seeing the Z06, they saw a black Mercedes instead. What if that same thing could happen to the clothes people are wearing in your VR experience? The phones people are holding? The gun they are using in that VR game? The billboard on the side of the road they are driving down? On top of all of that, what if future VR headsets start tracking your eyes and emotional responses to a VR experience… or even the ad that was just displayed?
We would then have dynamically generated virtual reality product placement advertising that could measure the emotional impact an ad had on someone. Woah. Crazy.
I imagine this monetization pain point for publishers will change rather quickly and we will start to see 3rd party VR ad platforms cropping up pretty soon (if they aren’t out there already). It’s still really early on in the history of VR.
So… do have some of the needed skills to make this idea a reality? I’d love to connect with you!
Want to see some of my other ideas? Go here.