The Experience Economy
The term “experience economy” was first coined by B. Joseph Pine II and James H. Gilmore who used it in an article describing it as the “next economy to follow the service economy” back in 1998. The idea is that businesses engineer memorable events for its consumers so that the memory of the experience itself becomes the product. The more advanced the experience, the more value and engagement can be derived from this transformative experience.
Luxury brands have been providing immersive offline experiences for many years now. For example, Givenchy perfume had a cocktail makeover to celebrate its L’atelier collection of fragrances.
According to research, four out of five Americans attended a live event spanning from entertainment-focused concerts to cause-related rallies (with 89% or nine out of ten millennials attending at least one live event within the past 12 months). This rise in preference for live experiences is driven by a strong desire to connect with something or someone.
The rapid pace of developing technologies has resulted in companies being able to deliver increasingly innovative customer experiences. From a digital marketing perspective, this has led in taking user experiences (UX) to new levels.
The brands and digital marketing agencies who can respond quickest to the changing trends will be the ones that thrive in a highly immersive, interactive, and sharable reality.
Introducing the New Virtual Experience Economy
With the recent acceleration of virtual reality (VR), augmented reality (AR), and mixed reality (MR) technologies, the experience economy will soon shift from one that is based on real-world human interaction and information on the internet, to a platform where immersive experiences can be accessed.
These digital experiences are expected to eventually carry the same weight as real-life experiences – however, they are far more scalable too. Furthermore, this new era will usher in a vast virtual world where the usual constraints of the physical world like accessibility, cost, and consumer capability no longer apply.
According to a study conducted by Greenlight VR, 71% of the 1,300 adults surveyed felt that brands who had embraced VR appeared “modern” and “forward-thinking.” Furthermore, another 53% stated that they were:
“more likely to make purchases from brands that utilised VR rather than ones that didn’t”.
If VR’s current impact on the experience economy is anything to go by, the future will push the limits of our digital marketing and experience economy imaginations.
So, how brands are utilising this innovative technology today?
The country leading this space with their innovations is (not surprisingly) China who adopted VR technology before anyone else. As a result, digital marketers seeking inspiration (or those who are just interested in the virtual experience economy) need to keep an eye on the Far East.
Here are two quick examples of VR campaigns that proved to be incredibly successful
Alibaba Buy+ VR Shopping Experience
In November 2016, Chinese e-commerce giant Alibaba launched Buy+ at Alibaba’s Singles’ Day which also happens to be the biggest online retail event on the planet. Buy+ is a virtual shopping app that enables shoppers to browse and shop from anywhere in the world.
The Buy+ VR experience allowed Chinese shoppers to virtually transport themselves to shop at Macy’s in New York City. While this event was a powerful indication of what’s to come, it was also a significant event because Alibaba’s Singles’ Day facilitated online transactions that amounted to $17.8 billion in a single day.
The North Face Dog-Sledging Experience
In South Korea, The North Face store incorporated a VR stunt at their retail outlets to help sell winter coats. Customers at the store were encouraged to test out potential winter wear before leaving the store. Those who agreed were asked to sit down in a dog-sledge and then strap on a pair of Oculus Rift virtual reality goggles. Suddenly, they were swept away in a VR adventure surrounded by beautiful snowscapes, led by a pack of huskies.
The North Face is well known for their stunts in South Korea as they have done it before with a disappearing floor in their pop-up store. This highly imaginative stunt forced unsuspecting customers to engage in activities like rock climbing.
You can bet that these types of highly immersive experiences will be remembered by those customers for years to come. When brands achieve that, then they are creating successful campaigns in the new virtual experience economy.
The West is catching up
Despite the far east leading the way, the West is taking notice and is catching up fast. For example, the fast food industry giant, McDonald’s, provided immersive virtual experiences with a VR initiative in Sweden where Happy Meals boxes were turned into VR headsets reminiscent of Google Cardboard. These Happy Goggles” allowed users to play a virtual reality skiing game which enabled the company to enhance engagement and brand value by delivering “fun” experiences.
We can see marketing elements sprinkled all around these initiatives, but what does this mean for the future of digital marketing?
The Death of Online Advertising as We Know it
According to Arnaud Dazin, CEO of San Francisco-based ADVR, a pioneer in immersive advertising, the death of online advertising has been a long time coming. VR and AR technology just represent the final nails on the coffin.
If you look at the current state of digital marketing, most brands want to engage and build loyalty with millennials or Generation Y and Generation Z who make up as much as 46.4% percent of the U.S. market.
In addition, VR and AR technology can produce immersive advertising experiences that can transform and deliver large-scale results. Subsequently, we should expect more advertisers to take advantage of AR and the ubiquity of our latest tech (such as our increasingly powerful smartphones), to create new, innovative and exciting experiences.
Consumers can now utilise VR and AR technology to engage with their real environments too and with a product or service at the same time. This can be seen in IKEA’s ARKit appwhere customers try out the furniture in their own living spaces via a tablet or phone. If customers feel like the furniture compliments their living area, they can purchase it immediately.
The key is experience and entertainment
However, it is essential that digital marketers remember that the experience also needs to entertain the consumer. The experience of VR itself is unlikely to be enough, so it is essential that digital marketers recognise that they need to focus on the entertainment element for any campaign to successfully engage its audience. This means that campaigns should no longer be an ad by itself; instead, they need to become pieces of entertainment in-and-of-itself. Subsequently, consumers shouldn’t expect to have CTAs (Calls to Action) popping up in their faces. Instead, content should be highly engaging and exciting and experience-led.
In the new and growing virtual experience economy, brands need to invite participation within mass experiences in a manner that minimises intrusion.
As VR hardware and application development becomes less cost-prohibitive, you can expect this space to become highly competitive as smaller businesses join in. Subsequently, as the market becomes more crowded, brands and digital marketers will need to work harder and get more creative by exploring avenues such as integrated in-game advertising that utilises data from the player’s social networking profile (to deliver ads that are highly relevant).
Subtle new virtual experiences will also create a new dimension for brands to consider creative product placements.
With multiple media channels competing for the attention of the same individuals, the element of trust will become more and more critical in ensuring that content is consumed by digital marketing target audiences.
While it might sound strange to perceive marketing or advertising as something that must delight and entertain the audience, that is precisely the future of marketing. Welcome to the Virtual Reality World of Experience Economy Marketing…
What do you think?
This article was written by Nick Day, Managing Director at JGA Marketing Recruitment – a boutique agency with a “quality over quantity” approach to creative recruitment practices.
If you are looking for expert talent in the fields of Marketing, Social, Search, Creative or Digital fields, then please call me or email me and I would be delighted to discuss how we can help.
Nick Day | Managing Director
JGA Marketing Recruitment
Email: firstname.lastname@example.org | Tel: 01727 800 377