Most extended reality (XR) experiences to date have been parallel brand environments: localised pieces of campaigning, with little or no consideration for how they fit into the wider customer journey.

This stands in contrast the direction of travel in marketing, where innovation has been driven by the need to integrate technologies and run coherent marketing in multichannel contexts.

It was previously not practical to do this with XR for various reasons, some related to costs and technological obstacles; others related to lagging awareness in how augmented and virtual reality (XR and VR) can be used.

Today, these blockers are greatly reduced. XR content can now be developed and delivered using the same technology that brands use to run their websites and smartphone apps. The costs of developing these experiences, and of VR headsets, have fallen significantly.

The purpose of this article is to outline how brands can capitalise on these lowered barriers to using XR in their marketing. We will:

• describe the evolution in software being used to create and publish XR experiences, including composable commerce platforms
• discuss the cost and effort of publishing in 3D – which have both fallen – and use-cases where the technology creates the greatest value for customers
• look at the utility of XR in offline settings, such as retail stores, and how the technology can be used to connect different channels and improve personalisation.

It’s worth recognising that, 17 years after the launch of the iPhone, brands are still working to better integrate mobile commerce and payments into their marketing ecosystems.

Given the unique value of XR for certain applications, similar progress could easily play out within 3-5 years, with significant rewards for those brands leading the charge.

Modern martech & commerce SaaS enables better marketing in XR

One of the major ongoing efforts for marketers and technologists in the past 15 years has been to be able to identify, track and advertise to individual customers across different marketing environments.

Devices have been a major driver of this effort, and the development of smartphones provides a useful indication of the necessary development with VR devices and XR experiences.

Initially, when smartphones became widespread about 15 years ago, they caused a ‘break’ in the customer journey. Individual customers could be identified if they logged into the app, but content was often served and managed separately from the main website. Brands had to invest a lot in maintenance and manual integration in order for the mobile apps to function usefully as part of a multichannel customer journey. It many cases, it simply created silos.

Today, these problems have been resolved to the point where smartphones are actually now a primary means of bridging between channels. This gives customers a means of engaging with brands in almost any offline setting – and the marketing team, a means of measuring and incentivising those interactions.

XR has the potential to provide a comparable bridge, thanks in part to evolution in the technology used for content creation and management. Today, device-agnostic, ‘headless’ technology platforms allow consistent customer experiences to be served to any device. Commerce platforms such as commercetools and BigCommerce, and content management systems (CMSs) such as Contentstack and Magnolia, can serve both app-based and web browser experiences from a single location.

Andrew Elia, CEO of Arishi, a London digital agency specialising in CX and extended reality, commented…

“..we’re developing all sorts of applications that have a CMS at their core. We have always viewed mobile applications as a kind of remote control for server-side applications: a mobile app gives you interactivity, tactility, and the ability to use it offline. The data at its core is almost always grabbed via a remote API from the CMS.”

This greatly simplifies work for marketing teams managing multiple touchpoints including mobile apps, websites, and XR experiences. The marketing team can maintain a single view of the customer and their online interactions, which makes it much easier to target offers and personalize the customer relationship.

Magnolia, says Andrew, along with other modern composable CMSs, is equally adept at serving 3D content into virtual environments. This means that the same wave of digital transformation, which is helping to unifying 2D digital environments, is also paving the way for better use of XR.

“While VR experiences can be delivered through modern web browsers, most VR or AR touchpoints are self-contained applications consuming content via headless APIs, which Magnolia offers out of the box.”

This, in turn, means that the full suite of modern martech tools and solutions, which brands now operate in their martech stacks, can also be deployed in virtual settings. Some modern search and merch products, loyalty solutions, personalisation engines, etc. can be operated with no front-end code, in theory allowing the same promotions and customer engagements in 2D and 3D customer experiences (CXs).

There is some work still to do.

“Ecommerce personalization is totally untapped in XR… it’s being used in the same way as the internet 20 to 30 years ago, when everything was baked in.”

