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  • BUSHOR-1262; No. of Pages 13

    Augmented reality: Designing immersiveexperiences that maximize consumerengagement

    Joachim Scholz a,*, Andrew N. Smith b

    aOrfalea College of Business, California Polytechnic State University, 1 Grand Avenue, San Luis Obispo,CA 93407, U.S.A.

    bGirard School of Business, Merrimack College, 315 Turnpike Street, North Andover, MA 01845, U.S.A.

    Business Horizons (2015) xxx, xxxxxx

    Available online at www.sciencedirect.com

    ScienceDirectwww.elsevier.com/locate/bushor

    KEYWORDSAugmented reality;Advertising;Branding;Consumer engagement;Interactive marketing;Mobile marketing;Social media;User-generatedcontent;Virtual reality

    Abstract Innovative marketers can now leverage augmented reality to craft immer-sive brand experiences, create more interactive advertising, and enable consumers toexperience products and spaces in novel ways. Augmented reality (AR) is the practiceof displaying digital information over peoples real-time view of objects, people, orspaces in the physical world. While AR can play a valuable role in integrated marketingprograms, little is known about the practice and how to execute effective ARprograms in the marketplace. We address this gap by presenting a framework thatdescribes the active and passive ingredients of augmented reality. We then describethe basic design decisions that marketers need to make when planning an augmentedreality campaign. In addition, we explain how understanding and addressing thedynamics between various active and passive AR ingredients can help marketers tooptimize their AR campaigns and enhance various types of consumer engagement: user-brand engagement, user-user engagement, and user-bystander engagement. Throughour framework and analysis, we develop eight actionable recommendationsdescribedwith the acronym ENTANGLEmarketing managers can use to design immersive ARexperiences that maximize consumer engagement.# 2015 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rightsreserved.

    1. Augmented reality: An emergingtool for marketers

    How can marketers use emerging technologiesto break through the clutter and create value for

    * Corresponding authorE-mail addresses: jscholz@calpoly.edu (J. Scholz),

    smithand@merrimack.edu (A.N. Smith)

    0007-6813/$ see front matter # 2015 Kelley School of Business, Ihttp://dx.doi.org/10.1016/j.bushor.2015.10.003

    consumers? Imagine IKEA could help consumers visu-alize how a new sofa might look next to their existingfurniture, or a TV station could spice up consumersmundane commutes by transporting them into aworld of The Walking Dead zombies (Figure 1). Mar-keters can create these unique and valuable experi-ences by effectively leveraging augmented reality.

    Augmented reality (AR) is the practice of aug-menting a real-time direct or indirect view of the

    ndiana University. Published by Elsevier Inc. All rights reserved.

    http://dx.doi.org/10.1016/j.bushor.2015.10.003http://www.sciencedirect.com/science/journal/00076813mailto:jscholz@calpoly.edumailto:smithand@merrimack.eduhttp://dx.doi.org/10.1016/j.bushor.2015.10.003

  • BUSHOR-1262; No. of Pages 13

    Figure 1. Augmented reality campaign for The Walk-ing Dead TV show in Vienna, Austria*

    Two tram commuters flee a digital zombie that they,initially, believe to be real (AR campaign in the boguswindow paradigm).*Source: Image provided courtesy of move121 WerbeagenturGmbH

    1 For a summary of terms used, see the Appendix.

    2 J. Scholz, A.N. Smith

    physical world with virtual information (Carmigniani& Furht, 2011). The layer/world metaphor aptlycaptures the basic idea of augmented reality: mar-keters layer digital information (e.g., text, pictures,videos) over objects and spaces in the physical world(e.g., product packaging, advertisements, streetscenes), and consumers experience these hybrid-ized realities via digital screens (e.g., smart phones,video installations) or projections (e.g., holograms).

    Many of the worlds largest businessesincludingCoca-Cola, McDonalds, and General Electrichaveembraced augmented reality in their marketingprograms. They have used AR to create interactiveadvertising and packaging, enhance retail experi-ences, and develop engrossing games. These typesof AR initiatives already allow marketers to craftimmersive brand narratives and enable consumersto experience products and spaces in novel ways.Moreover, future advancements in smart glasses andtransparent screen technologies (Dibble, 2014) willintegrate the human gaze with digital informationever more seamlessly, propelling AR into an estimat-ed $120 billion business by 2020 (Gaudiosi, 2015). Inthe words of an analyst at the 2015 Consumer Elec-tronics Show, AR has the potential to disrupt any-thing with a screen (Bradshaw, 2015).

