Why VR AR companies struggle in getting conversions from paid ads?
Virtual reality (VR) and augmented reality (AR) companies might experience low conversion rates from paid ads for a variety of reasons. Here are some of the most common causes, and how to resolve them to significantly improve the conversion rates and cost-effectiveness of paid ads.
Offering a hard conversion too early
Because the VR AR industry is still fairly new and has not yet reached a level of mass adoption, it can take multiple touchpoints to educate prospects before they are willing to convert, depending on the product. Showing ads with hard conversions (eg. contact us or demo/trial) at a stage where the user isn't warmed up enough would lead to low conversion rates.
Make sure to first offer a series of warm-up ads to simply educate and raise awareness. For example, these ads can lead to a blog, video, webinar, or whitepaper. Only offer hard conversion ads to users who have thoroughly engaged in your previous warm-up ads. For example, you can set up a retargeting audience with users who have watched >75% of a webinar. Showing hard conversion ads only to engaged, qualified users will ensure that conversion rates are high, while minimizing the cost per conversion.
Low search volume and high competition. Again, because VR AR technologies are still not at the level of mass adoption, the number of people searching for VR AR terms is relatively low (although it has grown a lot recently). Hence, we can expect lower search volume and higher competitiveness for related keywords. Generic terms such as digital transformation or industry 4.0 might be super expensive and difficult to bid for. Instead of targeting these keywords from the start, try to narrow down your keywords based on your target audience or vertical and use longer tail keywords (eg. digital transformation in manufacturing). Narrowing down your ad copy and messaging towards a particular audience segment would also help improve your ad performance. Remember to specialize, not generalize, for the highest efficiency.
Not using the best ad platform for your business
Depending on your business, niche, and target audience, there will be 1 or 2 ad platforms that work best for you. It's important to first try out different platforms (eg. Google, FB, Twitter, Linkedin) and objectively determine which platform generates the most conversions for your type of business.
We cannot stress enough the importance of actually testing it out. For example, some may think that LinkedIn ads are effective for B2B. However, we've found that for some B2B clients, LinkedIn Ad Manager often heavily inflates their results, and the quality of traffic they attract to your site is low compared to Google or Twitter ads. Seeking out the most effective platform for your business is a crucial first step in determining where to allocate your marketing budget for the most impact.
Not A/B testing all aspects of a campaign
A common cause of poor campaign performance is a weak ad or targeting. A key best practice of paid ad management is to always A/B test something at any given time. You need to constantly test different variations, select the best performing variation, and reiterate in order to keep refining the effectiveness of your campaigns.
Apply A/B tests to all aspects of a campaign, including the creatives, keywords, audience, etc., to really maximize the performance of the campaign on all fronts. To put it another way, if you don't A/B test, you won't know which creatives, keywords, for audiences would drive the most results for your paid ads.
Not setting the appropriate optimization algorithm For all of the major ad platforms, you can specify the optimization algorithm for a campaign. If budget and cost effectiveness is your main bottleneck, we would recommend selecting an algo to cap the cost, such as 'manual CPC' or 'target CPA'. Otherwise, we'd almost always suggest setting the algorithm to 'maximize conversions'. Here's why.
Whether your campaign is top-of-funnel (eg. a warmup or brand awareness campaign) or bottom-of-funnel (eg. a hard conversion campaign), there's always an end goal for the campaign. Setting the algorithm to 'maximize conversions' would maximize the likelihood of that end goal.
For a top of funnel campaign, you could set a conversion to be a proxy of engagement - eg. when a user spends >1 minute on your site. Note that this strategy is more effective than just setting the algorithm to 'maximize clicks', which would only target users who are most likely to click on the ad (but could bounce shortly after). Setting 'maximize conversions' with an engagement goal maximizes the likelihood of attracting quality traffic to your site.
Similarly, for bottom-of-funnel campaigns, you would set the conversion to be a contact us or demo/trial submission. This would ensure that the algorithm is targeting users who are most likely to complete a contact us or demo/trial submission.
The key here is to always set a goal for your campaigns, regardless of the stage of the funnel, and set the algorithm to optimize for that goal. This would ensure that you are driving quality as opposed to quantity.
VR AR companies often have a hard time getting their paid ads to convert, for a number of reasons. By troubleshooting and resolving the above items, you can significantly improve the conversion rates and cost effectiveness of your paid campaigns.
If your VR AR business is running paid ads but are seeing suboptimal results, we can help. With almost a decade of experience managing paid ads for VR AR businesses, ASATA is the leading marketing agency in this space. We guarantee to improve your campaign performance within 1 month.