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Behind the Numbers: an EMARKETER Podcast
The AI Ad Dilemma: Consumer Trust, Controversial Ads, and the Future of Media Buying | Behind the Numbers
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A
Consumers skip ads, but they don't skip rewards. Who would? There's madness. Fetch drives performance. With over 12.5 million monthly active users and over 11 and a half million receipts scanned daily, capturing basically 90% of household spend, your brand becomes the reward, earning real engagement, verified purchases and loyalty. Fetch, America's rewards app, where brands are the center of joy. Hey, gang. It's Monday, October 6th. Marissa Garger and listeners, welcome to behind the Numbers, the after video podcast made possible by Fetch Rewards. I'm Marcus, and joining me for today's conversation, we have two folks both living in New York. We have with us our analyst, Marissa Jones.
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B
Hi. Thank you for having me.
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A
Of course, of course. And senior analyst Garjo Sevilla.
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C
Happy to be here.
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A
Yes, sir. Today's fact. All right. Where did the camera come from? Well, a lot of folks have helped us get to the invention of the camera. The first photographic camera was developed in 1816 by Frenchman Joseph Nis for Niep. His View from the window at La Grasse was the first photograph created using helio heliography and the first image captured without manual intervention. It shows rooftops visible from a second story bedroom window. So he's responsible for the first photographic camera. Thank you. To him. However, the term camera, which I learned this whilst reading historical fiction and then went and checked to make sure that it's accurate and it's true. It happens. The first. Sorry. The term camera comes from the Arabic word qamara with a Q, A M A R A, which means dark room. And the first camera concept, the camera obscura, was developed by the 10th century Muslim mathematician and scientists, Ibn Al Haytham, more than a thousand years ago, he conducted experiments with light in a darkened room and a small opening, which laid the foundation for modern cameras. So, thank you. To him, it sounds like most things were invented by accident, you know. No, it's very amazing that they came up with this, but so many things in history, people are like, I accidentally stumbled upon this, you know, like the apple hit them on the head.
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C
Yep, yep.
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Maybe we're not that great as a race accidentally discovering things. Not to diminish inventions, but they're all by accident. Anyway, today's real topic, the ethics of AI in ads. Okay, the ethics of AI in ads. Talk about it. KFC used AI for a new ad and it didn't go as planned, writes Fast Company contributor Hunter Schwartz. Marissa, you also wrote about this earlier this year, noting that the fake AI generated KFC ad had ignited a debate over ethical adoption. Could you remind us why this AI generated KFC ad was so controversial, of course.
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B
So I would say the main reason why this ad was so controversial is it really ignited people's fears that AI will be used unethically in advertising, especially the concern that it will steal material from artists and not credit them, which in this case did happen. So for this advertisement, a director from a previous KFC shoot stated that the commercial used replicas of shots that he filmed years ago and he was not credited for any inspiration for the commercial. So we're really seeing a lot of consumers be concerned that using existing material without permission and it reignites a lot of fears that AI use is inherently unethical. We've seen nearly half of US consumers having the feeling that AI generated content is not just wrong, but is fraudulent, which I'll circle back to. But I think we're seeing a real problem where incorporating Gen AI without any human oversight or human review to keep practices in check and make sure it is ethical will inevitably cause controversy.
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A
Yeah, Gaja, it seems like the solution here might just be to source where things are coming from. You know, if you give credit to the people who have initially come up with the image, the text, the whatever, the intellectual property, so to speak, then maybe that takes some of the controversy out of using AI in a multitude of places, let alone in ads. Watermarks the answer here.
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C
Well, that could be one answer, I think, for existing artwork, content of photography. But I think in this particular case what Marisa is saying is that they took shots from an existing shoot and sort of replicated them with AI. So I mean, the creative work had partially been done by somebody and then that person was not given attribution or any royalties. Right. Which is really a red flag if you're, if you're going with a, you know, a national ad, especially if you're a high, high profile brand like kfc, you know, so yeah, I think that's the conflict there. But we're also seeing instances where AI is applied. But then, you know, brands and advertisers are, are sort of on top of the creative aspect. So they're using it as a tool rather than as a solution, if that makes sense.
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A
Yeah, plenty of examples of companies using AI generated content to ill effect. Toys R Us use OpenAI Sora to create what it called the first AI made brand film which prompted backlash. Sports Illustrated got in hot water after using AI generated articles published under fake authors names. The leading to the CEO getting fired. Marissa, in the piece you note that close to half of US consumers feel brands using AI generated content in ads come across as fraudulent. According to tenuity, close to half of people feeling this way Marissa, will this perception get better or worse in the next six months, in your opinion?
