Let's Get Phygital: How Commerce Is Getting In Shape
History shows that marketers are big fans of portmanteaus. Whether it's to describe a new product category (hello, athleisure), or a way we do business (e-commerce), our everyday conversations are peppered with words that are a combination of things or concepts.
One of the newest invites to the marketing vocabulary is "phygital," which combines physical and digital touch points to create immersive and interactive experiences designed to attract and engage today's consumers.
While the Metaverse and its potential have dominated the headlines for several months, there are applications of "phygital" in the here and now that are quickly earning a place in the conversation. Some of these applications have been around for quite some time, with conversations and expectations that have ebbed and flowed with mixed results. Others are improved versions of older technology, while still more are just starting to make their mark.
Why Do Phygital Experiences Make An Impact?
In the past 100+ years of marketing, there have been countless innovations. Marketers have gotten better at creating efficiency in their efforts, but the one thing that has not changed is marketing's reliance on human behavior to drive results.
Companies put ads in the Sears and Roebuck catalog because it was one of the few ways to reach consumers. The "Mad Men" created aspirational ads for their clients, so buyers would want to be like the people in the ad. Now brands buy targeted Instagram ads because user behavior says that if someone follows Golf.com and Tiger Woods they're likely to buy this golf polo.
Marketing is psychology, and the psychology behind phygital is that when humans interact with something, whether it is a place, a person, or a physical product, they 1) are more likely to recall that experience at a later date, and 2) form an impression and even an attachment to that thing.
Test drives for cars serve a dual purpose. Yes, it allows the potential buyer to see how it drives, if they like the features, etc; but it also increases the amount of time the buyer spends with the car, increasing the chance that the buyer will envision themselves driving and enjoying the car, thus increasing the likelihood of a sale.
Phygital experiences create the same type of response by triggering memory and attachment between the buyer and the brand. Whether that attachment is built on convenience, unique value proposition, or a general appreciation for a product, pairing digital and physical touchpoints to create better brand experiences has proven effective, and promises to generate further results in the future.
Here are five ways the phygital transformation has and is taking shape across verticals.
At the heart of the phygital movement is the concept of delivering a consistent and valuable brand experience across channels. While omnichannel has become a popular discussion among marketing strategists, many brands have only scratched the surface compared to the capabilities that exist to deliver against evolving consumer demands.
As highlighted by Paul Prior in a 2021 Forbes article, phygital is omnichannel. Consumers interact with brands across a growing number of channels, and if a brand's channels are competing or conflicting with one another, the results are counterproductive.
If retail had a theme in 2020, contactless would be a prime contender. When the COVID-19 pandemic led to major shutdowns and a need for social distancing, brands and retailers had to get creative to deliver their products and services to consumers. Contactless services (such as curbside pick up and QR codes) emerged as key business tools, and have remained popular among both businesses and consumers as retail has evolved over the last two years.
Before the COVID pandemic, QR codes were largely unknown or considered an irrelevant and forgotten technology. However, QR code uses include everything from menus to augmented reality, and consumers' willingness to adopt their use has spurred a renewed interest in how to use them for innovative and effective brand experiences.
In light of the phygital revolution, QR codes stand as an easily accessible and distributable trigger for linking digital and physical locations and experiences. QR codes placed in physical places can be used to provide additional information on products, or to activate a specialty experience or offer for a brand. Codes deployed on the web can be used to bring a physical product into a consumer's home in the form of an AR powered digital twin.
If asked about experiences that blend the physical and digital worlds, a majority of consumers will likely think first of virtual reality (VR). While the most mainstream applications of VR are limited to gaming and entertainment, an increasing number of brands have demonstrated interest in the technology's ability to engage consumers.
Brands such as Audi and Lowe's have deployed VR experiences to educate consumers on products, while American Express made an impression at the 2015 US Open by allowing visitors to face off against tennis great Maria Sharipova.
VR brings a digital world to the user, most often through the use of headsets which remove the user's true surroundings to enhance the experience. Tools such as the Oculus headsets or the HTC Vive place the user directly into the digital realm, allowing the designer to create an immersive, phygital experience that is more likely to leave an impression on the user. For a brand, that impression can translate to greater retention of information, higher brand affinity, or even increased sales.
While VR brings the user into the digital realm, augmented reality (AR) alters or enhances the user's physical location with digital elements. The elements are most often activated via a mobile device, with users viewing the altered environment on their screen.
The largest advantage for AR over VR is the lower barrier of entry, as far more consumers own a mobile device capable of acting an AR experience, compared to those who own VR headsets or other equipment. Additionally, This also means that AR is often more mobile, triggered by a link or a visual and not requiring additional equipment to be transported place to place.
Social media filters are the most common AR application accessed by consumers. In fact, 63% of Snapchat's daily active users utilize AR filters, and branded filters have demonstrated significant business results for brands in a variety of verticals. A 2022 AR try-on campaign by Ulta generated $6 million in sales and over 30 million virtual try-ons during the two- week campaign.
The success of AR in commerce is not limited to the social sphere, however; data from Shopify shows that AR- enabled product pages drive 94% higher conversions than those without, and 66% of consumers are interested in using AR for shopping.
Among the fastest growing applications of AR in commerce is home design, allowing designers and consumers alike to view furniture, decor, and even paint colors in a space to see how the item will look in the space. Home design site Houzz has seen 11x conversions on products enabled with an AR viewer compared to the non AR products, as well as more than 2x the time spent on the app.
Additional data shows that product pages enabled with augmented reality drive 2x the average order value, and up to 30% decreases in returns.
Despite the immense amount of discussion surrounding the metaverse, few agree on what the next digital frontier will look like, or how it will affect the daily life of the majority, if it affects them at all. However, it is safe to say that the momentum driving towards the metaverse has spurred many innovations that are making the phygital world feel more real.
Phygital creation is at the core of the metaverse, and the potential of the many tools, technologies, and applications is only beginning. In many ways, one could argue that the metaverse is the epitome of a phygital world. Whether that might means meetings are conducted in a virtual conference room with avatars instead of in-person or over Zoom, or if travel to far off places becomes more accessible due to a digital copy, phygital creation is at the core of the metaverse, and the potential of the many tools, technologies, and applications is only beginning.
As consumers become more familiar with the technologies that enable "phygital" experiences, the desire for these elements to be the standard among brands will grow, and brands not willing or able to deliver will feel the pinch of changing consumer desires.
If you're ready to get phygital, learn more about Dopple's augmented reality platform. We can help you create an immersive online shopping experience that keeps customers coming back.