Advocates of virtual reality spot light at the end of the tunnel

You are in a racing car, with a Nascar star, and two tunnels come into view. You must choose which one to enter and, wearing a virtual reality headset, you have to steer the car into it. One enters the “Pitch Black” experience reminiscent of the film Blade Runner, the other leads to the so-called “Baja Blast” and the southern California desert.

This is the latest virtual reality advertisement for PepsiCo’s Mountain Dew brand released in late May. The tunnels represent the Mountain Dew flavours Pitch Black and Baja Blast. The driver’s choice of tunnel represents a vote for which drink they want to remain on grocery store shelves.

Pepsi is one of a number of global companies including Volvo and Disney that have been experimenting with VR as an advertising medium — in Pepsi’s case since 2014.

VR technology has been around for decades but it is only in recent years that costs have come down enough for the concept to be commercially viable. While its presence in advertising campaigns is fairly common, it has yet to reach the vast majority of consumers.

This novelty value remains one factor in its favour. Being willing to dabble with different and novel platforms for advertising can help build brands, experts say, even if those experiments do not always fully work.

Other recent Pepsi experiments include a New York restaurant, Kola House, themed on the kola nut, which contains caffeine and gives cola beverages their name. It displays little or no sign of the Pepsi logo, the idea being to get people talking on social media about not Pepsi but the restaurant’s products. “There may be no direct marketing impact but the buzz around it has a lot of value,” says Thomas Ordahl, chief strategy officer at Landor, a brand consultancy. “They [advertisers] want to be current, fresh and topical and to do that they have to be experimenting.”

As a drink and snacks company, Pepsi may not appear to be the obvious choice for taking on the technology. Film and television studios, carmakers, and hotels might seem more obvious clients, for campaigns offering visually immersive experiences.

Pepsi says VR works for a brand like Mountain Dew because it is closely associated with sports such as Nascar racing and is popular among gamers. “You have to find the right story that makes sense to tell in VR,” says Sadira Furlow, a senior marketing director at Mountain Dew. “Technology should never be used for the sake of technology.”

As exciting as the prospect of VR in advertising is, there are several obstacles standing in its way. The most obvious constraint is a limited number of headsets now in use across the world. These are typically owned by serious VR gamers.

Deloitte, the consultants, estimates about 2.5m headsets will be sold worldwide this year. But the number of households with VR equipment remains just a fraction of the total that global companies aim to reach.

This limited audience means that companies such as Pepsi often aim to make their VR commercials adaptable to other platforms such as YouTube’s 360 degree videos and normal viewing.

Albeit from a small base, the VR consumer economy is thriving. Deloitte forecasts that sales of VR products will breach $1bn this year. That may sound a large sum but two-thirds of it will be spent on hardware and the remainder on content, of which branded material is just a part.

Improvements in headset design will continue to drive interest, says Tyler Hopf, a VR designer at Framestore in New York, which has worked with companies from HBO and Marvel to Marriott and Fiat.

Clients still need to be patient in discovering what will and will not work. “Half the job is educating people, brands and agencies,” Mr Hopf says. “Ideas don’t necessarily translate well into VR.”