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B
I do think this perception is going to linger to some degree for some time. But even with this belief that we're seeing a significant portion of audiences hold, we do also see the attitudes toward AI are very much improving. So within the next six months or so is likely that this will get better, but probably very incrementally. We probably won't see a super drastic change in such a short time. But I think what's really interesting is that we're seeing younger generations being more accepting of Gen AI than older generations, especially generations like Gen Z. And these are also the generations that we forecast are driving buyer growth. So with that combined AI and ads will likely in the future receive a more positive reception. But it still does land on the shoulders of brands to use the tool responsibly to avoid issues like the KFC ad by disclosing when AI is used and crediting who it's inspired by. If that's the case.
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A
Yeah, to those points, one it might be swinging pendulum might be swinging in a more positive direction, but it seems like it could take a really long time to change people's minds here. Some data from a test showing the share of consumers who say they're not okay with AI in ads fell a touch in the past year, going from 49% to 46%. So it is getting a little bit better there. With regards to by generation comment, it's it's better with younger folks, but still not as high as you might expect, especially with some other technologies where we see younger people really driving the trend and they' quite a big disparity. 18% of US adults between the ages of 18 to 29 would be more likely to buy a product if they knew the brand uses AI in its ads. According to Civic Science, that just is just 1% for people over the age of 65. Gaja, what do you think?
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C
I think one issue there is people know what AI ads look like. They know what AI creatives look like. And so the general feeling is that it's a low effort, you know, not so creative attempt at replicating advertising campaigns. And you know, they see that on social media when they're scrolling, right? And when they see it on other channels, they can pretty much identify it. And right away I think the sentiment is like, well, they didn't really put a lot of effort in that. Or that looks like a Rip off of something else. How can I trust this brand? It feels, you know, they're not being honest about, you know, what they're trying to, what they're trying to push.
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A
Yeah, yeah, it's an interesting take. If you're not being honest through the marketing, how can I see you as an honest brand? How can I trust you as a brand? Our AI and tech analyst Grace Harmon, writing that many U.S. adults both avoid and distrust brands that use AI ads. She explains that just 12% of U.S. adults would be more likely to buy a product, more likely to buy a product than a brand, sorry, from a brand if they knew it used AI in its advertising. That comes from civic science. So Gago, why, why risk it? These numbers look quite low in terms of the people who do trust brands that use AI. We've seen a lot of backlash towards brands that do use AI. And even if it is trending in the right direction, it seems like it's going to take a very long time before we get to a place where people are comfortable with this technology and advertising. What's, why is it worth the risk at this juncture?
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C
I think like with a lot of early AI adoption in pilots, it's to prove efficiency, to show that, yes, we, you know, we can create something that's camera ready at half the time, 1/4 the time, we can localize it for different markets. So it's, I think it's a push for speed and efficiency. But you know, the drawback there is, you know, your, your audience is watching and they're judging as well. Right. And these are, you have to be very careful about these first moves that, that, that you make because that kind of sets the tone for what your, you know, your, your take on AI is going to be. Right.
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Yeah.
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And any good brands can adjust, they can sort of find a good middle ground where, yes, they use AI for production, but it's not blatant and, you know, kind of cringe worthy when, when you see it. Right. So again, that comes in, that comes with the human aspect of it, the creativity, understanding your audience I think is one, one huge factor that, you know, no matter how good an AI tool is, that's, it's never going to get there. Right?
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Yeah.
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Without the human aspect.
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It seems, it's so surprising how fast people have rushed into this. To me, because the data just seems so overwhelming. There's more data from Civic Science. 37% of people view brands that use AI powered ads negatively versus 22% who view them positively. Marissa, you'd written A piece citing that 2/3 of US adults feel uneasy about AI generated ads. And at the extreme ends, 34% felt very uncomfortable with this content. Just 9% said they felt very comfortable with it. For you, is it worth the risk at this point to use this technology in advertising?
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B
I think a big issue is how advertisers are using it. I think at this stage, attitudes towards AI point to creating an ad. Unless you're a very big brand that can risk it creating an ad entirely using AI, creating the visuals, the creative, the script is largely maybe not the right move right now, but I think the efficiency that AI allows for it allows brands to create content at a scale like never before and have so much output that it seems like such an obvious choice. But I think that efficiency really causes a lot of brands to ignore that there is so much lingering hesitancy towards these ads and disregard consumer concerns.
