AI in Ads Faces Consumer Backlash: Efficiency gains clash with trust deficit

By 2026, nearly four in ten digital video ads will be made using artificial intelligence, according to WARC. That figure signals an unprecedented shift in the advertising world- one where automation and machine learning promise efficiency, scale, and lower costs.

But as the technology barrels ahead, research is exposing a sharp undercurrent: consumers don’t necessarily trust AI, and the label “made with AI” might be more of a liability than a badge of innovation.

A recent study by researchers at Washington State University, published in the Journal of Hospitality Marketing & Management, found that when AI is mentioned in product or content descriptions, emotional trust dips, which directly reduces purchase intention. The effect is most pronounced in high-risk categories such as expensive electronics, financial services, and medical devices.

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The Disconnect Between Boardrooms and Buyers

From Cadbury Silk’s personalized AI videos to Emami’s fully AI-generated film and Tata Gluco+’s rapid rollouts, brands in India are piloting campaigns entirely ideated and executed by AI- delivering speed, scale, and savings.

The problem may not lie with the technology itself but with how it’s being presented. Executives and investors, eager not to be left behind, are insisting AI be foregrounded in communications. Meanwhile, consumers remain unconvinced of its real-world benefits.

This disconnect plays out vividly in advertising.

“Consumer trust is reduced when ads are clearly labeled as AI-generated, especially in emotionally high categories,” said Arun Roongta, Managing Director at Texzone Information Services.

“Brands need to juggle transparency and care. AI must be a backstage enabler, with the brand’s human narrative remaining center-stage.”

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He warns that if too many brands lean on the same AI tools, the outcome will be creative sameness.

Distinctiveness- one of the cornerstones of brand equity- risks being lost. “While AI ensures cost reduction, AI-driven ads are viewed as less genuine and emotionally weaker by consumers,” he added.

AI as Curiosity, Not Creativity

Others in the industry argue that the fear of AI is misplaced, and that the real issue lies in how brands use it.

Aditya Aima, MD, Growth Markets at AnyMind Group, likens the debate to past technological disruptions.

“Every new technology has carried a certain air of intimidation, whether it was computers decades ago or AI today,” Aima said. “What unsettles consumers is not the tool but the uncertainty around it.”

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For him, AI should not be seen primarily as a cost-saving tool but as what he calls a “curiosity machine.” By enabling rapid testing and experimentation, AI can uncover cultural nuances at unprecedented speed. But, he cautions, efficiency is not the same as progress.

“Churning out fifty versions of the same bland creative doesn’t make a brand smarter- it does the opposite,” Aima said. “AI never really dilutes creativity, our laziness does.”

In his view, the balance lies in shifting focus from the means of creation to the meaning of the message. Consumers care about whether an ad makes them feel, think, or act- not whether it was written by a human or a machine.

Authenticity Still Rules

The message of authenticity keeps coming up in conversations with industry leaders. Piyush Goel, CEO & Founder of Beyond Key, believes that AI must always be positioned as augmenting, not replacing, human creativity.

“Data identified as being generated by AI often causes a decline in consumer confidence, particularly in high-risk sectors,” Goel said. “Short-term profits at the expense of consumer perception could erode distinction and trust since consumers appreciate uniqueness and human interaction in advertising.”

Goel recommends highlighting AI only when it directly enhances consumer benefits, such as personalized recommendations or seamless experiences. “If AI’s role is incidental, focus on product benefits like quality or performance,” he advised.

Read more: Microsoft CEO Satya Nadella warns AI could render “big businesses we built” irrelevant

Raahul Seshadri, Director – AI & Tech at WebEngage, agrees that AI adoption must be framed carefully. “Transparency is key,” he said. “Clearly explaining how AI is used, what value it brings, and how data is safeguarded helps reduce skepticism. Combining AI efficiency with human oversight ensures authenticity and emotional tone.”

The Efficiency Trap

The enthusiasm for AI-driven content creation has been fueled by financial pressures. Marketers are under constant pressure to deliver more campaigns, more quickly, and for less money.

For agencies, AI offers an enticing solution to strained margins. For brands, it promises faster turnaround and sharper targeting.

But efficiency comes at a cost. Too much reliance on AI can hollow out the emotional resonance that makes advertising memorable.

As Roongta put it, “Long-term equity is based on differentiation, trust, and emotional storytelling. Brands need to use AI as a support system, not the creative driver.”

Read more: Media buying disruption prompts brands to explore AI Agents

This is the heart of the dilemma: the short-term savings AI offers may come at the expense of long-term brand value. If every ad starts to look and feel the same- polished, but generic- consumers may tune out altogether.

In sensitive categories like healthcare and finance, overemphasizing AI may undermine trust. In contrast, in digital-first sectors or with younger audiences, AI can be framed positively- as a driver of personalization or smarter service, say experts.