The ‘new order’ of virtual reality

When’s the last time your shampoo sent you flowers? Or tried to hook you up with a celebrity boyfriend? These days, virtually anything can be done to win customer loyalty — with the operative word being ‘virtually’. 

From cranberry juice to real estate, brands in China are adopting virtual reality with gusto, and consumer-facing brands have been among the most imaginative. In a recent campaign, L’Oréal showered customers with AR flowers if Baidu’s image-recognition app spotted them with a bottle of the brand’s new Ultra Doux shampoo. Not to be outdone, P&G turned a Chinese male celebrity, Yang Yang, into a “VR boyfriend” to woo fawning fans into buying Rejoice shampoo, as part of Alibaba’s VR Lab testing.

But it’s in the travel and hospitality sector where Chinese consumers are most keen, finds recent research from Greenlight VR. Shangri-La Hotels and Resorts was one of the first in the sector to deploy VR headsets in its sales efforts. The chain is in the process of creating 360-degree tours of all its properties worldwide to offer virtual previews for potential guests.

“We see VR technology as an enabler to enhance our brand,” says Raymond Ye, the hotel chain’s China VP of marketing. 

Dirk Eschenbacher, co-founder and chief creative officer of luxury travel brand, Zanadu, is also a vocal advocate of the format’s potential in the sector. 

“Travel makes sense for VR marketing as it gives a teaser of what the real destination could be,” he says. In August, Zanadu opened a VR travel concept store in Shanghai where customers can ‘fly’ around the world, experiencing their dream destinations virtually, before making a booking. It has attracted up to 10,000 visitors a month.

Zanadu is not unique in its use of brick-and-mortar, retail-oriented spaces to push mainstream VR adoption in China. Shenzhen is home to VR Lounge, a membership-based club, similar to a karaoke lounge, where users can browse, select, pay for and play VR games. In the same city, startup Emax runs pay-per-view kiosks of 30 to 60 square metres in size, each equipped with VR headsets screening simulated rides in theme parks.

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Observers predict that VR is likely to become a bigger factor in the marketing mix in China sooner than elsewhere. Chinese audiences have shown a propensity for being early adopters, says Alvin Wang Graylin, China regional president of VR at HTC, and they are willing to pay for it.

More than one in five 25-to-34-year-olds in China are planning to buy a VR device within the next six months, says an HTC-backed survey run earlier this year. In comparison, just 12 percent of youth in the US are planning to buy a unit, finds a comparable study by Newzoo Market Intelligence.

Full-functioning VR equipment from Oculus Rift, Samsung Gear VR and HTC Vive, naturally have the most appeal, for those who can afford it. These high-end headsets are more sensitive to motion and result in more immersive advertising experiences. But for the less-affluent, the cost can be prohibitive.

Fortunately, the proliferation of cheaper, smartphone-powered VR accessories in China is fuelling the trend. Li Qi, marketing head of smart homes and VR at Xiaomi, is paying attention. The brand developed its first VR viewer for smartphones, the Mi VR Play, in just 10 months. “It allows consumers to quickly experience mobile VR,” Li says, adding that affordability and user experience will accelerate the mass adoption of VR in China.

Chinese users have access to a range of “surprisingly cheap” smartphone-connected VR equipment, says Sascha Engel, China director of Ogilvy’s innovation unit K1ND, citing Baofeng Mojing, LeEco’s LeVR, DeePoon VR, Huawei VR, VR Shinecon, VR SJG, or VR Box as examples. Engel says he conducted price comparisons, and found the exact same brand retailing at US$35 in other countries available on Taobao for less than $5.

Graylin believes that once there is a large-enough audience for VR, advertisers will automatically follow. VR will be a “dream advertising system”, he says, because engaging content and experiences will move audiences to wherever advertisers want to. The key, however, is to use the medium correctly. Today’s ads are designed around interrupting audiences, but that defeats the purpose of VR, he warns. “The whole point of VR is about immersion; VR ads should be non-intrusive product placements within multidimensional content.”

The need for strong interactivity and shareability means talent who can “plan visually and socially” are in demand, Engel says. “VR content used to be all app-based,” he says. “Since HTML5 mobile sites within WeChat are so popular in China, we thought of making a plug-and-play VR tool.”

Clients of the agency were lost about how to use VR to tap into existing audiences on WeChat or WeiBo without leaving those environments.

 K1ND recently helped KFC China launch a charity campaign aimed at raising awareness about autism via a VR art exhibition. It was built using StoryBuilder, a proprietary tool that transformed flat illustrations into 360-degree images, mapping in WeChat friends’ profile photos automatically.

Engel says this shows where VR marketing is heading: towards “a future which will incorporate VR storytelling with highly-personalised, emotionally-resonant brand experiences”.

Much VR content today is more about novelty than production values — especially in gaming, where themes often border on soft porn and horror. But proper VR video productions require a tremendous amount of work. “We need to plan very carefully where the cameras and crew are placed in a 360-degree shoot,” Engel says, stressing the need for exceptionally detailed storyboards, clear directions and tight sequences. "Think of your storyboard like a top-down architectural floorplan."

VR ads might also call for audio or visual clues to guide viewers to ‘hotspots’ linking to ecommerce sites or product coupons. 

The metrics for VR marketing are the next thing to fret over. HTC’s Graylin expects new metrics to move away from click-through rates — for the simple fact that there will be nothing to click. Gaze-through rates (GTR) may be the replacement, but they are way too simplistic. 

Future metrics, he argues, should revolve around the amounts and lengths of VR interactions, as well as follow-on activity such as purchases or sign-ups. He predicts pay-per-interaction ad models to become more important than pay-per-download or pay-per-click types. 

However, Shangri-La’s Ye stresses that China is still in the early stages of VR advertising, and the brand is still unable to “evaluate everything on financial terms”.

Eschenbacher agrees that VR conversion rates have yet to set the hills on fire. “Not everyone who sees our VR travel films will make a booking right away, maybe a few months later,” he says. “Presently, it’s 2 percent to 3 percent conversion for popular places like Thailand and the Maldives, but it’s not easy to track.”

So is VR marketing worth the time and effort at this stage?  Any brand that dabbles into VR is likely to be seen as more innovative, says Xiaomi's Li. But marketers still need to be “brave” to invest in these virtual returns.