What you need to know

• A study by researchers at Washington State University and Temple University in the US suggests consumers are repelled by the inclusion of 'artificial intelligence' in product and service descriptions, as backlash against the hype of AI grows.
• The study called Adverse impacts of revealing the presence of “Artificial Intelligence (AI) technology in product and service descriptions on purchase intentions: The mediating role of emotional trust and the moderating role of perceived risk suggests a brand's emotional connection to its customers can mitigate the effect.
• But even this has limitations, as the real-world experience of companies like Apple attests.
• With regulators starting to study the issue of AI disclosure, the priorities of compliance and marketing may start to clash.

Well, this is awkward. Artificial intelligence might be a great tool for improving marketing efficiency, just don't brag about it in your product marketing as it might actually come with a very significant downside - you will sell less stuff.

That's because consumers recoil at the link between AI and product marketing.

The revelation is contained in a new paper by academics from Washington State University and Temple University in the US called Adverse impacts of revealing the presence of “Artificial Intelligence (AI)” technology in product and service descriptions on purchase intentions: The mediating role of emotional trust and the moderating role of perceived risk.

Emotional trust in the brand is key to overcoming the effect, according to the authors.

This latest study replicates the findings of a Harvard Business Review paper from almost a decade ago, which argued companies should pursue emotional connections as both a science and a strategy. "Fully connected customers are 52 per cent more valuable, on average, than those who are just highly satisfied," that report stated.

But even brand trust and emotional connection are no guarantee, as Apple's marketers discovered with their ill-fated and short-lived social media campaign based on a hydraulic press crushing long-loved creative tools, all to the uplifting twang of Sonny and Cher's 'All I ever need is you'. No sooner had Apple CEO Tim Cook tweeted out the ad than the backlash began. 

Marketing vs compliance

The new joint university study is also at odds with the compliance mindset that suggests disclosure is key to building trust - and not running afoul of potential new regulations.

For instance, a paper in Bloomberg Law from April this year by Stuart Levi, Meredith Slawe, and Priya Matadar argued: "A thoughtful disclosure policy will not only help minimise a company's legal risk but will also bolster consumer trust and transparency with respect to the company's data practices." 

Not according to the Washington State and Temple University study.

Since the launch of ChatGPT in late 2022, there has been a dramatic rush into AI, and especially generative AI. As we reported last year, a study by Qualtrics revealed even though it is a relatively new technology (at least in terms of general release), 75 per cent of CX leaders say they feel pressure to incorporate generative AI into their business strategy.

"The study found nearly two-thirds of leaders expect their companies will increase their financial investment in tech tools as well as training for their CX teams over the next year," that report stated.

This is happening even as the consumer backlash against AI is growing, and broadening in terms of concerns.

According to Forrester Principal Analyst Audrey Chee-Read, "If 2023 skepticism around AI from consumers was all about the morality and ethics of AI — ‘Is it taking away our jobs? Is it taking away curiosity and intellect?’ — then the 2024 skepticism of AI is really around the output accuracy.”

Speaking on a recent Forrester podcast, she cited examples of AI-fuelled and ridicule-inducing forays where the outcomes fell far short of the promise. For example, an advertisement by Under Armour.

"It's a minute-long piece of really nice video advertisement. But the problem with it was that it took a lot of different pieces of video and advertisement and content from other directors and producers and didn't credit any of them," Chee-Read said.

Brands should take note. Misinformation and deep fakes around the Olympics, and later in the year, the US election will likely make consumer skepticism much worse, Chee-Read added.

Study: AI can hurt sales

According to Miset Cicek, one of the Washington State and Temple University study authors along with Dogan Gursoy and Lu Lu, mentioning 'Artificial Intelligence (AI)' in your product descriptions and ads can actually decrease your sales.

"The term can trigger fear and concern among consumers, lowering their emotional trust and purchase intentions, especially for high-risk products. Instead, focus on building emotional trust to boost your sales," Cicek said. "Marketers should carefully consider how they present AI in their product descriptions or develop strategies to increase emotional trust. Emphasising AI may not always be beneficial, particularly for high-risk products. Focus on describing the features or benefits and avoid the AI buzzwords."

According to the Washington State University statement within the study, "In the experiments, the researchers included questions and descriptions across diverse product and service categories. For example, in one experiment, participants were presented with identical descriptions of smart televisions, the only difference being the term 'artificial intelligence' was included for one group and omitted for the other. The group that saw AI included in the product description indicated they were less likely to purchase the television."

The statement said researchers also discovered negative responses to AI disclosure were even stronger for “high-risk” products and services, those which people commonly feel more uncertain or anxious about buying, such as expensive electronics, medical devices, or financial services.

"Because failure carries more potential risk, which may include monetary loss or danger to physical safety, mentioning AI for these types of descriptions may make consumers more wary and less likely to purchase," according to Cicek.

The paper noted emotional trust mediates the relationship between the inclusion of the 'Artificial Intelligence' term in descriptions of products and services and the decrease in sales intentions. Findings further suggested the negative mediating effect of emotional trust on the impact of AI term on purchase intention was stronger for high-risk products, compared to low-risk products.

Back to basics

According to Lucio Riberio, who has had stints in senior executive marketing and innovation roles at brands like Seven and Optus, and who has lectured in AI, "There’s a normal confusion in a world in transition."

"Firstly, let’s remember the role of marketers when advertising: to form memories and retrieve memories. Any other artifact placed into creative should be to retrieve or create associations and uniqueness. The problem is acrobatic marketing, where some poorly informed business and marketing people think there will be value in associating their products (and services) with anything AI. It won’t."

Consumers are increasingly wary of AI due to concerns about job displacement, ethical implications, and the accuracy of AI-generated content, he said.

"Instead of highlighting AI as a feature, focus on the benefits it brings, follow a “If it’s there, why is it there?" approach."

He told Mi-3, "I’m past the conversation and the proof points of AI and GAI benefiting automation and accelerating ideation and research, but we aren’t quite there for a final product and service that requires attention to the fact that has been done with AI unless there’s an ethical or legal requirement."

Ribeiro offers another perspective: "The study captures a temporary phase of consumer perception towards AI rather than a long-term trend. AI will become more ubiquitous, and consumers will become more familiar with it; the negative will diminish over time."

There are already generational differences with younger generations who grow up with AI-enabled technologies, possibly more accepting than older generations, he says.

"Like Social Media back in the 2010s, many businesses were sceptical about the value of social media and concerned about potential negative impacts on productivity or reputation. Social media is an integral part of most companies' marketing and communication strategies."

*The 'Adverse impacts of revealing the presence of “Artificial Intelligence' paper was published this month in the Journal of Hospitality Marketing & Management.