Whilst the development of headless CMSs has made content management a “less technical skill”, the underlying technology most often used to create 3D experiences offers…

“…very little flexibility. This is partly due to leading development platforms like Unity and Unreal Engine not being too concerned with more basic network capabilities but that’s changing – albeit at a slow pace. We believe it’s time for these applications to evolve.”

Notably, one of the most advanced modern VR devices, the Apple Vision Pro, was described by an Ad Age journalist this year as “an introductory technology”.

That said, XR experiences can also be designed for use in standard web browsers; indeed, augmented reality is often intended for use on a standard smartphone.

UnifiedAR is one company providing relatively low-cost technology solutions for the use of augmented reality at large scale. The company offers a campaign builder for producing AR experiences in augmented reality JavaScript (AR.JS), which are mostly intended to be launched via a QR code scan.

These experiences do not necessarily produce cinematic-grade visuals, but they do serve the purpose of displaying a 3D product which may elicit a deeper degree of audience engagement. For many brands’ purposes – which may simply be to encourage customers to log into branded environments and identify themselves for marketing – that will often be enough.

Of course, simply running XR experiences on better technology platforms is no guarantee that customers will consider the higher level of user-engagement, on their part, to be worthwhile.

This means that XR investments should take place with clear understanding of the balance of reward vs. effort for the customer, and ROI for the brand.

Falling barriers to entry, and the unique value of XR for marketing

Misconceptions persist about the cost and difficulty of creating and running XR environments. And as with all marketing investments, the conversation should really be around marketing ROI as opposed to direct cost.

For brands, the chief consideration for direct costs is the design investment needed to create 3D experiences, and the data processing needed to store 3D graphics and serve them to the CX.

Certainly, these costs of content creation are relatively high compared to 2D content, which makes XR unlikely to be used for certain kinds of retail.

“This has been the objection since we did the first AR stuff in 2008… If you’re talking about Primark forget it… it’s fast fashion. A SKU would last a couple of months and it’s gone. For them to invest the cost and time to model that, only to get rid of it… it’s not going to work.”

Many companies, however, have slower, faster-moving product portfolios of higher-value items. Car brands would be one obvious example.

“Automotive brands tend to stick with the same shape for a long time, and they already have the 3D models because the vehicle design comes from CAD [computer aided design] anyway…”

Other highly useful applications for XR would include products which are less expensive than cars, but which require a heightened degree of user engagement. This could include home electronics or craft tools which are tricky to set up, musical instruments or games which take time and skill to master, etc.

It should also be noted that the cost creating XR content has come down a lot as technology has matured. Fashion products, for example…

“…can be modelled quite effectively in 3D now, because rendering cloth in real-time and having something that flows and moves and doesn’t just look like a piece of cardboard… that’s a lot more possible with the computing power that we have now.

“The volume of data isn’t massive. If it was cinematic-grade 3D, then each model would be really heavy, even gigabytes in some cases… But you don’t need that sort of resolution and also it’s undesirable because the GPU won’t be able to hack it. You can get something really good within 10s of megabytes.”

Whether ‘really good’ is enough can be judged case-by-case.

Online and in print, highly-detailed representation of the product is often required in order to compensate for the customer’s inability to see or touch it up-close. Fashion brands and art dealers, certainly, invest heavily in print reprographics to achieve true-to-life colours and show tints, textures and fine lines as accurately as possible.

In these cases, customers would mostly prefer a 3D rendering of the product. However, a workaround for a relatively flat product would be to contain a high-resolution image within a less detailed surrounding. This concept by Arishi for a Christie’s art auction is a good case in point.

In other marketing contexts, however, accurately representing the product is less important than conveying functional information. This would include the ‘place in environment’ use-case, now widely used by the likes of IKEA, to illustrate how a piece of furniture would fit in a customer’s room.

