Is augmented reality Snapchat’s cash cow?

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Pokemon Go is said to be the first mass consumption of augmented reality (AR). Even though the mobile game from Nintendo is ranking more daily users than Twitter, let’s not get ahead of ourselves.

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The first mass consumption came from an unsuspecting mobile competitor, Snapchat, and it has opened a revolutionary platform for brands: augmented reality advertisements.

AR Ads are a real thing and have actually created a speculatively strong revenue stream for the mobile app. Despite the evolution of digital advertising – pre-roll ads, video-via-social media advertising, now chatbots – the concept of AR Ads has gone unnoticed.

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Snapchat claims 100 million people, majority millennials, use Snapchat everyday, and brands are splurging on pricey sponsored geofilters to reach this audience. Users can overlay the branded filters on their snaps before publishing to their friends and story. This in effect combines a real world image with a digital element, resulting in an augmented reality advertisement.

Branded geofilters cost reportedly anywhere from $250,000-$750,000 depending on the date, geographical coverage, and reach. According to Adweek, The Peanuts Movie campaign reportedly cost $750,000 for 24 hours on Halloween.  More recently, Hollywood film studios have turned to geofilters to promote their summer blockbusters like Finding Dory. Starbucks, Benefit Cosmetics, McDonalds, GE, Hollister, and Target are just a handful of brands also using Snapchat’s branded Geofilters.

What makes these AR advertisements so compelling? The reach and engagement among the highly sought after millennials is unprecedented.  The average geofilter can get a few million uses, and can rack up millions of more views when snaps are shared.

Millennials are notorious for their disdain of ads. They were raised in a digital world with DVR and AdBlockers, always having the power to skip ads.  Brands must tread lightly and initiate innovative campaigns to reach this demographic. For millennials, Snap geofilters aren’t intrusive compared to other ad mediums, but rather fun extensions of their content.

With the success of branded geofilters, it is surprising few have highlighted their connection with augmented reality.  For those who don’t know, augmented reality is when you take a digital asset and overlay it on the physical world. For instance, consider football’s 1st and ten line. This is a basic example of augmented reality. PokemonGo is a more advanced example of augmented reality, all the while combining geolocation and with 3D animated characters through a mobile experience. Snapchat is anticipated to even get into the wearable market with AR glasses. They certainly have the community for a successful rollout and their powerful acquisition with Looksery who powered the early branded filter experience for Snapchat.

Drawing this connection means that brands have unknowingly spent millions of dollars on augmented reality. Augmented reality mobile advertisements have taken off, and few have taken notice. AR ads have done what so many ad platforms have failed to do in the past: create an authentic connection between the brand and the consumer.  This authenticity is derived from AR’s ability to seamlessly merge the real and the virtual.

The success of Snapchat geofilters holds great promise for the future of augmented reality. AR is getting ready for primetime, as head mounted displays and mobile depth sensing technology arrive in the market in the coming months. With Snapchat, millions of consumers are engaging with AR on a daily basis. This interaction is priming users for the next wave of augmented reality.

Nonetheless, the bar for engaging advertising has been set. Connect with users and/or buyers with a personalized experience is becoming more of a need than a trend. Snapchat’s success with AR advertisements is a true breakthrough for augmented reality and an even bigger market for digital advertising.

This article was co-authored by Lindsay Boyajian.


Dennis Williams

Author: Dennis Williams

Dennis is the Content Marketing Manager at Augment, where he's active in building content to grow digital communities.