Can virtual reality save digital advertising from itself? These companies are betting on it.

Facebook, Samsung, Microsoft and Google, among others, are all betting big on virtual reality and/or augmented reality becoming the next big platform. With its predicted rise, virtual reality/augmented reality is also poised to transform digital advertising. Several companies are aiming to be ahead of the curve. We talked to two, each coming at VR advertising from a different direction.

Immersv’s an ad platform that enables VR app developers to monetize their content with ads on Google Cardboard and Samsung’s Gear VR devices. The Los Angeles-based company launched the platform in March with app-install ads from other VR app developers. The ads serve in custom VR environments and can display as 3-D video, flat 2-D video, 360-degree videos or as true VR ad experiences that users can virtually enter and explore.

Los Angeles-based Outlyer Technologies, on the other hand, is approaching VR from within the current landscape of mobile advertising. Launched about a month ago, the Advrtas ad platform from Outlyer enables advertisers to serve interactive content in standard IAB ad formats on smartphones. The ads can also be viewed in any browser and respond to phone movement to let users explore the ad content and click on hot spots to “enter” new spaces.

Marketing Land spoke with Robert Bruza, CEO of Outlyer Technologies, and Mihir Shah, co-founder and CEO of Immersv, separately by phone to get their thoughts on VR’s/AR’s coming impact on ad experiences and programmatic advertising.

(First, a quick explanation of difference between virtual reality and augmented reality from Digi-Capital’s report on the headset market: “Where VR puts users inside virtual worlds, immersing them, AR puts virtual things into users’ real worlds, augmenting them.”)

“We’re in a transition period”

Sitting on the leading edge, both executives are predictably bullish on VR/AR, based on what they’re seeing in these early days.

“We believe the VR market is moving a bit faster than we thought it would,” said Shah. He says virtual reality ads viewed on devices are already a business, but as with the early days of Facebook advertising, most of the ads are cross-promotions of other VR apps.

Still, the install base is in its infancy. “We’re in a transition period,” as marketers and consumers feel out this new medium, says Bruza. The Advrtas approach is to “start to introduce people to what’s eventually going to happen as the install base comes and the audience emerges. Advertisers will be able to transition into the new platform almost seamlessly.”

Moving faster than expected

Shah says VR is moving faster than Immersv had anticipated. “We expect Q4 to be when it breaks out,” says Shah. “Google Cardboard is by far the biggest driver. There’s no comparison in terms of volume at this point. Some days have seven figure daily active users (DAUs) and it’s doubling every quarter on Cardboard.”

“We first started looking ahead at the VR/AR device, but seeing the install base isn’t there … we decided to get people excited today and then learn from that and extend to platforms as more users come online,” said Robert Bruza, CEO of Outlyer, which runs Advrtas.

Bruza says the much newer Advrtas is in talks with about a dozen brands and publishers. “People are coming from a 360 degree video context and saying they have these assets but very few outlets to display it.”

Like Shah, Bruza expects to see rapid adoption as marketers figure out what works content-wise and consumers see what’s possible. There is a big learning curve in terms of getting content right, says Bruza, but there will be a couple of brands that do it right, and others will start getting it. “There will be a steep adoption curve like we’ve seen in programmatic.”

Bruza expects there will be early adoption this year, and 2017 will see a jump “where most major brands that are looking for ways to stand out will be in VR content.”

How will VR/AR impact programmatic?

Bruza believes VR/AR could have a significant affect on the growth of programmatic.

“All of the benefits of programmatic are based on data. To get programmatic to grow, it needs more data. With VR, qualitatively, you have more real estate and thus more data points to measure and ways to engage a user to see 5 to 10 times more products, options, etc. without having to click through [on an ad to go to another site].

“VR also helps sustain interactivity and the ability to add more touch points and keep gathering data, and create new data points like eye tracking to improve targeting and customize the user experience,” adds Bruza.

Can VR fix mobile advertising?

My pressing question was whether VR/AR can help fix the mess we’ve gotten ourselves into with digital advertising — and mobile in particular. Poor experiences for users and fraud for advertisers and publishers are all too common. With a chance to start fresh, will we take this opportunity to learn from past mistakes, or will we ruin this, too?

Bruza believes VR/AR gives the market an opportunity to reset digital advertising. “We came into this because of how paltry the digital ad experience is. It’s almost embarrassing. We do look at this as a moment where there’s going to be a major shift. VR can break the boundary of the classic ad container. It can provide ubiquitous engagement in which you don’t even realize you’re consuming ad content. We see a directional shift — a higher end in personalization and engagement, but also a shift from push to pull driven by the consumer.”

“The mobile ad experience bifurcates between boring and broken,” answered Shah when I asked him how he anticipates VR/AR will impact mobile advertising. “The great thing about VR is you can content market in short bursts and see great view-through. We are seeing 80 percent viewability at this point.”

Shah says Immersv is betting on VR/AR behaviors and ad experiences bleeding to mobile.

The mainstreaming of VR/AR

This week could prove to be a significant milestone for VR/AR, as Google is expected to make several announcements around VR/AR at its annual developer event, Google I/O, this week in San Francisco. Among the rumored announcements are an Android VR operating system, a more advanced version of a viewer like Google Cardboard and an update on Project Tango, Google’s special mapping tool for 3-D, VR and AR imaging. Each of which could have big implications for the growth trajectory of VR/AR advertising.

“For the first time in my career, advertising is actually getting cool,” said Shah. “We might finally get to a spot to where consumers will want to experience the ads.”