Building Business Models

Around
E-Commerce and Augmented
Reality
 PROFILE

HELLO…
WE’RE ZUGARA
Snapshot: We’re an interactive marketing agency with a passion for emerging
media and technologies
Services: Interactive Video, Social Media Marketing, Mobile Marketing,
Website/Application Development
AR Products: Webcam Social Shopper / Fashionista, Cannonballz, ZugSTAR
Founded: 2001
Location: Los Angeles / New York
Web: www.zugara.com
Blog: www.weareorganizedchaos.com
Facebook: www.facebook.com/zugara
YouTube: www.youtube.com/zugara
Twitter: www.twitter.com/zugara

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State of E-
Commerce

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Online Retail Sales Continue to Rise…

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Web-Influenced Retail Sales Rise As
Well…

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Peers Continue To Influence Purchase
Decision
• Eighty-three
percent of online
shoppers said they
are interested in
sharing information
about their
purchases with
people they know

• 74 percent are
influenced by the
opinions of others
in their decision to
buy the product in the
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But What’s Missing?

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Shopping Offline Is An
Emotional and Social
Experience

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Online…Not So Much

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The “consumer experience” has
made very little progress in the
lastAmazon
15 years
1990’s

Amazon
2010

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Abandoned Carts

45% of U.S. online

shoppers
abandoned
shopping carts
multiple times over
a span of three
weeks. (Paypal &
ComScore)

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Low Conversions

Conversion rates
are low, with the
“gold standard”
being between 2%
and 3%

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High Return Rates

The average return rate for online clothing

retailers is about 20% but goes as high as
50% for some. (Forrester Research)
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What Are Brands Doing To
Evolve The E-Commerce
Experience?

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E-Commerce Innovations – Social
Media

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E-Commerce Innovations – Interactive
Video
<- Zappos Interactive
Product Videos

<- Sales increased from 6%

to 30% when product had
video associated with it

Samsung Live Video

Customer / -> Product
Support

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 YouTube & Video Chat Generation
• 36% of Skype-Skype calls
included Video

• Chatroulette had 960,000

unique U.S. visitors in
February

Sources:
GigaOM – Skype By The Numbers. It’s Really Big
Comscore – Chatroullette Takes The College Crowd By
Storm
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Projected Webcam Growth

Markets for webcams at $1.8 billion in 2008 are anticipated to reach $3.2 billion by 2015,
growing in response to decreases in unit costs and increases.
(Wintergreen Research - Worldwide WebCam Market Shares, Strategies, and Forecasts, 2009-2015)

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This Changes Everything…

Augmented Reality Experiences

Through Standard Consumer Webcams

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 E-Commerce & The
Augmented
“Product” Experience

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Augmented Reality Shopping – Ray-
Ban

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Augmented Reality Shopping – Ray-
Ban

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Augmented Reality Shopping - Tissot

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Augmented Reality Shopping - Tissot

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Augmented Reality Shopping -
Fashionista

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Augmented Reality Shopping -
Fashionista

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 How Do
We Use AR
To
Enhance
The
E-
Commerce
Experience
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For The 29
Focus On
Utility

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Integrate
Social
Media

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 No
Software
Download
s

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Building Business Models
Around
E-Commerce and
Augmented Reality

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Monetization of Prior Emerging Media
& Technology

• Virtual Worlds
– Second Life
• Social Media
– Facebook, Twitter
• Mobile Marketing
– Admob, iPhone Apps
• Online Video
– Brightcove, YouTube
• Blog Networks / Advertising
– Gawker, AOL

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Questions and Challenges

• What’s the ROI?

• Will Consumers Actually Use It?

• What Other Brands Are Using AR?

• What Analytics Can You Share?

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So Where Does That Leave
AR?

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AR Technology Has Ability To Work With
Multiple Revenue Models
• CPM ads (“cost per thousand views”; banner ads
online and regular ads in print, TV and radio)
• CPC ads (“cost per click”; think Google ads)
• CPA ads (“cost per action”; pay only if the customer
performs a certain action)
• CPT ads (“cost per transaction”; you pay only if the
customer brought to you from a media sites becomes a
paying customer.)
• Lead generation (you pay for qualified names of
potential customers)
• Subscription revenues
• Affiliate revenues (think: Amazon Associates)
• Rental of subscriber lists
• Sale of information (selling data about users–
aggregate/statistical or individual–to third parties)
• Licensing of brand (people pay to use a media brand
as implied endorsement)
• Licensing of content (syndication)
• Getting the users to create something of value for
free and applying any of the above to monetize it.
(Like Digg or our own Reddit)
• Upgraded service/content (ed: aka “freemium”)
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• Alternate output (pdf; print/print-on-demand;
customized Shared Book style; etc.)
• Custom services/feeds
• Live events
• “Souvenirs”/”Merchandise”
• Co-branded spinoff
• Cost Per Install (popular with top Facebook apps who
can help others get installs)
• Sponsorships (ads of some sort that are sold based
on time, not on the number of impressions)
• Listings (paying a time based amount to list something
like a job or real estate on your website)
• Paid Inclusion (a form of CPC advertising where an
advertiser pays to be included in a search result)
• Streaming Audio Advertising (like radio advertising
delivered in the audio stream after a certain amount of
audio content has been delivered)
• Streaming Video Advertising (like streaming audio
but in video)
• API Fees (charging third parties to access your API)
Source: Wired Magazine
37
Most AR Companies Offer a Software
Based Revenue Model

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How Do We Target Areas Like
E-Commerce?

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“Augmented
Reality is a
solution looking
for a problem…”

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Problem: Bridge The Gap
Between Offline and Online
Shopping
Offline Shopping Online Shopping
Social but time consuming Convenient but not social

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 Solution: Augmented Reality
Webcam
Social
Shopper
Demo
At Booth
#114

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 Thank You!
Matthew Szymczyk
CEO, Zugara
matt@zugara.com
twitter.com/kobrakai
facebook.com/Mhszymczyk
 Market Data
• In 2009, 154 million people in the U.S. bought something online, or 67% of the
online population (4% more than in 2008). (Forrester Research)
• 80% of Gen X and 71% of Gen Y internet users buy products online. (Pew
Internet & American Life Project)
• Amount people spent on clothing online: $13.6 Bil. (US Census)
• Amount people spent on clothing in store: $7.0 Bil.
• 83% of online shoppers said they are interested in sharing information about their
purchases with people they know, while 74% are influenced by the opinions of
others in their decision to buy the product in the first place. (Manage Smarter)
• Online social network users were three times more likely to trust their peers'
opinions over advertising when making purchase decisions. (Jupiter Research)
• B2B interactive marketing spending will climb to nearly $4.8 billion in 2014.
(Forrester Research)

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