How Snap is Turning Virtual Reality Into Real Money in 2021
March 19, 2021
Snapchat has been around for years as a way for friends to connect, without commitment, using disappearing text, images, and video. In recent years, this platform has become a world leader in the mainstream adoption of augmented and virtual reality technology. Businesses are hopping on the trend to capitalize on this growing movement while using virtual reality technology to maintain sales metrics during the ongoing COVID-19 pandemic.
From offering virtual try-on solutions across multiple commercial spheres to understanding user behaviors for more targeted advertising, Snapchat is changing the world for e-commerce brands, brick-and-mortar stores, and consumers alike.
Just last year, Snapchat released 15 different products that all use virtual and augmented reality to create an immersive experience for their users. Additionally, over the past few months, the value of the app has increased by more than double.
This mobile app is taking over the world in a unique way, and these are just a few ways that Snap is turning virtual reality into real money.
Augmented Reality Reaches Millennials and Gen Z
Younger consumers have been sticking to social media like glue, even before the pandemic took hold around the world. Gen Z and Millennial buyers want instant access to thorough research and product testing, in comparison to older generations.
Using augmented reality and virtual reality during the shopping process is an easy and efficient way to try different colors of a product, review item specifications, and even check stock levels instantly. And, these trends aren’t only applying to e-commerce. Brick-and-mortar stores have also started using Snapchat to simplify the shopping process.
In order to keep up with consumer demand for immersive reality experiences, Snapchat has doubled down on infrastructure costs during the pandemic. This investment is already proving to provide a high ROI for the tech brand, as daily usage has soared over the past few months.
In the first quarter of last year, Snapchat had 229 million daily active users (DAUs) – which is an increase of at least 20 percent YoY. And, that’s only in the American market. France and the United Kingdom, for example, experienced an increase of more than 30 percent among DAUs.
The increase in adoption among key demographics has translated to an increase in overall engagement, as well. This has driven sales through the roof for Snapchat’s brand – a 44 percent increase to a total of $462 million in 2020 alone.
Gen Z and Millennial consumers want instant access to impressive tech solutions, and virtual/augmented reality are leading the way. From shopping to communication to everything in between, Snapchat is paving the way for widespread adoption of immersive and mixed media in everyday life.
Immersive Media Brings More to the Table
Virtual reality is creating buzz across the gaming, commerce, and even real estate spheres as more people find value in video and immersive media. These solutions provide users with the unique ability to try products in a realistic environment, without ever leaving home. Additionally, Snapchat’s approach to the tech trend removes the need for auxiliary equipment – such as headsets and motion-capture elements.
With just a mobile device and the app, users are able to apply visual elements over real-world images – or simply by highlighting their chosen product through the lens.
Buying a new couch? See what each color would look like staged in your living room. Shopping for a car? Check out the features with a digital magnifying glass, and test drive the unit on your choice of terrain. AR/VR technology is finding its way into virtually every industry, and Snapchat has capitalized on that boom among their growing consumer base in a huge way.
Even though the world is opening up in waves, the consumer pool as a whole has become accustomed to instant digital access to everything they need for day-to-day life. Experts expect that trend to continue, even once the pandemic officially comes to a close.
Digital Try-On Solutions Reduce Returns and Buyer’s Remorse
Returns make up a significant amount of revenue loss across various corners of the market, from clothing to furniture to even cars. By having a way to truly test a product in a virtual setting, consumers are able to have more faith in their purchases. As a result, returns have dropped by more than 22% among top brands.
Snapchat users are among the growing group that is prioritizing digitization in the shopping experience, with at least 40 percent of their consumer base using augmented reality technology in the past 12 months for day-to-day commerce.
Additionally, as we’ve seen with the growth among Snapchat users, these apps make shoppers more likely to buy while they’re shopping online or in the store. Window shopping has always made up a considerable amount of the commercial sphere, and looking for products online is free of costs AND commitments. But, with cart abandonment rates being such a powerful metric for online stores, AR/VR tech is helping brands to get more out of their window shoppers through sales engagement standards and improved conversions.
As Snapchat continues to penetrate multiple spheres and demographics, businesses and individuals are jumping on the bandwagon to make shopping easier and more satisfying than ever before.
Pandemic Shopping Behaviors Extend to Mobile App Use
Americans, in general, prefer to surf the web on their mobile devices, and recent data shows that more than 92 percent of online users access the internet from a phone. This dependence on hand-held connectivity is one of the reasons why stores have been prioritizing social media engagement and mobile accessibility.
More consumers are shopping from their phones, and this trend is bleeding into a wide range of digital markets. Social media, such as Snapchat, can be credited with coaxing this wave of cyber shoppers and the growth of digital integration into our daily lives.
