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VR will transform marketing - but not before 2020

10th Feb 2017
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Virtual reality generates lots of buzz and massive investments. Isn’t it the next computing platform according to Facebook’s CEO Mark Zuckerberg? Hasn’t Magic Leap – the most secretive start-up – raised up to $1.4 billion to deliver on that promise?

Forrester dug into VR technology to evaluate the opportunities it will open up for marketers. In the next decade, we believe that unlike any channel to date, VR will offer highly immersive and intimate experiences with a future integrated with social and IoT. This unique combination will create not just new storytelling capabilities, but also opportunities to craft whole new experiences as part of the brand offering.

Companies like Facebook are betting on VR to fulfill the dream of what Second Life tried to achieve in 2007: Enabling social interactions and gatherings within virtual spaces. Moving forward, VR will be enhanced by sensory devices that increase the immersive and realistic nature of virtual experiences and transition the users from passive participant to live actor. Think of it as “human teleportation.”

Let’s cut through the hype, though: We’re not there yet. Looking at the facts, Magic Leap has not launched anything yet – and TechCrunch is right to question its PR approach. Device penetration is still niche and will remain so for a couple more years. Content costs are high and production is complicated.

VR is not ready for marketers – yet. Forrester estimates that critical-mass consumer adoption of high-end VR headsets is at least five years away. In the meantime, 360 video content will flourish on low-to-mid-end VR devices, but 360 video is not a truly immersive VR experience. Benefits for brands and consumers alike are limited.

Should marketers wait and see how their brands can benefit? Not necessarily. Here are a few ways to determine whether you should invest in VR:

1. Decipher whether your targeted consumers are early adopters of technology innovation. Among the 17% of VR enthusiasts in the US, 86% of them are interested or very interested in viewing movies, TV in an immersive environment, while 82% would like to tour virtual homes/apartments and hotels. Before making the investment, know how your audience will react and engage.

2. Confirm that VR is a natural fit for your brand. The more aspirational your brand, the more complex the path to purchase and the more experiential and digital your offerings, the more you should invest early. That’s why we’re seeing amazing demonstrations and pilots from gaming and entertainment companies, automotive, real-estate or hospitality brands. Their initiatives will start scaling in 2018.

One last word of caution for marketers: we have found that consumers’ expectations for VR are high. They quickly get used to what VR has to offer and are equally quickly blasé with subpar VR experiences. The coolness factor of VR will fade quickly, and brands that want to develop VR initiatives will have to find compelling reasons to use VR as a channel. They will also have to be ready to deliver against consumers' expectations if they want to be relevant in this space. 

By Thomas Husson and Samantha Merlivat.

Thomas Husson is vice president and principal analyst and Samantha Merlivat is an analyst at Forrester. Click here for more information on this new research.

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