Imagine five years from now, you’re walking down a street wearing your own mixed reality glasses. They’re sleek, comfortable and increasingly fashionable. A virtual car drives by—it’s no coincidence that it’s the exact model you’ve been saving for. Your level of interest is noted. A hipster passes on the sidewalk wearing some limited-edition sneakers. Given your excitement, a prompt to buy “copy #93/100” shows up nearby. You jump at the chance, despite the hefty price. They’ll be waiting for you when you get home.
Cinema and television have long been imagining what advertising will look like in XR (known alternatively as eXtended Reality and as the entire Mixed Reality continuum from Virtual Reality (VR) to Augmented reality (AR)). We’re reaching the point where science fiction is rapidly becoming reality. If you’ve watched professional sports on TV in the past decade, you’ve almost certainly experienced a form of augmented advertising. Your friend watching the same game across the country will likely see different ads—not just the commercials but the actual billboards in the stadium behind the players may be replaced to suit the local advertising market.
VR-based advertising is in its infancy, and it looks very different from traditional advertising because of the way immersive media works. Instead of simple product placement, think about immersive ads as placement within the product. The advertising is experiential, using characteristics of media and entertainment that came before, alongside embodiment (a feeling of physical presence in a virtual space) and full immersion into a digital world. In immersive environments, creators completely determine what is seen, heard, and experienced by the user. This is not just influencing your feelings and impulses, but placing you in a controlled environment that your brain will interpret as real. As advertising in immersive contexts takes off, we should do more than marvel at the pokemon we meet in the street. AR and VR experiences have profound effects on cognition that are different from how we take in and process information in other media. For example, our brains interpret an assault in a VR world,1 even in a cartoonish environment, just like we are being attacked in our own homes. These implications get even more complex when we consider paid content: how will the unique characteristics of immersive worlds be used to persuade and drive behaviors?
Further, XR systems can collect a staggering amount of different types of data from XR users, from mechanisms like eye tracking and gesture-based controls. This is fundamental to the hardware, so users may not have a choice (or even realize what is happening). On top of that, XR systems have the potential to use data to serve even more precisely targeted advertising—not just on demographics, but on deeply emotional or physiological responses. Much scholarship, including fields like behavioral economics, has emerged around human decision making, specifically aimed at helping the marketing and sales world. Because of the way XR interacts with your brain, this type of advertising may require even more careful consideration. In this paper, we first review the history of advertising in emerging media formats, and then consider the evolution of immersive environments so that we can build on what we know about these technological fora. In doing so, we will argue that the form of XR advertising matters just as much as the content, and that consumers and regulators should start weighing the benefits and detriments of advertising in XR today.