The rise of augmented reality (AR) and the coming advent of even stronger AR hardware and capabilities puts a powerful new tool in the hands of companies looking for digital transformation opportunities. However, success in digital transformation requires proceeding with the key strategic objective in mind, not just indulging in technology push – so what goals is AR aligned with for physical product companies?
One of the most promising targets is e-commerce and consumer engagement, so in this blog, we look at the why, where, how, and who of using 3D content through AR to most effectively boost these goals, providing an overview for innovation leaders and highlighting how the rise of AR will affect their thinking about product development and strategy.
AR and 3D-like visual perception can provide a "try before you buy" customer experience for e-commerce. The need to reach to prospective customers in virtual space has been accelerated by pandemic restrictions, which prompted digital adoption to leap five years forward in a matter of a few months.
One of the leading AR marketing platforms, Snap, has reported that more than half of users consider AR experiences more important due to COVID-19, and brands have shown impact across a variety of markets:
- Christian Dior realized almost a fourfold increase in digital marketing ROI.
- Pizza chain Papa John's saw a 25% conversion rate increase.
- Some Shopify storefronts more than doubled their conversion rate while reducing returns by 40%.
- Adidas also doubled its conversion rate by web-publishing 3D models of its footwear.
- Houzz found that the customers were 11 times more likely to make purchase after AR engagement.
With more than 100 million consumers shopping with AR, largely represented by millennial and Gen Z users, brands should prepare for it to become a more important marketing and customer engagement tool, akin to the effort put into on-shelf packaging design for customer captivation.
There are several ways to engage with customers to display 3D content or via AR. Consider the following:
- Brands with high existing awareness and traffic can use their own digital platforms, whether through their own mobile apps (mobile AR) or throuhg web browsing (enabled by WebAR). They can also use AR to enhance the in-store retail shopping experience.
- Social media platforms provide means to reach a wider customer base targeted with personalized content. Facebook and Snap offer software studios, Spark AR and Lens Studio, respectively, that allow people to create AR effects and apply them to 3D models of apparel, footwear, and other goods, or just publish 3D content online.
- Shopify, Google, and other ad and shopping platforms also distribute 3D-enabled content directly or via third-party web sites. Google's 3D ad format Swirl enables displaying interactive 3D ads in search results, with promising results: Perfumer Guerlain used an immersive 3D Swirl ad that resulted in 34% longer dwell time and a 17% increase in purchasing intent.
- Games are a major use for AR and 3D content and can also provide a channel to connect with consumers. More than half of mobile games are built on the Unity engine, and 60% of AR/VR rendering is also done on this platform, which reaches 1.9 billion devices. The Unity Ads platform offers immersive engagement with game users.
Producing 3D content relies on 3D design software and can take advantage of digitalized versions of existing physical products; it then needs to be rendered and displayed to users in a final form. The design of 3D content varies by product category, but most industries already work with design and collaboration software that produce 3D formats. Examples include CLO Virtual Fashion, Optitex, and Browzwear in fashion; 3ds Max, Autodesk's Maya, and Adobe' Substance for general design software; and SolidWorks, Rhinoceros, and AutoCAD, as well as free options like Blender, in industrial design software.
In the absence of an existing digital twin, one can digitize physical objects using several approaches or use scanning service providers. Typical approaches include camera-based photogrammetry, or a combination with lidar or structured light sensors for added accuracy in far or near ranges, respectively, and fine granularity of object surface and texture. The latest versions of the iPhone and iPad with lidar sensors empower consumers to digitally render many objects; however, some instances require the use of a light dome with hundreds of high-resolution cameras to create an extremely detailed 3D model.
Obtained through either digital design or scanning, or a combination, an object 3D model file can then be displayed and augmented by online platforms. While many platforms work with a range of formats, the gLTF file extension has become a standard that contains geometric details as well as styles, colors, textures, and other variations. Additionally, Google, Facebook, and Snap offerings are compatible with OBJ and FBX file formats. These data types are appropriate for mobile AR applications as well as WebAR – except the iOS environment, which Apple limited to its brand file type, USDZ.
Which segments should be focusing on 3D strategy depends on the industry. The most pressing competition is among the brands and businesses that focus on reaching out to a young, digitally savvy consumer base. For instance, clothing, fashion, beauty, and luxury goods brands can gain immediate benefits from positioning their products in 3D along with AR interactions, which allow consumers to experience products remotely and on demand. Less differentiated but still relevant are consumer packaged goods companies (CPGs), which can use AR to catch the attention of and generate interest among consumers. Lastly, all physical goods aimed at broad consumer and commercial companies will receive greater consideration when displayed in an immersive and interactive way, from consumer electronics to durable goods like furniture and appliances.
AR and 3D content have potential to become competitive differentiators in a variety of industries – their rise will not only affect marketers but also have impacts that propagate back into innovation and new product development. Whereas today's innovation funnel has marketing activities that follow product design and manufacturing steps and precede e-commerce, an AR-enabled future holds a different, on-demand model.
As digital transformation trends and future operation models companies allow companies to create custom products specific to consumers, the marketing step enabled by immersive engagement and AR tools will move before the manufacturing step to gather customers' requirements before producing products. In such a future, mainstream e-commerce will depend in part on successful 3D/AR strategy and favor early AR adopters – particularly those that take the opportunity to leverage AR to achieve personalization and find business models that take advantage of this manufacturing-marketing inversion. It will also push companies to master alternative manufacturing, making it a multifaceted challenge for innovation teams – but one that has great potential to provide a much-needed edge in highly competitive markets.