2022 Predictions: AR Ad Revenue Approaches $3 Billion


As we enter a new year, it’s time for our annual ritual of synthesizing the lessons from the past twelve months and formulating the outlook for the next twelve. This has been an action-packed year for AR & VR as the world slowly emerges from the grips of a pandemic.

Moreover, 2021 was marked by the emergence of metaverse mania. Though it has legitimate principles and promise, the term has been ambiguated through overuse. It’s also been overhyped in terms of the timing of its arrival. A fully-actualized metaverse is decades away.

Beyond the metaverse, AR and VR continue to be defined by steady progress in several areas. We’re talking mobile AR engagement & monetization; AR marketing and commerce; continued R&D in AR glasses; enterprise adoption; and the gradual march of consumer VR.

So where is spatial computing now, and where is it headed? What’s the trajectory of each of the above subsegments? This was the topic of the latest ARtillery report, Spatial Computing: 2021 Lessons; 2022 Outlook. It looks back and looks forward, including concrete predictions.

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Flirting with $3 Billion

After unpacking our prediction about 2022 AR glasses activity last week, we switch gears this week to drill down on a separate prediction: AR advertising revenue. Specifically, spending on sponsored AR placement (e.g., branded lenses) is projected to reach $2.9 billion this year.

This makes it a leading AR revenue category. But to define what we’re talking about here, this is the amount spent on AR ad placement in paid channels such as Snapchat and Instagram. It’s purely the placement/distribution spend, not counting campaign creation nor self-distribution.

The latter includes AR marketing efforts that utilize a given brand’s own channels, such as apps or websites. Though this is important, it isn’t counted in paid advertising, by definition. It is however an important component of the broader camera commerce opportunity.

As for breakdowns in ad revenue, Snapchat leads for any one social AR app. However, Meta leads when considering its many AR-enabled apps powered by its Spark AR platform. That includes Facebook and Instagram, where multimedia-driven shopping is native.

Panning back, the growth in AR advertising (and AR marketing & commerce generally) is driven by a few macro factors. First, AR is naturally aligned with product demonstration. A better sense of product dimension, style, and fit can be gained through immersive try-ons.

That benefit is felt by both users and brands. For the former, AR is a natural accompaniment to eCommerce, especially among the increasingly buying-empowered and camera-forward Gen-Z. Brand marketers are also attracted to AR’s creative capacity for 3D product demonstration.

Data-Backed Validation

But perhaps more important than all the above factors is ROI analysis and performance data. Specifically, we continue to see data-backed validation of AR advertising’s efficacy. Our research arm ARtillery Intelligence just released a report filled with AR advertising case studies.

Projecting forward, several other accelerants will continue to impact AR ad spend. For example, hardware evolution such as LiDAR will enable AR lens leaders like Snapchat — and the brand marketers it works with — to create more robust rear-facing (world-immersive) lenses.

When looking at macro factors, there’s also continued Covid-impact on all things digital and eCommerce. For AR marketing, Covid has been a double-edged sword. Though advertising is usually hit hard in recessions, Covid-era factors had a net positive impact on AR.

Part of this is due to the additional confidence that immersive product demonstrations can bring to eCommerce. Online shopping inflected during retail lockdowns and consumer distancing measures, which was well-timed for AR’s ability to bring some IRL dimension back to shopping.

Furthermore, downturns historically cause advertisers to re-examine and reallocate budget to emerging ad formats, as seen circa-2005 (search) and 2010 (social). AR benefited from similar factors in 2020 and 2021, and its momentum will likely carry forward into 2022.

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2022 Predictions: AR Ad Revenue Approaches $3 Billion was originally published in AR/VR Journey: Augmented & Virtual Reality Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.

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