Augmented Reality is generating lots of buzz as an emerging platform for mobile marketing and e-commerce, across areas like search, retail and gaming. But AR is still a long way from being a widespread reality on mobile devices. A new report from Juniper Research projects the technology combining the physical world with virtual imagery and information will generate only $2 million in revenue next year.
But the U.K.-based research firm expects that figure to grow dramatically to $714 million by 2014, with revenues derived from paid application downloads, subscription- based services and advertising. Growth will be driven by wider adoption of Android phones and the iPhone as well as the spread of technologies like digital compasses and accelerometers that help to power mobile AR.
Juniper predicts AR will initially gain a foothold through location-based search but that mobile games are where the technology will first show substantial revenue. It should also be increasingly attractive to brands and retailers as user base increases, with AR ad networks able to charge higher CPC and CPM rates because of location relevance.
Separately, Jeremiah Owyang of digital strategy firm Altimeter Partners, suggested in a recent a post that mobile is where AR is mostly likely to go mainstream. "Expect Google to develop a product that maps physical products with their online information, making them yet the middleman for Internet advertising -- again," he wrote. "Furthermore, it gets really interesting when a brand can 'hijack' another company's brand by creating augmented reality experiences on the boxes of their competitors."
For now, he calls AR as "the victim of 'shiny toy' syndrome" since the benefits to brands and businesses aren't yet clear. Most mobile marketers in the near future are smarter to focus on building out mobile-friendly sites and less more basic applications before moving on to more costly AR-centric projects that may not deliver sufficient return to justify the investment.