Until now, augmented reality technology has been in virtual reality’s shadow. Ever since Facebook bought Occulus Rift in 2014, virtual technology (VR) commanded the headlines – HTC Vive. Playstation VR. Sony’s Morpheus. Samsung’s Gear VR – Many of the tech titans are entering the VR market, and each device has taken its turn basking in the limelight, as one piece of hardware tries to one-up its predecessors. Virtual reality was huge at CES 2016, one of the biggest tech conferences of the year, so there is no question that VR is going to be big.

While all these big players are making their entrance in VR, Microsoft has announced that it is going in a different direction. The tech giant won’t be entering the VR space at all; instead, it will be releasing Windows Holographic, the first major foray into augmented reality (AR) technology from any tech company.

What is Augmented Reality Technology?

During a TED Talk filmed in February 2016, Alex Kipman, the man behind Windows Holographic, described AR as technology that works to “bring 3D holographic content right into our world, enhancing the way we experience life beyond our ordinary range of perceptions.”

In layman’s terms, the difference between VR and AR can sometimes seem confusing, but let’s consider what’s in a name. Virtual reality is focused on just that: creating a virtual experience. It isn’t real, nor is it meant to be. Augmented reality, on the other hand, is a technology that enhances the real world. Rather than isolating the user in a phantasm, AR technology provides additional information and possibilities in the real world, in real time.

In short, AR is poised to provide immediate practical uses and value to consumers whereas VR more clearly provides pleasure and escapism.

While technologies like Windows Holographic and Magic Leap, an AR startup backed by Google and Andreessen Horowitz, might sound like science fiction come to life and certainly do not lack any cool factor, investors have been traditionally hesitant to enter the VR/AR space.

This is due to a few factors: most of the demos of VR/AR have happened behind closed doors, the very nature of these technologies requires a 1:1 interaction with them, and finally, much of their success depends on third party content – the games, apps, and videos utilizing the AR/VR hardware – which is an unknown factor until the much-hyped hardware gets released to mass markets.

Yet investments are starting to swing in AR’s favor. Venture capital fund, Super Ventures, was recently formed to exclusively support AR technologies and Venture Reality Fund to invest in both AR and VR technologies. In fact, Analyst Digi-Capital conducted research that suggests that the AR market will be worth $90 billion annually in 2020, compared to a much smaller $30 million for VR.

Augmented Reality and Marketing

Investments are pouring into AR because the AR technology market is becoming increasingly competitive, as early testing shows great promise for the application of AR technologies. Perhaps the most immediately impacted area of AR application is the world of marketing, which stands to see benefits as soon as the business field first begins implementing AR technology.

The possibilities of AR within marketing are broad and were discussed recently at the National Retail Federation, held in NYC from January 17th-20th 2016. The main point of AR in the context of retail was simple: Imagine walking down an aisle of goods and being able to pull up additional information on products on the shelves or even being able to see a 3D hologram of what a product looks like outside of the box.

Considering that 67% of retailers believe that brands can increase sales by creating stronger product representations on shelves, this has the possibility to be hugely impactful by bringing marketing materials to the store itself.

This is the power of AR technology. It has the ability to bring information to a user’s fingertips without much effort on the part of the user. Consider, for example, the company iQNECT that uses a form of augmented reality called “visual search.”

Through visual search, a user is able to take a picture on their smartphone, and iQNECT then provides additional information on the contents of that picture, such as links to a brand’s other content or upcoming deals. Not only can this type of AR provide all necessary information to users, but it can also take them directly to the point of purchase by connecting the user to an online vendor exactly when they show interest in the product.

These benefits are why early use of AR marketing is showing massive improvements across all marketing channels. USPS recently boosted direct mail response rates to 37% (up from 3%) by using AR to connect mail readers with electronic content, containing additional information on pricing tiers as well as an immediate option to purchase.

Similarly, AMC Theatres used AR to get a 75% CTR by using augmented reality movie posters in their lobby. Movie-goers could pose by movie posters and take pictures alongside their favorite movie characters. Not only did this provide fun pictures for the consumer, but they also got coupons and other discounts by taking the photo in the first place.

But what really makes 2016 the year of AR technology in marketing is the simple fact that it is finally ready to go to market. AR technology doesn’t require much from the user in terms of learning curve or overhead cost. Users don’t have to purchase expensive new hardware as they do with VR, because a mobile device can handle the processing power. As for usability, much of AR utilizes simple gestures that users already make on a regular basis, such as using a built-in camera or voice control.

Summary

Not only does AR make the sales funnel a cleaner process for users, but it makes the job easier for the marketer as well. AR technology for marketing could span all marketing channels and provide data on things previously impossible to track. How effective is a television ad or a billboard? It’s hard to say. With AR, marketers could track how many people engaged with a particular advertisement and how many then made a purchase of the product or service in question.

In a recent study conducted by SDL, 58% of millennials cited that they expect to engage with a company whenever and through whichever channel they choose. Unsurprisingly, AR technology is a comprehensive tool to enable potential customers to engage with companies by providing a seamless flow of information. In 2016, expect more businesses to begin using AR technology to better market their products in innovative ways. Maybe you should consider it too.