Equally, the XR may be used not to promote a physical product, but to deliver entertainment or interactive content, where perceived image quality is less important.

In such cases, the business value of the XR experience may be in generating and measuring user engagement, to yield insights for the marketing or innovation teams.

For customers, it should be recognised that XR is higher-effort than browsing on a laptop or smartphone. Some people don’t want to wear things on their faces for reasons of comfort, and certainly for everyday web browsing or grocery shopping, a headset would be an unnecessary inconvenience.

Others may consider the cost to be excessive – though, at around $400, the Meta Quest 3D costs less than many smartphones. For the many consumers who shop for entertainment, or who have strong affinity to certain brands, $400 may seem quite affordable.

People who enjoy videogames and esports are an obvious example. Many luxury fashion labels and entertainment brands have diehard fans which actively take part in brand events, including online and on social media, and who might well invest in a richer brand experience.

These customers could easily represent 15-25% of customers for some brands – a highly engaged minority where the brand may generate its greatest marketing ROI.

In that context, as brands invest further in XR, a key focus should be considering how it contributes to the customer’s wider relationship with the brand, including across different marketing channels.

XR devices as a bridge between online and offline channels

In the last couple of years, brands have been relying more heavily on mobile apps as a way to identify customers in-store. By encouraging customers to log in and shop using their phones, brands can collect valuable data and inform personalised marketing.

The classic example is use of loyalty apps by grocers, which is now almost ubiquitous. But research indicates that XR has the potential to lend unique advantages over other forms of content delivery, holding customers’ attention effectively and producing deeper engagement. Exchange Wire reported in 2023…

“Research from OmniVirt shows that AR/VR ads brought in more clicks and engagement than 2D ads, while Unity Blog found that interactive VR ads achieved a much higher emotional response – an elevated heart rate (+24%), heightened galvanic skin response, or sweating, (+44% peaks/minute), and increased muscle activation associated with smiling (more than 3X).”

This sounds promising; even more so if you consider sweaty customers to be a lead KPI.

A potential problem arises, however, in use-cases where the device is owned by the brand rather than the customer.

In ideal circumstances, a VR headset would store a record of the customer’s identity in much the same way that a smartphone does. Smartphones and apps now mostly alleviate the need for customers to log into different customers experiences, since tracking cookies and/or biometrics provide an easy way to identify the customer.

Certainly for Andrew Elia, the dream for XR is that…

“…you stick the headset on your head and you use it. It’s pre-registered so you don’t have to log in each time… People would receive a pre-configured headset that’s already registered to their platform…”

Many VR headsets, however, and nearly all out-of-home screens and holographic display etc., will be owned and operated by the brand rather than the customer. Scaling the use of XR tech in-store, therefore, requires some thought as to how customers can be motivated to identify themselves on a third-party devices.

This is partly a technological question; partly a strategic one.

Technologically: conventional means of logging into a mobile device are problematic in XR. Virtual keyboards are incredibly difficult to use, voice input is error prone.

In theory, biometric login be possible via a controller or retina scan, if the brand was able to cross-reference this scan with an existing record. In reality, brands do not want store this information and customers equally would find this intrusive. Short of any future third-party solution for the encryption of customer identity, this isn’t gong to happen.

The answer is for customers to identify themselves when they collect and activate the device, either via a QR code scan, or perhaps simply by typing their email address into a terminal. That would allow the customer ID to be matched to the specific headset, allowing first-party data to be collected and for content to be personalized in real-time.

There’s a clear precedent for this kind activity with modern POS (point of sale) devices, where customers are often encouraged to scan at the till. Indeed, the Mobile Device Management (MDM) features of modern XR platforms (including Arishi’s own proprietary solution) help brands solve this problem.

This is needed, because the phrase ‘build it and they will come’ does not apply to in-store martech.

Scanning a QR code at the checkout may only take a few seconds, but that can feel like too much time for a busy shopper. ‘Scan while you shop’, where you wave a phone around whilst putting items in your basket, is genuinely inconvenient.

