Virtual reality is getting plenty of press these days. A new VR headset seems to be announced every week (Google’s Daydream being the latest). But, ever so stealthily one company has managed to all but own the market for VR’s less well known cousin, Augmented Reality (AR).

Whereas VR is a totally immersive and transporting experience, AR brings digital assets into the real world. Either via smartphone or tablet displays or with more exotic options like Microsoft’s HoloLens, AR overlays virtual imagery right onto what the user is actually seeing.

Nintendo has one of the biggest hits in AR gaming right now with its Pokemon Go property, a location-based app for Android and iOS where players seek out 3D monsters hidden in their actual neighborhoods that can only be seen on their phone screens.

The game was an immediate smash hit, and even though the hype has died down somewhat since, it still rakes in over $2 million every day according to video game analytics company Newzoo. It was also the fastest game to hit $600 million in revenue, reaching that mark in just three months.

 

The Making of a Snapsterpiece

But, another company, Snapchat, has quietly dwarfed even that massive figure. What started as a simple disappearing messaging app has become a rapidly evolving advertising giant, and its biggest cash cow is bringing augmented reality to millions who might not even realize they are using (and loving) the technology.

Snapchat’s lenses are quirky, smart filters that capitalize on the iPhone generation’s obsession with selfies. Now instead of just taking a picture or video of boring old you, a lens can be applies that swaps your face with a buddy, gives you puppy dog ears, or makes you barf rainbows when you open your mouth.

Snap, Inc., the messaging app’s parent company, initially tried to monetize the concept by creating a “Lens Store” where users could purchase new filters for 99 cents, but that plan fizzled out after just a few months. People loved their lenses, they just didn’t want to pay for them. So, last year Snapchat rolled out “Sponsored Lenses,” custom filters that promote brands and media properties.

 

Brands Get in on the Fun

The first sponsored lens was commissioned by 20th Century Fox in anticipation of the release of its newest animated film; “The Peanuts Movie” Lens let users to take a selfie with Snoopy. The lens appeared identical to standard Snapchat filters except for the inclusion of a branded logo in the corner of the screen.

The idea has taken off. There are now over 100 different sponsored lenses produced for a diverse array of brands like StarbucksPixarGatorade, and L’Oréal.

On June 27th, National Sunglasses Day, Michael Kors commissioned a lens that let users try on a pair of the designer’s sunglasses. The company reported that “During the day-long campaign, Michael Kors saw an 18 percent increase in ad awareness and a 12.5 percent lift in sunglass preference.”

Taco Bell’s Cinco De Mayo campaign, which let users see what they’d look like with a taco for a head, went viral and was viewed 224 million times… and nearly half of all users of the lens ended up sharing their Snap with friends, pushing the brand’s presence even further.

Snapchat has leveraged its popularity (especially with the coveted Millennial demographic) into huge ad revenues. A single day campaign reportedly costs $300,000 to $750,000, and the company, which only grossed $50 million in 2015 is projected to take in $1 billion in 2017 according to eMarketer.

Digital marketer Jeremy Leon did research on Snapchat’s ad products and found them to be expensive, but powerful: “People are smart enough now to know when they are being marketed to, so they won’t react kindly if you don’t add to their experience. Lenses are different for one simple reason: They’re exceptionally fun.”

Snapchat has thus far pretty much owned the market for branded AR products, but a much larger rival is looking to get in on the action. Facebook announced in late October that it would be rolling out its own suite of augmented reality video and still filters.

 

What’s Next?

We’re still in the embryonic stage of this technology and the true potential for these tools for brands and marketers has yet to be discovered. What’s certain is that in the coming years we can expect the drive for new, fun, and engaging brand experiences will push further development of augmented reality.