AI's Marketing Challenge: Consumers Wary of "Artificial Intelligence" Label

AI's big marketing problem: People don't want to hear about it

This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in. "There seems to be this fundamental misunderstanding of what we should be using AI for," said Iain Thomas, who cowrote a book on AI, "What Makes Us Human?," and is a founder of Sounds Fun, an agency that helps marketers harness AI. "We shouldn't be using it to write poetry or books, but take care of the grunt work so we can expand our creativity in different ways." The AI messaging problem reaches well beyond Google. A June Toys "R" Us ad that it touted as being made by OpenAI's text-to-video tool Sora got mixed reviews, with some saying it sent the message that filmmakers can be replaced with AI. An "AI-powered" Under Armour ad in March was accused by some in the creative community of using others' work without giving proper credit. These high-profile missteps speak to a fundamental issue facing advertisers: Consumers don't yet trust AI and are less likely to buy AI-powered products. A study from researchers at Washington State University published in the Journal of Hospitality Marketing & Management earlier this year found that US consumers were less likely to buy products like television sets, medical devices, or financial services products if "artificial intelligence" was included in the product description. It's easy to understand the unease, with growing fears about AI's potential to upend jobs and rob us of our humanity. A November Pew study showed growing concern about AI, with 52% of Americans more concerned than excited about it, an increase from 37% two years earlier. But advertisers might be vulnerable to their own positive thinking about AI. A Yahoo survey released in February with Publicis Media showed that advertisers were twice as likely as the general public to view AI positively. Marketers can't ignore AI, however. Enterprises are expected to spend more than $40 billion on generative AI this year, and many companies are looking to their marketing departments to help trumpet those investment decisions. According to data from MediaRadar, companies spent more than $107 million on ads marketing AI-related products and services in the first half of 2024, up from the $5.6 million total spent in the same period last year. To date, 575 companies have bought ads to market AI products in 2024, up from 186 in all of 2023. "There is a Catch-22 because they need to differentiate, and they're using AI to do it," Josh Campo, CEO of the ad agency Razorfish, said of advertisers, adding it's especially tricky for companies like financial services and healthcare firms that trade in sensitive personal data. "You can talk about AI but don't talk about it as much as you are. It's not a strategy, it's a tool," he said. "We're advising them to focus on: What is the benefit in terms of the human experience?" Matt Rebeiro, executive strategy director at the creative agency Iris, said business-to-business brands are also embracing AI in their ads, using it as a marketing shorthand to demonstrate how it can help their clients drive efficiencies. But he added that "AI" in and of itself isn't a unique selling proposition, and that marketers need to focus on the benefits and outcomes. "I don't care if AI is making the sausage, provided it's tasty," Rebeiro said. "In the same way, I wouldn't trumpet that my new product was designed in Photoshop, so why would I talk about how my product was designed using AI? It might be new, but it isn't relevant to the customer in the majority of cases." System1, which rates TV ads on their potential to drive long-term growth for brands, found that the AI-focused ads that perform best with consumers are those that focus on a human-led narrative. The research company asks a panel of consumers across several countries to indicate how they feel about the ad they're viewing from a list of emotions ranging from contempt and disgust to happiness and surprise. One of the top-performing US ads of 2023 came from Adobe, which ran a spot featuring a girl using AI to create a birthday card. The ad scored 5.2 out of a top score of 5.9. In System1's tests, the ad got some negative responses from viewers in its early moments when the AI element was introduced, but it dissipated when the ad showed that the tool was helping rather than undermining the girl's creativity. Another top scorer, coming in at No. 4, was Dove's "The Code" ad. When AI-generated beauty images were shown, the ad generated a surge in negative responses from System1's testers, but the response subsided when Dove showed examples of realistic beauty and images of everyday women. The ad concludes with the promise that the brand "will never use AI to create or distort women's images." On the negative side, Microsoft's Olympics ad, "They Say" -- which showed how people could overcome doubters and achieve their ambitions using Microsoft's Copilot chatbot -- scored a modest 2.9. System1 blamed its poor performance on an overemphasis on the negative instead of the feats that AI technology can help people accomplish. Thomas said some consumer companies have hit the right note when they used AI to personalize an experience or do something new. A Virgin ad featuring JLo humorously showed people using AI to mimic the star while inviting people to send out a personalized invitation to book a cruise, for example. Another was a Cadbury tool that let people upload their photos onto classic Cadbury posters. "Trying to do everything with it is in bad taste," Thomas said of AI. "People are getting sensitive to how things are made."

