Eye on AI - June 26th, 2020
Welcome to Aigora's "Eye on AI" series, where we round up exciting news at the intersection of consumer science and artificial intelligence!
Hi everyone! This week, we’ll be trying something new with a retrospective, looking back on the previous year’s news to try and understand progress, and consider the future of, a specific AI-driven technology in the consumer markets. In this case, let’s take a look at Augmented Reality (AR), how it progressed within marketing in 2019, how it’s evolving during the pandemic, and how it might look in the future.
Increasing E-Commerce Trends Revive Brick and Mortar
Early 2019 seems so long ago now. Back then, we were just beginning to hear whispers of a potential extinction of brick and mortar locations, but those whispers were temporarily put to rest when a story out of Daily Nation, titled “Retailers turn to e-commerce firms for sales boost”, emerged in July, hinting at their revival.
“E-commerce [will] continue to evolve as the trade of fast-moving consumer goods (FMCG) online is projected to grow five times faster than offline transactions over the next five years,” the article noted.
E-commerce, as it turned out, was the key to saving brick and mortar. The trick was to couple convenience of e-commerce with the personalization of brick and mortar, which meant implementing e-commerce in conjunction with brick and mortar. Companies slow to catch on to this growing trend were soon forced to shutter their doors, while those that implemented aggressive e-commerce initiatives saw expanding profits in the wake of their competitor’s missteps.
The Emergence of AR Marketing
By August, early adopters of e-commerce were already beginning to experiment with ways to take their remote platforms one step further, experimenting with new AR methods to build more intimate customer relationships. “AR is one of the opportunities an e-commerce platform cannot miss out on,” noted WIRED reporter Laura Goode in the article “Get Ready to Hear a Lot More About 'XR'”. “It will be even more popular because of its psychological impact on human beings…”
The main benefit of XR is that it greatly enhances a brand’s ability to tell stories. Better stories led to more confident shoppers, and more confident shoppers led to higher conversion rates. Brands like L’Oreal tripled, or even quintupled, conversion rates with the use of AR.
A novel example of this came in the form of consumer packaging from Böen, a California wine brand . Last August, they launched one million near-field-communication (NFC) connected wine bottles to the U.S. market. Customers could tap the cap of their wine bottles using smartphones, and then be transported to the Böen vineyards for a brand-focused interactive experience. “We know from experience that brands who leverage connected packaging to drive engagement can learn more about what their consumers want and keep up with emerging trends,” noted Joseph Wagner, founder of Cooper Cane Wines & Provisions.
Indeed, AR-based products were beginning to emerge as a growing packaging trend among marketers and advertisers. “It’s because online commerce is winning the convenience game that physical shopping has to be about providing experiences,” added Mauricio Ruiz, Chief Technology Officer of Grey New York, in his MediaPost article titled ‘Amping Up The Power Of Packaging With AR’. “While all the elements of an in-store purchase need to evolve to rise to this challenge – from the environment design to the purchase process to the data customization of your experience – it’s product packaging that may provide one of the most evolved, immersive, empowering creative opportunities within your future brand experience.”
Marketers See the Emotional Value in AR
By the close of 2019, e-commerce marketers had begun to make use of AR in droves, with over 90% of companies with revenues exceeding $100 million leveraging AR or VR in some capacity. AR-driven apps were created that allowed customers to try on clothes or test out furniture digitally from their own homes, and the ability to tour brick and mortar brand locations, offering insights into the robust history of their favorite products.
The appeal wasn’t simply the novelty of AR, but, as previously mentioned, the emotional value. Customers make about 95% of their buying decisions subconsciously, making it essential for customers to connect emotionally with products. AR does this by infusing marketing with physicality. On top of that, there’s also the information-sharing ability of AR. Embedded within most AR is a treasure trove of discoverable information.
Take Panera Bread’s menu app, for instance, released at the end of 2019, which allowed customers to scroll Pandera menu items on their phone, choose a desired menu item, have it appear on the physical surface in front of them, then give them the option to ‘play with their food,’ pulling back layers of sandwiches or watching toppings being added to salads, thus giving them valuable insight into how each meal was prepared, and connecting them more with the menu items. Furthermore, the data collected through these types of apps proved invaluable for marketing initiatives.
“It's not a retail apocalypse,” says Lori Mitchell-Keller, executive vice president and global general manager of consumer industries at SAP. “It's a retail renaissance…. This whole idea of customer experience and experience management is definitely the best battleground for the guys that can't compete in delivery. Even for the ones that can compete on delivery, like the Walmarts and Targets, they are using their brick-and-mortar stores to offer an experience that you can't get online. We thought five years ago that brick-and-mortar was dead and it's absolutely not dead. It's actually an asset."
COVID-19 and the Future of AR
COVID-19 all but shut down most brick and mortar retail. But for the enterprising entrepreneur, the quarantine also spelled opportunity. New AR innovations seem to be popping up every week, supplementing the e-commerce trend that many companies now view as an essential.
It’s still too early to tell what this pandemic will mean for brick and mortar. But with customers lacking the physical experiences they were used to, post-pandemic may ring in a new era for AR. There will always be the deeply human need for physical, emotional attachment. And AR-supplemented e-commerce seems like the ideal way for marketers to bridge that gap until customers are ready to return to physical store locations.
That's it for now. If you'd like to receive email updates from Aigora, including weekly video recaps of our blog activity, click on the button below to join our email list. Thanks for stopping by!