Written by Deborah Worrell
As a leading consultant in the immersive marketing space, Virtual Reality Marketing is often asked why XR is an important component of marketing mix and how to kick off a campaign. And while every company is unique—there are a few tried and true guidelines that go way back and are as relevant today as they were then.
In our hyper-fast business environment, decisions on marketing mix can mean the difference between mediocre returns and rocket ship success. A strategic blend of traditional and innovative marketing tactics is essential for businesses to thrive. In this series of articles we will delve into a budget framework for marketing allocation and showcase how the inclusion of immersive technologies such as XR, the Metaverse, and spatial computing fits in long-term.
Understanding the Baseline: Allocate around 15% of Revenue to Marketing
A foundational management guideline suggests that companies should allocate 10% to 20% of their revenue to marketing efforts. For purposes of this example, let’s say 15% allows for a robust framework, ensuring that marketing tactics are adequately funded to drive awareness, increase engagement and ultimately support strong revenue growth. Distribution within this budget must be meticulously planned to cover various facets of marketing–digital, traditional, promotions, events, analytics as well as emerging technologies.
Segmenting the Marketing Budget
Today the segmentation of the marketing budget generally falls into these broad buckets: digital marketing– 50%, traditional–25%, events and sponsorships–20% and metrics–5%. This offers a balanced approach, delivering both reach and engagement. Digital marketing, with its broad spectrum of channels and trove of user data offers unparalleled targeting capabilities and analytics, justifying its majority share. Traditional marketing, particularly television, provides value in brand building and reaching consumers in lean-back mode. Events and sponsorships offer tangible brand experiences that foster community and loyalty, while a dedicated budget for metrics ensures that all strategies are data-driven and results-oriented.
Balancing Proven Tactics and Innovation
Conventional wisdom advises a thoughtful allocation of marketing funds: 70% to proven tactics, 20% to innovative strategies and 10% to experimental initiatives. This allocation underscores the importance of relying on strategies that consistently deliver results while still embracing innovation and experimentation. Proven tactics offer stability and predictable outcomes, innovative strategies provide competitive advantage and experimental initiatives pave the way for breakthroughs. Key to the 70/20/10 guideline is that is crosses all marketing segments.
The Case for Immersive Tactics: XR, Metaverse, and Spatial Computing
Although this traditional allocation provides general direction– rapid technological advancements and changing consumer behaviors require deeper consideration of immersive marketing tactics. XR offers businesses an unparalleled opportunity to create engaging and memorable brand experiences. AR’s ‘try-before-you-buy’ and ‘see-it-in-your-space’ are examples of executions that have significantly grown ecommerce and retail revenue; branded immersive experiences are changing the engagement game on platforms like Roblox and Fortnite.
The Metaverse, a collective virtual shared space, opens up infinite possibilities for brand interactions, community building and fresh revenue streams that are still being realized. Spatial computing, which integrates the physical and digital worlds, enables companies to offer personalized and context-aware experiences, tactics which have been extremely successful in driving additional revenue. Even in this nascent space millions of dollars in value creation are already attributable to virtual goods and services.
Allocate a Portion of the Budget to Immersive Technologies
To stay ahead of the curve, companies should consider allocating a portion of their marketing budget towards immersive technologies. Given the 70-20-10 rule, immersive tactics may initially be categorized under innovative and experimental initiatives. However, as these technologies mature and their efficacy is proven, they will command a more significant portion of the proven tactics budget. Included are links to case study examples.
Digital Marketing–50%: Allocate resources to develop high-quality immersive content and execute campaigns focused on experiential strategies– XR, the Metaverse and Spatial Computing. Amplify immersive experiences by leveraging digital channels—paid, owned and earned—to create the brand halo effect, drive traffic and engage new viewers.
o https://www.virtualrealitymarketing.com/case-studies/starburst-juicyverse/
o https://www.virtualrealitymarketing.com/case-studies/att-jordan-spieth-pga-experience/
o https://www.virtualrealitymarketing.com/case-studies/the-lucid-air-purchase-journey/
Traditional Marketing–25%: Integrate immersive experiences in traditional settings to bridge the gap between traditional, digital and virtual. Examples: AR powered collateral, location-based couponing, interactive experiences in physical stores, recreating a physical location within a virtual world and more.
o https://www.virtualrealitymarketing.com/case-studies/kabaq-ar-in-restaurant/
o https://www.virtualrealitymarketing.com/case-studies/hm-x-simone-rocha-ar-pop-up-book/
Events and Sponsorships–20%: Use immersive technologies to elevate events and sponsorships–offering virtual attendance options, VR product demos, Metaverse expos and AR engagement and participation through gamification during conferences, sporting events, concerts, etc.
o https://www.virtualrealitymarketing.com/case-studies/nissan-thrill-seekers-ar-scavenger-hunt/
o https://www.virtualrealitymarketing.com/case-studies/motorola-and-san-diego-padres-hall-of-fame/
o https://www.virtualrealitymarketing.com/case-studies/daikin-ultimate-customer-vr-experience/
Metrics–5%: Invest in analytics solutions capable of measuring engagement and ROI including cross-platform immersive experiences. Understanding user interactions in these new spaces is critical for refining strategies and evaluating further investment.
The Strategic Shift Towards Immersive Experiences
Significant budget allocation in XR, the Metaverse, and spatial computing is not merely a trend-following move; it is a strategic investment in the future of brand engagement. These technologies offer the ability to create highly personalized, engaging experiences that can significantly enhance brand perception and customer loyalty. Moreover, they allow companies to differentiate themselves in a crowded market, showcasing innovation and forward-thinking.
The Take-Away
The marketing landscape is continuously evolving, shaped by technological advancements, in-flux media consumption patterns and changing consumer expectations. As companies navigate this complex terrain, their strategic allocation of marketing resources is crucial to future success. Adhering to the foundational guideline of 15% of revenue allocated to marketing and thoughtfully distributing this budget across various segments, businesses ensure a comprehensive approach that delivers positive results.
To truly become visionary leaders—executives must embrace the shift towards immersive strategies and commit a portion of their marketing budget to XR, the Metaverse, and spatial computing. This aligns with the 70-20-10 rule of balancing proven, innovative, and experimental tactics and well positions companies to catch the next wave of virtual transformation today and future-proof their businesses for tomorrow.