Growth in Virtual Reality is set to explode over the next 5-10 years.
That said, Meta has “only” sold 8.7 Million Quest 2’s in 2021 (and the Q2 is by far the most owned headset). When compared to the billions of users on Facebook or Google, you can see why VR advertising is still in its infancy.
However, that doesn’t mean it’s not going to be a great place to advertise or that people haven’t already started creating ways to do so. Let’s go over what currently exists for both developers and advertisers and what it might look like in the future.
How To Run Ads In VR
There are some platforms that exist right now in December 2023 that will let you advertise in VR even though this hasn’t hit scale. Let’s go over all of your options, starting with Unity.
For those that don’t know, Unity is a video game development platform for both 2D and 3D games. As such they’ve built out the Admix platform that allows developers to put placeholders for ads within their games so they can make and extra buck or two.
At the moment, this is really the heart of the VR advertising world. I expect Meta to do more work on this in the future, but for now, it’s Admix or bust.
But again, none of these companies (including Unity’s Admix) are exclusively doing VR ads. VR simply hasn’t reached the scale needed to support it just yet.
In 2015, YouTube started accepting 180° and 360° video ads on its platform. Most advertisers avoided it because 360 video tended to not convert as well as regular 2d advertisements. That said, 360° content is a completely different experience when viewed through a VR headset. So the game has changed.
Growth in new VR headsets will cause us to revisit these types of advertisements.
You would expect Meta to be on the frontier of VR advertising seeing as they invested $10 billion dollars into VR in 2021 alone. And Meta did begin experimenting with placing ads in select VR games in June 2021 (but faced some public backlash). So they’re definitely aware VR advertising is going to be a thing.
That said, they’re currently noticeably absent from the VR advertising space. There is no way to go onto the Facebook ad platform in June 2022 and target your ads at VR devices.
I HIGHLY suspect this will change in the future. Assuming Meta’s headsets continue to dominate market share, they will own the platform. And it would make sense if they leveraged that advantage to own the advertising space as well.
That said, for right now we’re still waiting on their public entry into the space as you can’t get in-game VR ads through Facebook’s advertising platform as of this writing (June 2022).
How Much Does It Cost To Run Ads in VR?
I can’t give an exact dollar amount that you’ll be paying for VR ads that will stand the test of time. Ad campaigns vary wildly in cost depending on the Medium and who you’re targeting. For instance, I’ve seen Facebook ads that ran for $1 per 1,000 impressions all the way up to $100 per 1,000 impressions with around $20 per 1,000 impressions being normal. And the same is true of PPC advertising.
That said, I’d expect VR advertising to be extremely cheap comparatively for the following reasons.
- Quest 2’s dominate market share and are seen as a toy for teenage boys (nobody’s paying big money for this audience).
- There’s a grand total of 20M-ish VR users so this hasn’t reached scale.
- There’s no great way to segment the audience by demographics (unless you want to target teenage boys, they’re everywhere).
- There’s no easy way to immediately buy something in VR. So it’s hard for ad campaigns to measure their effectiveness. Thus advertisers won’t be willing to pay as much.
What I’m saying is if you’re paying more than $1 per 1,000 impressions to advertise in VR right now… You’re probably paying too much. Which is really the crux of why VR advertising hasn’t taken off just yet (but it will).
How Much Will Developers Make from VR Ads
Developers can expect to make 50-70% of whatever advertisers are currently paying to run ads in their game. And this will vary wildly depending on placement, demographics, the overall economy, whether it’s Q4, etc.
How did I come up with that number?
Well, Admix takes a 30% cut of ad revenues for their service. Which may seem excessive, until you realize ad platforms like Google Adsense keeps 49% of search & 32% of display advertisement revenue. Depending on how greedy the company that wins the VR ad space is will determine their cut.
The (Dystopian?) Future of Ads in VR
While we all cringe at the idea of our favorite VR games getting as dominated by ads as some of our favorite blogs are. I actually welcome the change.
Why? First, developers need to get paid to work. People lament seeing software companies get rich by switching to a SaaS model. But, being able to pay the bills that way gives them an incentive to update their software and compete in the marketplace. With the old model where you buy the software once and that’s it, there’s no incentive for the company to ever work on the software ever again.
And advertising is just another way that developers can justify continuing to work on the software or selling their games for cheap (or free). It opens up a lot of games to regular people who otherwise couldn’t have afforded it.