Like many analyst firms, market sizing is one of the ongoing practices of AR Insider’s research arm ARtillery Intelligence. A few times per year, it goes into isolation and buries itself deep in financial modeling. The latest such exercise zeroes in on mobile AR revenues.

This takes the insights and observations accumulated throughout the year and synthesizes them into hard numbers for spatial computing ( see methodology and inclusions/exclusions). It’s all about an extensive forecast model coupled with rigor in assembling reliable inputs.

So what did the latest forecast uncover? At a high level, global mobile AR revenue is projected to grow from $12.45 billion in 2021 to $36.26 billion in 2026, a 23.8 percent CAGR. This sum consists of mobile AR consumer and enterprise spending and their revenue subsegments.

Drilling down, our latest Behind the Numbers installment zeroes in on consumer spending. How much is spent on apps and in-app purchases that involve mobile AR? And how much is being spent on physical goods that are informed or influenced through AR visualization and try-ons?

First, to define consumer AR, it’s any mobile AR apps and experiences that consumers pay for (excluding mobile devices). It doesn’t include software and services that help businesses develop consumer AR (covered here). It’s limited to direct consumer spending.

Consumer AR spending is also subdivided by digital and physical goods. Digital goods include AR apps or in-app purchases (IAP), such as spending within Pokémon Go. Physical goods involve products whose sale is influenced in some way through AR visualization.

Starting with AR digital goods, spending was estimated to be $1.89 billion last year, growing to $5.82 billion in 2026, a 25.3 percent CAGR. This is dominated by IAP, which was $1.86 billion last year. This accounts for 98 percent of consumer mobile AR digital goods spending.

One reason IAP is so dominant is that it’s the primary model for Pokémon Go, which is still going strong. IAP is also propelled by consumer comfort and acclimation from its prevalence in more established (non-AR) mobile gaming. It eases users in with a “free to play” dynamic.

Projecting forward, mobile AR IAP spending will be driven by Pokémon Go’s continued success as the world returns to more physical activity. It will also be boosted by the proliferation of Niantic’s Lightship platform ( now with 8th Wall) that brings IAP-producing AR to other titles.

Moving on to AR physical-goods spending, these will grow from an estimated $26.1 billion last year to $248.6 billion by 2026. Again, this includes consumer purchases that are informed or influenced through AR product visualization — everything from furniture to footwear.

As one caveat for these figures, spending on AR-influenced physical goods isn’t counted as “AR revenue” per se. It’s rather spending on physical goods that’s influenced through AR, meaning it would inflate AR’s value to assign that revenue (e.g., a new couch) wholly to AR.

Another question is why such steep growth? First, it’s growing from a small base (mathematically creates higher percentage jumps). It’s also following a typical adoption path that, like images in eCommerce historically, will quickly become a consumer expectation.

But it’s worth noting that, though this is steep growth, there is still a great deal of headroom for AR-influenced commerce. For example, the $248.6 billion projected revenue for AR-influenced physical goods in 2026 is only .4 percent of the 63 trillion in global consumer spending.

In terms of formats, AR-influenced purchases are driven by social lenses, visual search, and web AR. Social lenses lead today due to Snap’s popularity and commercial traction, but visual search will gain ground over time due to a high-intent use case (just like web search).

Web AR will likewise grow over time due to lower friction to launch AR experiences; and the ability to run marketing campaigns through web-compatible channels. Among product categories, cosmetics leads, followed by clothing, jewelry, furniture, and home appliances.

How Much Do Consumers Spend on Mobile AR? was originally published in AR/VR Journey: Augmented & Virtual Reality Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.