By comparison, donning a headset lengthens the customer’s shopping trip by minutes rather than seconds. The risk, therefore, is that a minority of techie customers participate in the technology whereas the majority ignore it – ultimately reducing brands’ return on their XR investment.

One answer to this is ensuring the technology offers genuine utility as opposed to being gimmicky in nature. Useful applications include allowing customers to ‘try on’ the clothing in a virtual changing room, or other use-cases which allow the customer to experience a product or service before committing to a purchase.

The unit economics of this approach will largely depend on your business category. High-volume, low-margin sectors such as grocery probably do not want customers to use VR headsets in-store as it would create little customer value and slow down trade.

By contrast, furniture retailers such as IKEA, hardware suppliers, art galleries and other businesses may find the technology helps to accelerate customers’ buying decisions, reduce return rates etc.

In some cases, direct incentives may be useful to encourage customers to transition between environments, if the brand considered the marketing value to be worthwhile.

Member-only pricing in supermarkets has become commonplace for just this reason; the grocer wants the majority of customer to identify themselves in-store. Similarly, participating in an XR experience in-store could unlock loyalty points, automatically enter the customer into a competition, allow customers to claim a free gift etc.

With brands already investing in digitalizing their in-store experiences, XR, with its unique advantages and applications, should be actively considered as complementary means of connecting the dots.

Readying XR for the near-future of multichannel marketing

Advertising has not been widely discussed in this article – largely XR has not yet proven particularly useful for this purpose.

The majority of ad inventory is served to environments which customers mostly browse using computers and smartphones: social channels, news sites, search engines, in-app marketplaces, etc.

If the consumer cannot easily pass between these different environments using a headset, nor can they easily be identified and tracked through tracking cookies or device/app store IDs. This ultimately restricts ad inventory in XR, and it also limits the production of data which can be used for targeting.

In short, virtual media ecosystem lacks critical mass – but this may change in the near future.

An additional trend which has surged in 2024 is retail media, described on The Telegraph recently as a “£2bn goldrush”, as individual brands begin to monetize their own proprietary environments and data.

Amazon and social media marketplaces have been doing this for years, enabled by very high volumes of customer traffic and content, which allow them to build out richer customer profiles than most brands. Recently, retailers such as Walmart and Tesco, have begun to monetize their loyalty programs as media environments, realizing the high utility of their zero-party loyalty data for targeting ads.

More diverse retailers such as Walmart, and other brands with large memberships such as travel companies, could easily create customer value in XR experiences. Reaching a point where advertising can be productively served in XR would likely have a flywheel effect, accelerating wider development and adoption of the technology.

Preparing for this future will mean running XR experiences on the same tech and brands’ primary campaigning channels. It will mean ensuring that customer experiences can be personalized, and incentivizing customers to take favourable actions, using a coherent, common marketing framework that unites the entire customer journey.

Admittedly, some outstanding obstacles are cultural rather than technical in nature. Andrew Elia comments…

“…despite the fact the price has come down dramatically in the last 20-30 years, people still VR as a little bit ‘out there’, and that’s probably one of the things holding it back.”

But it’s often the way, with digital transformation, that cultural blockers linger longer than technological ones. Meanwhile, companies which focus on innovation reap the rewards

With falling costs, spreading awareness, and improvements in the technology used for creating and delivering 3D content, there’s significant scope to carve out a competitive advantage in the use of XR in the coming years.

About Arishi

Arishi is a boutique international digital agency specialising in CX, including extended reality. See their recent work for brands including Sky, Capita, Intel, Ogilvy, American Express and more, projects across web, e-commerce, immersive technologies and technical consulting, at arishi.agency.

About Navigate B2B

Navigate B2B is a content agency that specialises in highly differentiated, often technically complex businesses.

We collaborate with business and technology leaders to produce creative media, digital UX and thought leadership that engages and educates their target audience.

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