When AI Doesn’t Sell Prada: Why Using AI-Generated Advertisements Backfires for Luxury Brands

Abstract

The current research uncovers the potential negative consequence of utilizing AI-generated imagery in luxury brands’ advertising efforts. Across three experiments (field and lab studies) using only AI-generated ads, the authors find that when luxury brands feature and disclose the use of AI-generated imagery in their advertisements, consumers respond to the ads more negatively (Study 1). The results further reveal the underlying rationale for this negative outcome: AI-generated advertisements are perceived to be made with lower effort, which results in AI-generated luxury ads being evaluated as less authentic of the brand (Study 2). Finally, the authors explore a potential strategy that mitigates the negative impact of disclosing the use of AI-generated imagery on luxury ads’ evaluations (Study 3). Specifically, the authors find that the negative outcomes associated with AI-generated luxury ads are attenuated when luxury brands use generative AI to generate highly creative ad imagery rather than standard creative ad imagery. This research highlights how luxury brands should strategically approach AI usage and the important managerial implications of employing generative AI in brands’ advertising efforts.