A Marketer's Guide to 5G and XR in 2023

The advent of 5G mobile technology is revolutionizing marketing and advertising. The high speeds and low latency allow marketers to create campaigns that are not just interactive, but immersive. Brands can deliver 360-degree live video streams and sensory experiences that engage customers in remarkable ways, no matter where those users are. And they can deliver all these features wirelessly over smartphones, tablets and a broadening array of special headgear. Many companies are embedding their brands in online gaming worlds such as Fortnite and Roblox, allowing people to interact with digital assets that they can click on to buy products. They’re creating virtual worlds where consumers can play games, shop and interact with other visitors. They’re delivering high-definition video that allows sports fans to see games and matches from various angles simultaneously. They’re able to collect astonishingly precise usage data to adjust and optimize content for individual customers. “These spaces present a unique opportunity for brands to engage with consumers by utilizing experiences—not just ads—that are limited only by the imagination,” said Zoe Soon, vice president of the Interactive Advertising Bureau (IAB) Experience Center. The Speed of Culture Podcast: The Future of 5G With T-Mobile’s Mike Katz What is 5G? Fifth-generation technology is the newest global standard for broadband cellular networks. Telecommunications companies across the world began deploying 5G in 2019. While most mobile phones still operate on 4G connectivity, 5G networks will account for a quarter of all mobile connections worldwide and serve more than 1.7 million subscribers by 2025, according to the trade association GSMA. Because 5G possesses superior bandwidth over 4G, it can connect a widened array of devices and deliver fast, highly reliable internet service even in crowded venues. 5G networks afford download speeds that can reach 10 gigabits per second, enough to download a 4K movie in 30 seconds. (The average 4G download stream is roughly 14 megabits per second.) How will 5G adoption affect consumer behavior? People are spending less time with traditional media, dousing the impact of TV and print advertisements. Mobile devices are increasingly becoming the tool of choice for purchasing activity and media consumption. Market research provider Statista projects that mobile purchases will exceed 10% of all retail sales in the United States by 2025, up seven percentage points from 2018 levels. And as more people subscribe to 5G plans, they’ll expect rich media experiences wherever they go. Live video streams already garner widespread engagement on mobile devices. Nearly half of people in the millennial and Gen Z demographic, for example, prefer watching sports on smartphones or tablets, according to a 2022 study by Nielsen and technology solutions provider LaLiga Tech. Consumers are also spending more and more time in the metaverse, the term used to describe the extended reality (XR) environments that are emerging in various forms. XR includes: virtual reality (VR), or a fully simulated world that typically requires a special headset and offers 3D visuals;augmented reality (AR), which overlays information over the user’s real-life environment; andmixed reality, which allows users to interact and manipulate both real and virtual items and environments (e.g., Instagram or Snapchat filters). eMarketer projects that 110 million U.S. residents will use augmented reality in 2025, while 75 million will explore virtual reality. And they appear open to engaging with brands in those XR environments. More than half the respondents to a survey by the Eclipse Group said AR makes shopping more enjoyable, and 40% said they would pay more for a product if they can test it virtually first. How is 5G changing marketing? Marketers who are tapping XR report promising results. Shopify, for example, reported that providing 3D models of products in AR improved conversion rates by 250%. And research shows that immersive campaigns can boost brand recall by 75%. 5G-enabled immersive environments allow marketers to attract consumers in ways that are largely impossible under the 4G standard. Clothing brands can allow customers to virtually try on clothes, accessories and cosmetics before buying them. Nike, for example, created a photo filter on Snapchat that allows users to see how some of the company’s newest sneakers look on their feet. Estee Lauder saw online sales grow 60% in 2020 after launching AR technology that allows users to view how makeup products will look on their faces. Walmart, Amazon and other brands that offer virtual try-ons have found that it not only increases conversions but reduces returns on merchandise, IAB’s Soon noted. Furniture retailers are using XR apps to let consumers place virtual 3D models of digital goods in their home environments. IKEA introduced such an app in 2017 to help users better visualize how a piece of furniture would look in their homes. The app helped IKEA boost its online sales from $1.6 billion in 2016 to $5.9 billion in 2020—a gain of 268%—yes, 268%. The hospitality and travel industries have developed their own form of try-before-you-buy marketing, giving shoppers self-guided video tours of hotel rooms or vacation spots. Dutch airline KLM, for example, launched a "Try Before You Fly" campaign that allowed consumers to virtually experience a vacation in select locations. Airbnb sells live virtual walking tours and classes through its online experiences portal. Automakers are allowing car buyers to virtually experience a vehicle before they make a purchase. Volvo promoted its XC40 Recharge to potential customers via AR advertisements, giving potential customers a 360-degree view of the car on their mobile