AI in ads: Boosting brands or breaking trust?

In 2021, Cadbury ran a Diwali campaign that used AI in a strikingly original way to support local Indian businesses hit hard by COVID-19. Using deepfake technology, they created a digital Shah Rukh Khan to deliver hyper-local, geo-targeted messages. Depending on the viewer’s location, the Bollywood star would say, ‘Iss Diwali se kharidiye’ (This Diwali, buy from ’.

The campaign was a breakthrough, combining voice cloning, digital avatars, and AI to offer a highly personalised experience and energise struggling small businesses. Building on this success, Cadbury later launched a similar campaign featuring local businesses in 2023, with its #ThisAdIsMyStore campaign. It spotlighted home-based small businesses through interactive out-of-home (OOH) advertising featuring local businesses from the respective areas.

A year later, it launched a highly personal Raksha Bandhan campaign that allowed customers to relive their special memories with their siblings. They could create AI-generated photos, aiming to capture moments that were never photographed, under the theme #CreatingMemoriesNeverClicked.

AI has quickly become indispensable for brands aiming to run smarter, faster, and more personal ad campaigns, transforming ad targeting, data analytics, and campaign efficiency. Today, it helps advertisers process immense data in real time, detect consumer patterns, and deliver tailored ads to the right audience segments, maximising ROI.

However, while AI’s capabilities are expanding the possibilities in digital advertising, it also brings substantial risks. The technology’s complexity can sometimes backfire, causing public backlash or even harming the very brand it aims to support.

AI’s dark side in advertising: Challenges and setbacks

Despite AI’s advantages, some campaigns have shown that AI-driven ads can have unanticipated consequences. Sheerluxe, a British lifestyle brand, learned this the hard way when it introduced ‘Reem’, an AI-powered fashion editor, on Instagram.

This AI persona, designed to promote products, attend events, and share opinions, faced fierce backlash from Sheerluxe’s half-million followers. Followers voiced concerns about Reem’s appearance, unrealistic beauty standards, and job security in an industry already plagued by redundancy fears. The AI’s identity as a woman of colour also triggered criticism due to Sheerluxe’s past allegations of racial bias, making the AI rollout a PR blunder instead of a triumph.

 

 

 

 

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This case underlines that the allure of AI must be weighed against the possible fallout, especially in markets as diverse and complex as India. AI systems rely on large data sets, which may contain inherent biases. “These tools and platforms are trained on large data sets. AI systems are only as good as the data they are trained on. If the data is biased or incomplete, the resulting algorithms can perpetuate discrimination, leading to unfair outcomes,” explained Sindhu Biswal, CEO of Buzzlab, a growth consulting firm focused on ad performance.

Besides bias, misuse of data and concerns around privacy are central challenges. “Misinformation and deepfakes, overly targeted advertising, and privacy breaches are some of the most pressing issues that I see as the challenges of AI,” says Suchana Sarkar, chief brand officer at advertising agency Makani Creatives.

In a world of increasingly targeted ads, consumers are questioning the line between tailored content and intrusion, and advertisers face the challenge of using AI responsibly without crossing ethical boundaries.

Balancing AI innovation with transparency

Transparency, an essential principle in AI advertising, can often be obscured by the technology’s ‘black box’ nature. For instance, AI models sometimes make decisions that even their developers cannot fully explain, leaving consumers in the dark about why they see specific ads.

According to Raghav Bagai, co-founder of digital marketing agency SocioWash Network, consumers need to feel that their data is respected and safe. To maintain trust, brands should be transparent about their use of AI, reduce bias, and rigorously protect data.

Raghav Bagai, co-founder, SocioWash Network.

In India, consumers tend to prioritise convenience and personalisation, often valuing this over privacy. However, the recent Digital Personal Data Protection Act (DPDP) signifies a shift, raising the bar on data protection. Brands now face the challenge of aligning AI-driven personalisation with transparency and compliance to build and retain consumer trust.

To aid in transparency, the Advertising Standards Council of India (ASCI) has implemented guidelines for ethical advertising, including in AI applications. Globally, frameworks like the IEEE’s Ethically Aligned Design and the European Union’s AI Act are pushing for safe, ethical AI practices, while tech giants like Meta and Google are setting internal guidelines for AI use in ads. These efforts underscore the global trend toward responsible AI, though industry-wide adherence remains a work in progress.

Explaining how transparency can work in practice, Biswal suggested that brands use labels such as ‘Powered by AI’ on ads to help viewers distinguish between AI-driven and human-generated content. Additionally, “contextual disclosure”—tooltips or pop-ups clarifying how AI was involved—can also boost consumer understanding and acceptance. By proactively addressing transparency, brands in markets like India can build a more trusting relationship with consumers who are increasingly aware of and concerned about their data privacy.

Navigating accountability in AI advertising

Who bears responsibility when AI-driven campaigns go wrong? Accountability in AI advertising is a shared burden.

Creative agencies must ensure that their content is not only engaging but also complies with advertising standards. Brands have the final responsibility for their campaigns, including data ethics and transparency around AI use. Technology providers, meanwhile, play a pivotal role by designing AI systems that are fair, secure, and non-discriminatory.

Suchana Sarkar, chief brand officer, Makani Creatives.

Bagai underscores the importance of collaboration: “In cases of negative outcomes, such as misleading ads or data misuse, accountability should be shared among these stakeholders.”

This collective accountability is essential to building ethical advertising practices and fostering consumer trust. For instance, if an AI-driven campaign like Sheerluxe’s ‘Reem’ causes backlash, the responsibility should not lie solely with the agency; all stakeholders involved should take part in addressing and rectifying the issue.

At present, India lacks specific laws governing AI, though frameworks like the National Strategy for Artificial Intelligence aim to lay the groundwork for future regulations. In the meantime, brands need to proactively adopt responsible practices, as the absence of strict laws does not absolve them from ethical considerations.

According to Hayden Scott, creative head for APAC at Virtue Worldwide, educating clients and agencies on AI’s regulations and limitations is crucial to ethical use, as well as to preemptive compliance with future regulatory frameworks.

The road ahead: Responsible AI as a trust-building tool

AI is redefining advertising with the power to hyper-personalise and streamline consumer engagement. But with AI’s rapid adoption come ethical and operational challenges that cannot be ignored.

As AI continues to reshape advertising, consumer awareness around data privacy and fairness is growing, prompting brands to navigate this landscape carefully. Transparency practices—such as clear labelling, data protection, and responsible data use—are essential in ensuring that AI-driven campaigns do not erode consumer trust.

For brands, responsible AI implementation is more than a compliance issue; it is an opportunity to cultivate deeper, more authentic connections with consumers. In India, where data privacy scepticism is on the rise, responsible AI practices can be a differentiator, showing consumers that a brand values integrity as much as innovation. Balancing the tech’s advantages with ethical transparency not only meets consumer expectations but also opens doors for brands to leverage AI as a tool for long-term trust and loyalty.

As the AI advertising space continues to expand, the industry must continue evolving its ethical practices, not only to comply with emerging regulations but to forge a responsible, trust-driven relationship with consumers in the digital age.