Augmented reality (AR) as an innovative technology has changed the way people use technology for interaction and communication. While researchers have studied the application of AR, research on AR as a communication medium remains scant. In this study, we investigate the effect of AR factors (namely, interaction, visual canvas/cues, and immersion) on AR-mediated communication. We apply design science research (DSR) guidelines to design, develop, and evaluate an AR artifact. We derive the design elements based on interactivity, media naturalness, and immersion theories and develop the AR artifact as a mobile app in an iterative manner. We evaluate the design product through the informed arguments and scenarios method, and the design process by assessing its conformance to DSR principles. We show that AR factors' design elements—interaction (user controls, contextual tasks, and ergonomics), visual canvas/cues (realistic 3D models, visual and audio cues, and aesthetics), and immersion (diverse components)—play a critical role in AR-mediated communication. Furthermore, high-quality product visuals and interactive user controls give users a good AR experience. From a practice perspective, AR app designers may incorporate the design process we used in our study and generate AR experiences that fully exploit AR media’s communication affordance. We contribute to knowledge by using DSR guidelines for designing and developing AR as a communication medium.