Augmented reality apps will generate “close to US$300 million” in revenue globally during 2013, according to Juniper Research.

The company said that while the traditional pay-per-download payment model will continue to account for the largest share of revenue in the medium term, the scale of retailer engagement with AR suggests that ad spending has increased “dramatically” in 2012, and is poised for further growth next year.

It also said that “crucially…many retailers now perceive AR as a key means of increasing engagement with consumers, both as a means of providing additional product information or in the form of branded virtual games and activities”.

However, there are still hurdles to overcome, including the lack of consumer awareness.

It was also noted that “technological  limitations of AR-enablers such as the phone camera, GPS, digital compasses and markerless tracking meant that in many cases, the AR experience was failing to live up to consumer expectations”.

Looking further forward, Juniper forecasts that more than 2.5 billion AR apps will be downloaded to smartphones and tablets each year by 2017, with games accounting for the largest share of these.