The Coming Convergence of VR and AI Gives Brands Big Opportunities (and Potential Pitfalls)

When car shoppers walked into a Cadillac dealership in Greenwich, Conn., this fall, in addition to the usual collection of gleaming Escalades and ATS Sedans, they found an HTC Vive virtual reality headset. By donning VR gear, would-be buyers entered a virtual showroom where they could check out the Caddy of their choice without ever climbing behind the wheel. Luxury carmakers like Cadillac are the first big brands to use virtual reality as a marketing tool, but they’re hardly the last. Over the next few years they’ll be joined by others across a wide spectrum of products, driven by huge advances in immersive technology and artificial intelligence. To experience virtual or augmented reality today you need to strap on clunky head gear or peer through your smartphone camera. In a few years, VR and AR will be built into everyday objects like eyeglasses and be coupled with AI. The result will be an explosion of virtual environments that respond in a more human and compelling way, along with copious opportunities for brand marketers to use this technology to make stronger connections with consumers—if they don’t creep them out first. Virtual shopping VR is already being embraced by the biggest retailer on the planet. Walmart is looking at VR to enhance "the contextual shopping experience," says Katie Finnegan, principal and founder of the retail giant’s innovation arm, Store No 8. At its Innov8 showcase in Los Angeles last October, Finnegan’s team demonstrated a VR app that allows shoppers to try out camping gear in a virtual Yosemite. “You can see the tent in the environment in which you’ll use it,” she says. “You can unzip the opening, get inside, lay on the ground and say, ‘You know what? this is too tight,’ then swipe your hand to try another tent.” While a physical store might set up one or two tents, it won’t have room to set up 20 of them. With virtual reality, it can. “The ability to have a real-life experience, to see how the tent’s fabric is woven and what type of zipper it’s using, has the potential to be the next generation of merchandising,” she adds. Besides bringing online shoppers back to stores, VR could also bring stores to shoppers, notes Lyron Bentovim, president and CEO of The Glimpse Group, a holding company of VR and AR startups. For example, you’re unlikely to find a Nike store in a small town, he says. But you can create a virtual Niketown and put it anywhere you want. Customers can interact with the brand in a way they couldn’t otherwise, while Nike saves millions on infrastructure and inventory. And because it’s virtual, Nike can personalize the store for each customer based on his or her purchase history. Steph Curry fans may see a store crammed with Warriors swag, while Patriots faithful can gorge on Tom Brady merch. “Right now stores have zero customization, so they’re trying to appeal to everyone,” he says. “VR solves that.” [kickout id="1" label="sidebar"] VR meets AI But things get really interesting when you throw artificial intelligence into the mix. Suddenly that virtual environment becomes not only more intelligent but also more personal. “What’s really going to make VR and AR take off for marketers is artificial intelligence,” says Rori DuBoff, head of content innovation for Accenture Interactive. “Once VR and AR are powered and infused with AI, they will provide a smarter, more relevant and personalized experience.” Virtual stores—and some real ones—will be populated by AI-driven salespeople who know who you are and are synced to your preferences, says Bentovim. “Some people like to be sold to by an older gentlemen,” he says. “Some prefer younger women. Some want people who look like them, and some may want different ethnicities. A store can only hire so many salespeople. With virtual reality you can create whatever you want.” Or imagine walking into a real Tesla showroom and being approached by a holographic Elon Musk, says Steve Raymond, CEO at 8i, which creates photo-realistic human holograms used inside virtual environments. You could ask virtual Elon questions about the new Model X and, using natural language processing, it would understand what you're saying and respond as the real Elon might. Because some VR gear can track exactly what you’re looking at, apps can employ AI to adapt your experience based on what you're most interested in, notes Michael Schaiman, svp for Helios Interactive, a digital experience design studio. If you’re visiting a virtual showroom filled with BMWs, for example, the app can detect that you spent more time looking at the M5 series and provide more content about that sport sedan. “When you’re fed a commercial inside a virtual environment it will be incredibly personalized for each individual,” he says. “You will get to the point where no two people will experience content in the same way.” Reality check Research shows people form stronger emotional connections when experiencing something in a virtual environment than, say, watching it on screen. But whether that translates into a positive consumer experience has yet to be determined. At this point no one has any idea how effective this technology will be, says Raymond. “Are you more likely to buy a car because a hologram is showing it to you?” he asks. “Would you just do that at home instead of going to the dealership? That’s what we need to test.” Beyond that, technical and social barriers abound. VR hardware is still expensive and awkward, a key reason why less than 5 million devices were sold during the first half of this year, according to IDC. Virtual gear should start to gain momentum when Facebook releases Oculus Go, its $200 untethered VR headset, early next year. (At press time, HTC had not announced pricing or availability for its stand-alone headgear, the Vive Focus.) Right now consumers can see and hear inside immersive environments, but haptics technology that allows us to feel the Escalade accelerate or smell its leather upholstery is still several years away. And for all its amazing advances, AI is still not sophisticated enough to truly mimic human interaction—yet. As with seemingly every new technology, marketers also risk crossing the chasm from creative and innovative to creepy and intrusive. “There’s a fine line between this being effective for consumers or horrifying because it goes too far,” says Fred Schonenberg, founder of VentureFuel, which helps brands partner with breakthrough innovations and disruptive startups. “Take Alexa. It’s getting to the point where Alexa knows things about you, and that personalization saves you time and energy. But it’s also like Minority Report, where if somebody bad is controlling it they know everywhere you go and everything you do.” Evolution or revolution? Two years from now, you’ll see some bare bones VR presences for some brands, predicts Bentovim. “It will be like e-commerce in 1998,” he says. “Initially it will be more like a showroom. But over five, seven, 10 years it will evolve.” In five to 10 years, VR and AR devices will converge; consumers will be able to toggle between an immersive experience and an augmented one, depending on their environment. “What people really want is the 10-year vision where you have pods in your ears and glasses on your face and you’re always able to access an immersive computing world,” adds Raymond. “In two years, we’ll have very rudimentary versions of those that are expensive and relatively limited. In five years the hardware will be there but not everyone will have it. Ten years out it’s an accessory, and maybe your phone goes away and all that technology is in your glasses.” At that point, he adds, the Internet essentially becomes an always-available, semi-immersive experience. None of these ideas is really new. In the 1990s, the first virtual reality headsets were poised to revolutionize the world. In the 2000s, Second Life was going to change how brands and consumers interacted. The technology may change, but the hype remains constant. This time is different, swears Accenture’s DuBoff. “What’s happening now is much bigger than Second Life,” she says. “We’re talking about the next generation of media. When you take a three-dimensional world like VR or AR and combine that with a smart system that can replicate a human, suddenly the experience is leaps and bounds ahead of where we’ve been. “Ten years from now someone might say to you, ‘I had a great experience when I was shopping at Nordstrom, the salesperson was awesome,’ and you’ll be like, ‘Was that a real salesperson or a virtual one?’”

Digital Transformation

The Coming Convergence of VR and AI Gives Brands Big Opportunities (and Potential Pitfalls)

Using the new technology to strengthen connections with consumers

Dan Tynan

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