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A
Yeah. Yes. What's the right balance? Right? Too much salt in a dish. I shouldn't be talking about cooking. I haven't turned my oven on since I moved to America. But what? From what I heard, too much salt in the dish. If you've made it yourself, people won't feel great about it, but they won't say no salt. Thank you. It's finding the right amount that people are going to be comfortable with. I also thought it was interesting you had a stat. Marketers don't even really trust the technology. You were writing that quote. Whilst AI adoption is widespread, spread over 80% of marketers using Gen AI, only 4% of marketers highly trust AI content according to 2024 demand Gen report survey. However, these are all just feelings. This is how people feel, not what they will actually do. The data seems to paint a consumer who would like brands not to use AI, but that will still buy from them. Call it an AI ads paradox. As we see throughout technology and media and advertising, people say they don' Trust news on social media but consume a ton of news on social media. People say they want to step away from their phones but continue to use their phones a lot. Some numbers here, 61% of people saying they will still buy from a brand that includes AI generated images, video and text in its ad according to tenuity. And there's this chart here as you can see on the screen from Civic Science. While some people might be more or less likely more or less likely to buy from brands who use AI in their ads, most the folks in the middle say it has no bearing on their purchasing decisions. Let's close the episode by Talking not just about AI being used in ads to make ads, but AI being used as part of the whole ad buying process. Patrick Coffey of the Journal writing Marketers have for years responded to the perforation of platforms and media formats by demanding greater control and transparency in allocating budgets. The tech giants dominating digital advertising now appear to be headed in the opposite direction. Advertisers are grappling with trade offs of AI powered ad planning and buying tools for automating nearly every step in digital ad campaigns. The tools work by asking buyers for parameters for campaigns such as budget limits and sales goals, and then allow algorithms to decide where ads will run, who they target and in some cases how ads appear. We saw this, I think it's this earlier this year, Meta saying give us your credit cards, tell us what you want to achieve and we'll take care of literally everything else from the planning, the creative, where it goes, how many of them go there, and the measurement piece at the end. And then we'll iterate and continue as long as you want us to. To Ben Hov, the chief media officer ad buying firm OMD, part of the ad giant Omnicom, thinks AI buying agents are going to be directing upwards of 80%. 80% of digital media buys by 2030. Marissa, what do you make of this estimate from Mr. Hoviness regarding ad buying being delegated to AI?
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B
I feel like it's a fairly accurate estimate of what we're seeing right now in the ad industry. Well, yeah, there's such a rapid pace of AI adoption in the media buying process and AI, just as I mentioned, allows brands to really scale and optimize the process like never before. And this is not a trend that seems like it's going to slow down, especially with AI tools becoming more sophisticated.
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A
Yeah. Would you take the over on this? Do you think 80% is reachable and then some or they might fall short of this estimate, I would say, and.
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Please feel free to disagree with me, Gajo, but I would say there is even room for growth in that.
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Oh wow. Okay. Gajo over or under on 80% of digital media buys being conducted by AI buying agents by 2030.
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C
I think it's spot on. I think.
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A
Wow, okay.
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At the minimum by 2030. Yes, because you mentioned Meta, we're seeing big tech companies who are also ad tech companies. They're disintermediating a lot of the smaller, you know, solutions. Right. They want to own the whole widget. And so for, for a brand you just need to deal with one company and for that company, they just need your credit card, like you said. You just need to go over what they propose, sign off on it, and basically see the results. That saves a lot of time, a lot of, a lot of negotiations. Now, whether or not that performs as promised. Again, it might, might take till 2030 to figure out, you know, the payoff. Right. But I feel that proposition and where the technology is supposedly at today makes it just too attractive to, to kind of not be enticed by, by, by those possibilities.
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A
Do you see this being the case where a lot is going to shift to automated buying, but people might keep a little money back, a little bit back to create things themselves? Because I think Yuri Wormser, who's one of our analysts, described it as ads made by people, set up by people, executed by people, will be kind of the acoustic music or the acoustic version of music, or do you just see, you know, similar to television, for example, it's just a matter of time before all of it becomes digital, so to speak.
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C
I think there's always going to be appreciation for the acoustic sense. Right. And, you know, there's a value in that, that area. But again, you know, talking about meta, they're not just the ad company, they're also the, the content platform. Right. So that cohesiveness makes it, makes it difficult to find other ways in other mediums. There might be a mix. And I think, you know, if you're a wise agency, you will have a mix depending on how you're trying to reach your customer. And again, more organic, more thoughtful, less, I guess generated or algorithmically driven solution is still worth. Worth looking into. Right? Especially if your clients want that approach or have been successful in that approach. Why change it? Right?
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A
Yeah. Yeah, that's what we've got time for this episode, unfortunately. Thank you so much to both of you for hanging out with me today. Thank you to Marissa.
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B
Thank you for having me.
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A
Of course, of course. Thank you to Gaje. Of course.
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C
This was great. Thanks again.
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A
Thank you to the whole editing crew and to everyone for listening in to behind the Numbers, new marketing video podcast made possible by Fetch. Rewards. Ratings and reviews mean absolutely everything to us, so if you have a little free time to write one of those, we'd really appreciate it. Wednesday, you can hang out with the reimagining retail crew as they host the US CMO of fashion retail giant Primark.