devices. The campaign lifted product awareness by nearly 7 points. Brands can collaborate with sporting and concert venues to enable spectators to view the stage or field from multiple angles. Verizon, Pepsi and XR development agency Trigger, for example, created an immersive AR experience for the Super Bowl Halftime Show in 2022. By downloading the Pepsi Halftime mobile app, fans with 5G-enabled devices logged onto an AR portal and toggled between three stage views during a show that featured Dr. Dre, Snoop Dogg, Eminem, Mary J. Blige and Kendrick Lamar. Cameras strategically placed throughout the stadium streamed 4K video to the users. The offering kept 500,000 fans in the portal for nearly all the Halftime Show, garnering more than 3 billion impressions, said Trigger founder and CEO Jason Yim. Entertainers have also leveraged XR and often involve brand sponsors. Rapper Travis Scott appeared as digitally rendered avatar in a live VR concert on Fortnite in 2020. The event drew 27 million unique participants, $20 million in revenue, including merchandise sales, and a whopping 419% increase in demand for tickets to Scott’s “real-world” concerts. Nike garnered brand exposure worth more than $500,000 because of the footwear Scott wore during the event. Travis Scott Doesn’t Like ‘Branding’ or ‘Marketing,’ but He’s So Damn Good at Both How will 5G and XR help with market research? The ad industry has yet to develop standardized metrics to measure ad effectiveness in immersive environments. But IAB warns that ongoing privacy legislation will make it difficult for brands to measure user behavior for ad targeting. New privacy and consumer data protection laws are already set to take effect in 2023 in California, Colorado, Utah, Virginia and Connecticut, and several companies have faced lawsuits over their data collection and management practices. Additionally, Firefox, Safari and other browsers now block third-party cookies, hampering marketers’ ability to track user behavior for ad targeting. In response, agencies and brands are innovating their methods of capturing behavioral information. Advanced technologies such as biometrics and eye tracking stand to help brands measure consumer preferences far better than surveys and focus groups. The Kellogg Company, for example, leveraged VR technology to identify the optimal store display for its Pop-Tarts Bites. With the help of Qualcomm Technologies and Accenture, the company had a test group wear a mobile headset that tracked their eye movements as they shopped in a full-scale simulated store. The VR solution showed that the best placement for the new product was on lower shelves. This helped boost brand sales by 18% during testing. Such capabilities are myriad and growing quickly, said Lisa Peyton, an Oregon-based digital media strategist. “There are even devices now that can measure someone’s heart rate variability while they’re in an experience,” Peyton said. “It’s going to be a goldmine of data, and there is a plethora of AI-driven tools that help with that.” How can brands embark on XR marketing? Technology and marketing experts offer several tips for brands considering the use of XR to engage existing and potential customers. Consider the costs and returns. Technology advances are making XR campaigns more affordable, but costs can still be substantial for small brands. Development of AR portals can cost up to $100,000, and VR worlds can run $250,000 or more. Most companies lack in-house resources and use developers such as Trigger, Sector 5 Digital and Groove Jones to develop the immersive environments. The costs can vary based on the quality of the visuals, the number of 3D models, use of animation, storyboards and scripts. Entry to New Realities Cannot Remain Restricted Plan wisely. IAB advises brands who are considering 5G-powered XR for marketing to identify and understand the target audience, determine the resources needed to execute a plan and develop benchmarks for success. A lack of thoughtful planning can backfire spectacularly. The European Union, for example, spent €387,000 in 2022 on a 24-hour metaverse party to promote its Global Gateway infrastructure development initiative. But only six people showed up and stayed for the event, according to news reports, with many blaming the lack of interest on poor marketing and a weak user interface. Give customers some control of the experience. Brands should also focus on engagement features with their 5G-enabled experiences, such as chat features or self-directed 360-degree video tours, Peyton said. Also, younger audiences place a premium on self-expression, and that includes the ability to create unique 3D avatars in interactive environments that brands create, she said. Offering limited avatar options may douse interest. Start now and be patient. In the near term, brands may not see a clear return on investment in 5G-enabled user experiences. However, media strategists say immersive campaigns will be a major part of the marketing ecosystem within the next 20 years, as VR headset prices fall and more people spending time in XR worlds. 5G-powered marketing may not immediately boost sales or lure clients, but it can bolster brand awareness and loyalty that eventually will pay off. Media experts advise marketers to plan for a world in which our time immersed in extended reality exceeds our time spent watching TV or listening to podcasts. “If you wait to catch up,” said Trigger’s Yim, “you’re not going to do well when that big rebalance happens.”

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A Marketer's Guide to 5G and XR in 2023

Marketing teams must strike a balance between delighting customers with immersive, futuristic experiences and managing costs and expectations

Scott Sleek

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