    Growing media coverage about augmented reali-ty reflects its emerging ubiquity. AR has been dis-cussed in trade publications (e.g., Handley, 2013),business magazines (e.g., Reality, Improved,2009), and national newspapers (e.g., Berlin,2009) but has received little attention from businessacademics. If AR is mentioned in managerial-orient-ed journals, it is typically referenced only periph-erally as part of a changing business environment oras something to be studied in the future (e.g.,Dholakia & Reyes, 2013; Rohm, Gao, Sultan, &

    Pagani, 2012; Zhao & Balague, 2015). However,managers who wish to integrate augmented realityinto their marketing programs need frameworks toinform their decision making. They need to under-stand the building blocks, design principles, anddynamics of augmented reality beyond its technicalqualities and non-commercial applications (e.g.,Broll et al., 2008; Hugues, Fuchs, & Nannipieri,2011). What should marketers consider when de-signing AR experiences? How and when should theyco-produce these experiences with consumers? Howcan they craft compelling AR experiences thattell brand narratives, create value, and engageconsumers?

    Informed by an analysis of over 50 augmentedreality marketing initiatives from a broad array ofAR paradigms (Table 1), we have developed a frame-work that describes: (1) the ingredients of augment-ed reality; (2) basic design decisions for developingcompelling AR experiences; and (3) how marketerscan optimize the dynamics of AR initiatives to in-crease consumer engagement. First, we introducethe building blocks of AR experiences, which can beidentified as active ingredients and passive ingre-dients of the physical world. Second, we discussthe basic design decisions marketers have to makewhen developing AR initiatives. Marketers can designmore successful ARexperiences by defining the targetaudience and communications objectives, determin-ing how the AR layer will be activated for users,regulating what content will be added to the AR layerand by whom, and planning for how the AR layer willintegrate with specific social and physical contexts.Third, we describe how marketers can optimize theirAR initiatives by making adjustmentsoften smalland inexpensiveto their AR content and overallexperience. As a part of this discussion, we elaborateon how marketers can facilitate three different typesof consumer engagement by enabling users to inter-act with the digital content, other users, and peoplewho are not currently participating in the AR experi-ence. This framework allows us to develop eightactionable recommendations marketers can use todesign immersive AR experiences that maximize con-sumer engagement.1

    2. The ingredients of augmentedreality

    Every augmented reality experience is establishedand influenced by digital AR content (represented

  • BUSHOR-1262; No. of Pages 13

    Table 1. Four typical augmented reality marketing paradigms

    AR Paradigm Description Examples

    Active Print /Packaging

    Augmenting targetspresented in magazineand out-of-home advertisements, productpackaging, catalogues, or other printedmaterialswith digital objects, typically usingprivately owned devices triggered by the user.

    Volkswagen Juiced Up billboard in which adigital VW Beetle acrobatically jumpsthrough the air. IKEA catalogue in which promotionalmagazine is augmented with furniture,projecting it into a users room. Cadbury Quack Smack in which package of achocolate bar is augmented with interactivegame. McDonalds Australia TrackMyMaccaspackaging in which boxes are augmentedwith ingredient-sourcing information.

    Bogus Window Augmenting the space in view of the usertypically via devices such as TV screensdisguised as normal glass windowswith digitalobjects. The AR experience is usually initiatedfor the user, who views the AR experiencethrough the bogus window. Since theaugmentation occurs behind the bogus window,the user cannot see himself as part of theaugmentation.

    Pepsi Max bus shelter in which a live streetscene is augmentedthrough a clandestinescreen in the shelterwith fantastic images(e.g., UFOs, tigers). The Walking Dead tram stop in which a livestreet scene is augmentedthrough aconcealed screen in the stop fixturewithapproaching zombies. Into the Storm transport stop in which a livestreet scene is augmentedthrough aninvisible screen in the stop shelterwithviolent tornadoes.

    Geo-Layer Augmenting the space around the user withdigital objects that may or may not be linked tospecific geolocations, typically using privatelyowned devices triggered by the user.

    Tokyo Aquarium guide in which digitalpenguins lead consumers toward theattraction. BOS Iced Tea forest in which users plantvirtual trees across a city. Kringle Santa Claus application in whichparents can create artifacts providingevidence of Santa Claus visiting the home.