'Why do I need AI in my coffee maker?' AI-labeled products can scare away customers, study finds

Despite almost a quarter of U.S. adults using ChatGPT and thousands of companies integrating artificial intelligence into their operations, many consumers haven't ditched the fear of a Terminator-style AI takeover. That could be bad news for brands trying to convince customers to buy their AI-stamped products. A study published in the Journal of Hospitality Market and Management in June found consumers were less interested in purchasing an item if it was labeled with the term "AI." Across a series of studies, participants were asked about their intention to buy a product -- from televisions to vacuums to consumer and health services -- labeled with one of two descriptors, "AI-powered" or "high tech." Among about 200 participants across age and gender demographics, the impact of AI labels on a consumer's willingness to buy a product was unanimous, according to Dogan Gursoy, hospitality management professor at Washington State University's Carson College of Business and one of the study's authors. "In every single case," Gursoy told Fortune, "whenever we mentioned 'AI' versus 'high tech,' consumers' purchase intention went down." Indeed, shoppers are largely threatened by AI, with only 30% of respondents saying they trust generative AI, according to a Cognizant survey of 1,000 U.S. consumers. Almost three-fourths of respondents believed genAI would increase corporate profits, and 28% believed genAI would benefit consumers the least compared to corporations, small businesses, employees, and the government. Brands have largely overestimated consumer trust in AI, Gursoy said, and he has the research to support his claim. When consumers had lower emotional trust, a critical factor in determining if a shopper will buy a product, they also had low purchase intentions for products labeled "AI-powered." Purchase intentions and emotional trust were lower for items participants considered higher risk, such as cars. For many consumers, the anxiety around AI stems from an identity threat the technology poses, Gursoy said. The fear of AI taking over humanity -- exemplified in Gen Z's fear of losing their jobs to the technology -- is still salient. "It threatens my identity, threatens the human identity," Gursoy said. "Nothing's supposed to be more intelligent than us." These fears have been exacerbated by consumer concerns over privacy, with most consumers saying their trust in AI has already been eroded by organizations using the technology, per Cisco's 2023 Consumer Privacy Survey. Lawmakers are reacting accordingly: The proliferation of deepfake video and audio content caused Massachusetts Attorney General Andrea Campbell to sound the alarm over AI, warning companies that use the technology that they must abide by the commonwealth's consumer-protection and data-privacy laws. Amazon's use of a palm-scanning payment system at Whole Foods stores sparked concern from cybersecurity experts. "Any time you entrust your data with a private corporation, you're trusting that company to keep that data safe. And most of the time, you probably shouldn't," Evan Greer, director of tech regulation advocacy group Fight for the Future, told CNBC. Amazon Web Services' chief information security officer Chris Betz said in a June blog post the company is prioritizing security as it continues to invest in genAI. Since there's already distrust toward AI, brands producing and advertising AI-powered products have an uphill battle ahead. Consumers need to be convinced of AI's benefits in a particular product, Gursoy said: "Many people question, Why do I need AI in my coffee maker, or why do I need AI in my refrigerator or my vacuum cleaner?" The only problem is that no company has been able to successfully tap into this strategy, he argued. "Companies are not doing a great job of that kind of messaging," Gursoy said. "Everyone is keeping the AI development or what's going on with AI a secret, and that's understandable. But consumers also need to know that their data is safe." In order for consumers to purchase items espousing the utility of AI, brands need to first assuage anxieties around the technology. That means companies spelling out the benefits of a product thanks to AI and increasing transparency practices around data usage. "There are always people who will never want that," Gursoy said. "But for a large portion of consumers, we need to nudge their mind."