The digital ad space is increasingly at the mercy of Google and Facebook. Although US digital ad revenue increased 19% year-over-year (YoY) to $32.8 billion in H1 2016, according to the IAB Internet Advertising Revenue Report, after removing the combined $23.1 billion in ad revenue from Google and Facebook, everyone else is left with only $9.7 billion, a 2% decline from H1 2015, according to Digital Content Next.
In addition, the ad-revenue model is starting to show signs of decay, as more consumers opt to completely forgo ads by installing ad-blocking software. And this is ultimately costing the industry lots of money: US display ad-revenue losses from ad blocking alone were estimated to reach $3.9 billion by the end of 2016, according to Optimal.com.
Meanwhile, marketers are falling behind on the consumer shift to mobile. Consumers in the US spent over a third (35%) of their total media time on mobile devices in 2016, a 15-percentage-point increase from 2014, according to BI Intelligence estimates based on data from PwC, IAB, and eMarketer. However, only 17% of advertisers' digital spend went toward mobile in 2016.
Immersive video formats — namely, 360-degree video, augmented reality (AR), and virtual reality (VR) — can help publishers solve the digital duopoly problem, while providing marketers with a platform that reaches consumers on mobile. In addition, immersive video isn't annoying or intrusive, which means it's less likely to succumb to ad blocking. In fact, immersive video has been proven to increase consumers' emotional responses and engagement rates.
360-degree video presents an opportunity for advertisers to reach massive audiences, while allowing viewers to engage with ads as they see fit. For example, Hong Kong Airlines ran a 360-degree business class ad last summer that allowed viewers to virtually walk through the airline's business class cabin before making an actual purchase. The ad was 35 times more effective, with a 4.51% click-through rate (CTR), and generated an average viewing time nine times longer than the same traditional display ad.
AR is an immersive format that links the physical and digital worlds. Brands in the retail space stand out as first-movers in adopting this technology for advertising, with several directly implementing AR campaigns to increase customer engagement and drive sales. The global AR market is forecast to grow at a nearly 81% compound annual growth rate (CAGR) from 2016 to 2024, according to Global Market Insights.