    Magic Mirror Augmenting the space or objects around theuseror even the user himselfwith digitalobjects, typically via public devices such as TVscreens that may or may not be disguised asnormal mirrors. The user can see himself aspart of the augmentation, either in direct viewin a digital mirror or by watching his actions ona screen from the perspective of a third person(in contrast to the bogus window paradigm).

    Pepsi Max Monster Mirror campaign in whichusers faces are transformed into werewolvesand evil clowns. National Geographic Channel in-mallcampaign in which users are able to interactwith virtual cheetahs, dolphins, andastronauts. Lynx Angels Will Fall campaign in whichangels fall automatically from the sky overusers. The Bachelor Canada campaign in which usersare able to interact with digital bachelor starby receiving a ring or planting a kiss on hisvirtual cheek. Timberland in-mall campaign in which userscan virtually try on clothing and shoes usingdigital screens in shop windows.

    Augmented reality: Designing immersive experiences that maximize consumer engagement 3

    by dotted grey triangles in Figure 2) and four addi-tional ingredients in the physical world. Activeingredients (black arrows in Figure 2) include theaforementioned AR content, as well as consumerswho participate in AR experiences (users) and

    objects that are augmented with digital information(targets). Passive ingredients include non-partici-pant witnesses (bystanders) and nearby, non-aug-mented objects and ambient conditions(background). These are not a direct part of an

  • BUSHOR-1262; No. of Pages 13

    Figure 2. Augmented reality ingredients and design decisions

    Figure 3. Optimizing augmented reality for consumerengagement

    4 J. Scholz, A.N. Smith

    augmentation, but can nevertheless profoundly in-fluence how consumers experience and respond tomarket-oriented AR campaigns.

    AR content is virtual information that is oftenperceived by consumers through digital devices(e.g., smart phones, large-screen AR installations)running generic AR browsers (e.g., Blippar, Junaio,Layar) or custom-made AR applications (e.g., Volks-wagen Juiced Up). Virtual AR content can exist in avariety of formats, including text, pictures, videos,and animations. Collectively, all the content avail-able for viewing within a particular AR application,or in one particular setting of a generic AR browser,makes up an AR layer. For example, Yelps Monocleapplication augments a real-time view of the sur-rounding area with restaurant ratings in one AR layerand the location of close-by friends in a second,different AR layer.

    Users are the people who directly experience anAR layer. They may do this through either a private(e.g., a smart phone) or publicly shared device(e.g., a projection screen). Users can share thesame physical spacefor example, if a screen dis-plays an augmented view of the street behind a busstop (e.g., bogus window paradigm)or they mayview the same AR layer while dispersed across dif-ferent locationsfor example, when readers of amagazine access the AR content of an active printcampaign from their respective homes via smartphones.

    In contrast, bystanders are people who do notexperience an augmentation themselves but instead

    observe a users actions either directlyby sharingthe same physical spaceor indirectlyby viewingcontent (e.g., images) that a user has generatedduring his or her augmented experience (see user-bystander engagement in Figure 3). Bystanders canaffect users willingness to engage in AR experiencesbecause bystanders form the social context of theexperience; they act as generalized others whomusers consider when determining whether their ac-tions are socially appropriate (Mead, 1934). Forexample, some shoppers might refrain from partici-pating in Timberlands street-facing virtual fittingroom because their strange movements could beseen by passersby.

    Targets are entities in the physical world that areaugmented with digital information. In many cases,targets are objects; for example, a marketer might

  • BUSHOR-1262; No. of Pages 13

    Augmented reality: Designing immersive experiences that maximize consumer engagement 5

    digitally overlay a brand narrative or ingredientinformation on product packing (e.g., Heinz Ketch-up bottles). However, people may also be thetarget of augmentation. For example, clothingstores Topshop and Timberland have experi-mented with magic mirrors in fitting rooms andstorefront windows, respectively, that superim-pose digital images of their merchandise over liveimages of customers.

    Every AR experience is interpreted within thecontext of the physical environment in which it issituated (Biocca, 2002). For example, a virtual IKEAcouch augmented into a fully furnished living roomhas different meanings and value than the samevirtual couch augmented into a grassy field full ofgrazing livestock. To capture the importance of thephysical environment, we employ the term back-ground: those objects and ambient conditions thatshare the same physical space as the target, but thatare not augmented in this particular AR layer. Theextent to which the background shapes the mean-ings of AR content varies from application to appli-cation; yet campaigns that adopt the active print/packaging paradigm are often less influenced bybackground as compared to the other paradigmsdescribed in Table 1.

    These five ingredientsAR content, users, tar-gets, bystanders, and backgroundare t...

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