Facebook Begins Advertising In Virtual Reality

Facebook is beginning to test advertising in virtual reality.

The “small test of in-headset ads” is starting with Blaston from Resolution Games, and “a couple other developers that will be rolling out over the coming weeks.” Facebook says the purpose of the test is “to explore new ways for developers to generate revenue on the Oculus platform”.

“Though we’re not quite ready to test them yet, we’re also exploring new ad formats that are unique to VR,” Facebook explained.

In its prepared explanation of the advertising test, Facebook said it “will get new information like whether you interacted with an ad and if so, how—for example, if you clicked on the ad for more information or if you hid the ad. Outside of that, this test doesn’t change how your Oculus data is processed or how it informs ads.” In 2019, Facebook announced it “will now use information about your Oculus activity, like which apps you use, to help provide…more relevant content, including ads”.

“We use first-party info from Facebook to target these ads, as well as some VR data. Specifically, that VR data includes whether you’ve viewed content, installed, activated, or subscribed to a Oculus app, added an app to your cart or wishlist, if you’ve initiated checkout or purchased an app on the Oculus platform, and lastly, whether you’ve viewed, hovered, saved or clicked on an ad within a third-party app,” a Facebook representative explained over email.

Facebook says that it does not use the following information to target ads:

  • “We do not use information processed and stored locally on your headset to target ads. Processing and storing information on the device means it doesn’t leave your headset or reach Facebook servers, so it can’t be used for advertising. Examples of data that are processed on device include raw images from the sensors on Quest and images of your hands (if you choose to enable hand tracking), which are both overwritten instantaneously. Examples of data that are stored locally on-device include any weight, height, or gender information that you choose to provide to Oculus Move.”
  • “We take extra precautions around the use of movement data like minimizing what we need to deliver a safe and immersive VR experience—for example, to keep you safe from bumping into real-world objects and making your avatar duck while playing a game—and we have no plans to use movement data to target ads.”
  • “Finally, we do not use the content of your conversations with people on apps like Messenger, Parties, and chats or your voice interactions to target ads. This includes any audio your microphone picks up when you use our voice commands feature, like “Hey Facebook, show me who’s online.”

This isn’t the first platform-level VR ads service – HTC launched Vive Ads for Viveport back in 2017, though given Viveport’s limited reach we don’t know which, if any, apps actually used it.

Facebook Subsidizing Hardware Cost

Ads in VR and the money paid by advertisers to put them in front of players may enable Facebook to further subsidize the up front price of Oculus VR headsets.

“This is a key part of ensuring we’re creating a self-sustaining platform that can support a variety of business models that unlock new types of content and audiences,” a prepared statement from Facebook reads. “It also helps us continue to make innovative AR/VR hardware more accessible to more people.”

Oculus Quest 2 already sells at an unmatched all-in price of $299. In the box is a standalone VR headset and controllers that deliver some of the best-selling and best-reviewed VR software without requiring external hardware like a PC or console. You do, however, need a Facebook account in good standing to use the headset.

Facebook doesn’t say how many headsets it sells but non-advertising revenue at the company soared in the last three months of 2020 with the release of Quest 2, revenue remained strong in that category in the first three months of 2021 as well, and some VR developers five years into consumer VR sales on PC VR and PSVR headsets report their strongest sales ever from Quest 2. In addition, Facebook executives claim Quest 2 is on track to be the first “mainstream” VR hardware.

Still, Apple and Sony are reportedly preparing new VR gear for release sometime after 2021 with an array of other companies like Microsoft and Snap also releasing hardware toward the longer-term play of wear-outside augmented reality glasses. This year, though, the only companies with similar products to Facebook’s are HTC and Pico and both are priced toward businesses in western countries while pursuing consumers in Asia. Facebook doesn’t operate inside China.

Taken altogether, during this time when Facebook has no direct competition in standalone VR the company is essentially working to maximize revenue which could enable it to subsidize hardware further ahead of new entrants getting into the game.

“I’m pretty inclined to take whatever gains we could get, from things like an app store, and just use that to make the price lower,” Zuckerberg said in an interview with The Information earlier this year. “I think our inclination is probably going to be to try to offer these products at as low of a cost as possible in order to be able to get them out to everyone.”

Anybody remember “Pure O2” from the Ready Player One movie? Video embedded below for reference.

So, what do you think of this news? Let us know what you think in the comments below.

Note: Article updated immediately after publication with an added sentence about HTC’s ads effort.

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