New research: The AI Ad Gap

When Coca-Cola launched its AI-generated holiday ad, the initial response was positive. And then, things turned sour.

The controversy illustrates a key consideration for marketers that want to use AI to created advertising: Are your audiences ready for it?

New research published by Sonata Insights in conjunction with Interactive Advertising Bureau (IAB) reveals a significant gap between advertiser enthusiasm and young consumer sentiment toward AI-generated ads. While advertisers are eager to harness the power of AI for ad creation, Gen Z and Millennial consumers are far less convinced.

The Disconnect: Advertisers vs. Young Consumers

The IAB/Sonata Insights study, conducted between August and October 2024, surveyed 300 US Gen Z and Millennial consumers and 75 advertising industry executives. To me, the most striking finding was the disconnect between the perceptions of advertisers and young consumers regarding AI-generated ads. While 80% of ad industry executives believe consumers have a positive view of AI-created ads, less than half of Gen Z and Millennial consumers share this sentiment.

This disconnect extends to brand perception as well. While advertisers associate AI-generated ads with positive attributes like "creative" and "innovative," young consumers are more likely to view brands using AI as "inauthentic" and "unethical." This skepticism is particularly pronounced among Gen Z, who are known to be more discerning and critical of advertising in general.

Three Key Strategies for Successful AI Advertising

So, what can advertisers do? Our research identifies three crucial best practices for advertisers to navigate this challenge and build trust with young consumers:

Transparency is Key: While three-quarters of advertisers already disclose AI usage in their ads, it’s important to go beyond mere disclosure. Advertisers should use this opportunity to educate consumers about the “how” and “why” of AI deployment in their ads, fostering understanding and trust. Simply stating that an ad is AI-generated isn't enough; explain the benefits and rationale behind using AI to create a more positive perception.

Strategic Placement Matters: Both advertisers and young consumers favor social media and online display as the preferred channels for AI-generated ads. This preference likely stems from the interactive nature of these platforms, making them more conducive to engagement. However, a considerable gap exists between the enthusiasm levels of advertisers and consumers. This underscores the need for advertisers to prioritize education and engagement strategies even on preferred platforms.

Prioritizing Creativity Remains Crucial: While AI can streamline ad creation, it shouldn't come at the cost of quality and creativity. Young consumers are most likely to engage with AI ads that feature high-quality visuals, humor, and personalization, especially for Gen Z. Advertisers should leverage AI's potential to enhance these elements, creating ads that are visually appealing, humorous, and tailored to individual interests. The use of AI shouldn’t be a substitute for creative excellence.

Embracing the Future of Advertising

The emergence of AI in advertising presents both opportunities and challenges. While advertisers are enthusiastic about AI's potential, winning over skeptical young consumers is crucial for long-term success. By prioritizing transparency, strategic placement, and creative excellence, advertisers can bridge the existing gap, build trust, and pave the way for wider acceptance of AI in advertising.

Read the full study here.