Brand marketers are taking gradual steps in their experiments with virtual reality (VR), the computer-generated simulation of a fully immersive 3-D world.

Only 8% of marketers have used VR in ads, while 35% say they have no intention to use it, according to a survey this year by consulting firm Yes Lifecycle Marketing. Many consumers aren't quite ready to experience VR, with 46% of online adults saying they didn't see a use for the technology in their lives, Forrester Research said in a February report.

VR adoption tends to be more common among brands that seek to appeal to millennials, the generation of people born between 1980 and 2000. The demographic group has shown the most awareness of VR with about 80% of the group expressing a positive view of the technology, according to a study by researcher ReportLinker.

"Brands seeking relevance with the millennial lifestyle have plenty of opportunities today, whether educating customers on products or suspending belief for entertainment customers," Aaron Buchanan, vice president of emerging technology at ad agency HYFN, told Marketing Dive in an email.

Sipping on VR

So far, VR has been leveraged by brands and publishers mostly for content marketing and for product-driven experiences. 

Buchanan pointed to Mountain Dew, the fourth-most popular soda brand in the U.S., which debuted a VR experience as part of its Dew Tour events aimed at extreme sports fans, as an example of a brand embracing VR for marketing purposes. The Mountain Dew pop-up booth at the events let people wear VR headsets to experience a ride down the Las Vegas Strip with the MTN Dew skate team.

The soft-drink brand also has a dedicated website to showcase its VR experiences, such as its Dew VR Beat Drop campaign to promote the MTN Dew Label Series of new flavors. Other experiences include virtual snowboarding, skydiving and racecar driving.

Mountain Dew isn't alone in setting up a specialized display that has the VR equipment ready to try. Vera Bradley, the luxury handbag and luggage company, last month debuted its first bedding collection with an in-store VR demonstration created in partnership with Obsess VR and Daydream by Google, according to a press release. The VR experience was showcased in 10 stores for a limited time.

"VR is ideal for luxury brands [and] products where VR can help convey the experience of the product in an immersive way," said Adam Fingerman, chief experience officer and co-founder of mobile app design company ArcTouch. "VR is also ideal for complex products, such as industrial or medical, where the buyer needs to experience the product, but it's impractical or impossible to see it in person prior to purchasing."

VR ads

VR's immersive capabilities can also boost engagement between consumers and a brand in a more straightforward ad format, something brands are just starting to experiment with.  

Luxury hotel chain Ritz-Carlton last month started running a 360-degree VR ad on The Wall Street Journal's homepage to promote its rewards credit card. The ad lets viewers navigate through nine neighborhoods in U.S. cities and includes links urging to viewers to inquire about the Ritz-Carlton Rewards credit card. The brand partnered with tech company OmniVirt for the "Inside the Moment" campaign, according to a press release.

"In the increasingly competitive marketing environment, building a loyal and growing customer base is the basis for enduring profitable growth," said Larry Light, CEO of brand consulting firm Arcature. "Loyal customers value more than just features and functions. They value the total brand experience. The focus on loyalty represents a big opportunity for VR."

VR's popularity as a gaming tool makes it ideal for loyalty programs, especially among millennials, he said.

"Almost 40% of Generation Z ranked playing games as their preferred way of earning points as part of a loyalty program," Light said, citing data from a study by loyalty program manager CrowdTwist. "VR is an exceptional gaming tool to attract and retain and grow loyalty with a generation that has up until now been considered less than loyal."

Original ad content

Many people first experience VR with a smartphone running a 360-degree video, mostly because smartphones are nearly everywhere. In the past three years, Google has shipped more than 10 million Cardboard headsets, the $15 gear that lets people experience a rudimentary form of VR.

The biggest limitation to VR adoption among consumers is the expense of specialized equipment, such as Facebook's Oculus Rift headset and hand controllers that retail for $400 on Amazon.com. Most of the software for the device consists of video games.

VR headset shipments surged 70% to 2.2 million in Q1 2017 from a year earlier, according to International Data Corp. But those sales are a fraction of the more mature market for smartphones, whose sales grew 3.4% to 344 million shipments during the same period.

The cost of a VR campaign can be a hindrance for some marketers, Forrester Research said in its report. Brands need to spend $500,000 on content for a high-quality VR experience. Meanwhile, the cost to create a 360-degree video is between $10,000 and $100,000.

Brand marketers should create original ad content that is optimized for VR, said Kelly Andresen, senior vice president and head of Get Creative at USA Today Network.

"Don’t try to cut corners and simply re-purpose your 2D TV or online video ad for 360 or VR application," she said. "Take advantage of the immersive properties of 360 and VR — and use the full scope of the canvas. And don’t be afraid of the additional investment — there is good scale opportunity here, particularly in 360 videos across social and mobile video that enable you to reach a sizeable audience."

Expanding opportunities

Brands can cut costs by creating 360-degree video that doesn't require a VR headset, Jourdain May, senior content producer at Oregon-based The Program, told Digiday. May told the publication that 360-video and "VR-type work" has proven to be most successful if clients find opportunities that lend themselves to immersive experiences. Traditional media are still best for those messages that don't benefit from immersive experiences.

Google, which has a 41% share of the digital ad market, is working on several kinds of VR formats. Its video-sharing service with 1.5 billion users, YouTube, introduced its VR180 format in June to help content producers create immersive videos. The company is working with electronics manufacturers to develop special cameras that will support the VR180 format.

Google also debuted a website for its internal startup incubator program Area 120 that demonstrates Advr, a technology intended to simplify the development of VR advertising.

Advr technology lets video ads run in 3-D and VR environments through a new, cube-like format. Advr was based on several key principles including being easy for developers to implement, native to VR and customizable as well as being useful and non-intrusive for users. As such, it points to how VR is heading towards a more accessible future. 

"Developers and users have told us they want to avoid disruptive, hard-to-implement ad experiences in VR," Aayush Upadhyay, Google product manager, and Neel Rao, associate product manager, said in a blog post. "Our first idea for a potential format presents a cube to users, with the option to engage with it and then see a video ad."