The catalyst, or at least one of the biggest dominos to fall so far, is Instagram.
Earlier this month, Instagram introduced the capacity for certain brands to utilize AR technology in their advertising, according to a report from Mashable.
The first wave of companies include makeup brands Mac and Nars and eyewear companies Ray-Ban and Warby Parker. With AR, those brands can show Instagram users how a particular shade of lipstick or style of glasses looks on their face all within the app itself.
“They're opening up their ecosystem to e-commerce businesses that have AR assets that want to advertise” Gappelberg told Proactive in an interview. “ NexTech creates those AR assets.”
NexTech’s process, known as ARitizing, works by taking a 2D asset and turning it into a 3D one. Users can view the 3D image from every angle on their devices or even project it into their own space. Its clients include prominent names such as Budweiser, Mr Steak and Zoltan David jewelry.
Now, every company that wants to get in front of Instagram’s 1 billion active monthly user base has a reason to invest in AR.
First and foremost, Gappelberg said, ads that utilize AR technology perform dramatically better.
“The conversion rates for AR ads are three to four times higher than non AR ads,” Gappelberg said. “And if you can get a boost in conversions, you’re gonna do it.”
As Instagram expands its AR capabilities, NexTech expects more and more companies to turn to its ARitize platform. Ultimately, if the conversion rates for AR ads remain steady, 2D ads could start to become obsolete.
“All the ads are going to end up being AR ads,” Gappelberg said. “Why? Because that’s what people want.”
Shares of NexTech increased 3% Wednesday to C$0.94 in Toronto and 1.5% to US$0.71 in New York.
Contact Andrew Kessel at [email protected]
Follow him on Twitter @andrew_kessel