Following the Coronavirus, app downloads and usage skyrocketed to break records across the entire web. In fact, consumer spending as a whole reached record highs in the second quarter of last year. How was this possible during one of the largest economic downturns of recent years?
One of the reasons why Americans are spending more time on their phones is to cope with the changing world around them. Online shopping, as well as social media use as a whole, is one way to mitigate the stress and uncertainty of a global pandemic.
Additionally, as more and more businesses have sent their employees home to work remotely, we’ve become accustomed to the instant access to goods and information that these apps provide.
From small-scale businesses to global brands, people are using programs and apps like Snapchat to:
- Appeal to a wider consumer base
- Approach new potential customers
- Increase engagement across other platforms
- Drive online store activity
- Boost brand recognition
- Stay tapped into their target audiences, and what users are looking for
By helping to increase customer conversions, using social media for brand growth, and adopting immersive media as a mainstay in modern society – apps like Snapchat are effectively changing the digital sphere and the commercial world as we’ve always known it.
More Consumers Want Instant Shopping Options
If the pandemic changed anything about the commercial sphere, it’s the type of instant gratification that was created by the dearth of instant shipping options as a result of social distancing measures. To keep up with demand and meet sales goals, retailers responded by upping their delivery and mobile accessibility measures in 2020. Following the close of the pandemic, that trend is expected to stick around – and even grow – according to experts in these key industries.
As previously mentioned, we’re getting used to the instant access to goods that food delivery, rapid shipping, and AR-based shopping tools provide. Even once stores are able to fully open up to the public, online shopping trends will continue to drive a major section of the commercial market. In fact, e-commerce is also boosting social media apps in a symbiotic way.
With more and more consumers looking to online solutions to get through daily life, brands like Snapchat are swooping in to bridge the gap. By offering a new way for brands and business professionals to reach their target consumers, this technology is being more widely used in the commercial sphere.
Since more consumers are driving the demand for digitization in the commercial, social, and professional worlds – apps and tech brands are facilitating this change. Providing resources to their consumer base while also catalyzing the upcoming “digital boom” sweep is helping to drive this change that is taking over the world.
Why is Snapchat More Cost-Effective than Proprietary Augmented Reality Options?
While many brands have started offering their own AR/VR apps and programs to connect with consumers, Snapchat has proven to be the more affordable option for certain functions such as:
- Product try-on functions
- Image and video capture
- Scannable product data and information planning
- Referrals and sharing accessibility
To keep ROI high while still utilizing this powerful social trend, brands are turning to established apps like Snapchat for the same features at a fraction of the cost.
Building a proprietary AR app or program requires a heavy amount of overhead, and this trend is really only in use among technical brands such as electronics or automotive. For clothing, consumer goods, furniture retailers, and more – utilizing third-party programs proves to be more affordable and accessible for many businesses and corporate brands.
With Snapchat’s free features, growing brands are able to access the booming technology that is building the social media sphere without the cost and overhead of spearheading their own initiatives. Snapchat, in return, is seeing a steady increase in corporate usage as well as individual adoption from 2020 on.
How Snap is Turning Virtual Reality into Real Money
Virtual reality as a concept has been generating buzz for decades, but it has only recently become affordable enough to truly turn a profit. Additionally, businesses who are looking for a fresh and unique way to appeal to their audiences have adopted some form of AR/VR connectivity to tap into this growing consumer base.
While their expenses have increased as a result of the sharp intake, they have also maximized value by monetizing these changes through advertising, premium product offerings, and more. With a paid service option that expands user capabilities, premium users could take advantage of a wide range of features for a small fee.
Gaining access to the Snapchat premium plan included:
- Exclusive, paid content that isn’t available to free users
- Personal connection with brands and personalities that are in-demand
- Screenshot production
- Snapcash integration
- Spotlight access
Snapchat’s Spotlight feature actually pays users to make viral posts, which is another way the brand is generating revenue during this unprecedented time in the company’s history.
Payment for this feature is largely determined by the post’s success, as well as the reputation the user is able to maintain online. Viral posts are all over the web, and this is yet another way for social media platforms and users alike to gain public attention – and make a profit – based on their creative content.
Augmented and virtual reality is changing the world before our eyes, and social media brands are taking this technology to expand their brand’s reach while appealing to current consumers. As we continue to dive deeper into the digital world, technology is paving the way for future trends and the growth of global commerce in the immediate future.
For these reasons, Snap is turning virtual reality into real money across the entire network of brands, companies, and even influencers on the web. Despite a rise in their operational costs, Snapchat is using their approach to integrated augmented and virtual reality to build their own brand significantly during an ongoing health and economic crisis.