How to Make Money in Augmented Reality

Augmented reality uses technology to overlay digital images and information on top of real-life environments when viewed on smart devices. Although augmented reality sounds futuristic, the technology has been in use since the 20th century. In 1962, cinematographer Morton Heilig patented a 3-D machine that combined sensory stimuli with a film to create an immersive environment. Researcher Tom Caudell originated the term “augmented reality” in the 1990s to describe graphical overlays used by Boeing aircraft technicians.

In 2016, the technology has been refined for smart device apps, and advertiser interest in reaching mobile consumers is growing. Media market research firm Magna Global projected more than $160 billion in digital ad revenues for 2015. The increased interest in digital outreach to consumers indicates that using augmented reality content to attract and interact with consumers is profitable.

Augmented reality integrates 3-D digital images with real-world locations. Companies specializing in digital advertising believe that businesses will show increased interest in placing promotional images and ad content in public spaces at events. One example is a computer-generated drone seen only through an iPad viewfinder hovered in the air at the SXSW festival in 2015. Motion sensors in the iPad made the drone appear bigger or smaller as festival attendees moved around it.

Other examples of augmented reality promotional images include life-sized virtual cars, furniture, electronics and even elements from digital games. Content overlays on the virtual images can add relevant details for viewers. For example, when you view a tree or the side of a building through your viewfinder, an advertiser could pay for a graphical image to point you to your favorite cafe. Although images are presently viewed through smart device apps, the potential for augmented reality ads is expected to grow as the market for augmented-reality eyewear devices expands.

Businesses can also use augmented reality to attract consumers by allowing them to get a closer look at products before they go to a store. In 2013, furniture retailer IKEA released an augmented reality app to supplement its print catalog. Shoppers browsing the print catalog can view 3-D animations of furniture through their phones. They can even use their phones to display virtual images of furniture to determine whether a piece of furniture will fit in their living space.

Augmented reality also provides a way for online retailers to bring brick-and-mortar-type experiences to customers. Chinese grocery store Yihaodian does not have physical retail space, but shoppers can view the virtual image of a grocery store through their phones as they tap their screens to order products. The technology also works in stores to engage customers. For example, American Apparel shoppers use their smartphone viewfinders to see what clothing items look like in other colors.

Maps combined with search engine results help consumers find goods and services they need in their local areas. However, consumers typically do not read maps well, and this is where augmented reality technology may help to connect businesses with consumers in the near future. Instead of using a map to look for nearby restaurants or supermarkets, augmented reality apps can help people find what they are looking for using images of their real-time environments.

Local businesses often compete for advertising space on billboards and other structures, but augmented reality firms such as skignz Ltd. believe digital technology can open up a wealth of additional ad space by enabling local businesses to overlay virtual banners over real-time environments. Graphical overlays of business locations offering coupons and discounts can grab consumers' attention and compete for local business. The benefit of this type of advertising content is it is not intrusive because consumers can choose when to see it.