As AI increasingly powers everything from holiday ads to product recommendations, retailers face a critical balancing act between efficiency and authenticity.

"The question isn't if retailers will use AI, it's how they'll keep using it and maintain the human touch along the way," said host Suzy Davidkhanian on a recent episode of “Behind the Numbers.”

AI creativity: Innovation or soulless automation?

Coca-Cola's decision to use generative AI for its holiday campaign for the second consecutive year has sparked industry debate about the role of artificial intelligence in brand storytelling.

• "I thought it was a pretty bold choice to double down and do it again this year," said our analyst Arielle Feger. "For a brand that is so embedded in Christmas and known for their Christmas ads, to take what I'm calling a shortcut is a little bit of a wrong turn."
• The ad, which features AI-generated polar bears and the iconic red trucks with "10 times better craftsmanship" according to Coca-Cola, still contains noticeable imperfections like inconsistent truck wheels that sometimes show three wheels and sometimes six.

Analyst Sky Canaves offered a different perspective.

"Coca-Cola's attitude has been, 'It doesn't have to be perfect. We just have to move forward with AI because this is the future,’” she said, noting that according to the company, consumers actually responded positively to last year's AI-generated ads, which justified bringing them back.

Research shows mixed consumer reactions to AI in advertising.

• Nearly two-thirds (65%) of consumers feel uneasy about AI in ads, according to September 2024 data from CivicScience.
• But that doesn't necessarily make ads less likable, and younger consumers might even view AI-generated content more favorably, said Canaves.

When authenticity becomes premium

As AI-generated content becomes ubiquitous, human creativity and authenticity are gaining new value in the marketplace.

• "Creators and human content become more important both to build emotional connections with human consumers, but also as AI plays a bigger role in mediating consumer interactions with brands," Canaves explained.
• She pointed out that large language models like ChatGPT frequently cite platforms with user-generated content like Reddit, YouTube, and Wikipedia because they provide authentic material.

The data supports this trend: Shoppers discover products 10 times more often through social media than through AI tools, and more than half of US social users report that a creator influenced a recent purchase, according to EMARKETER surveys.

Some brands are already positioning themselves against the AI tide.

"We're going to see companies differentiate themselves by saying, 'No, we're not using AI,'" said Feger. "I believe Dove took an anti-AI pledge to not use AI in their advertising. I think that in itself will become a way to signal to consumers, 'We are real, we're authentic.'"

Finding the sweet spot: Practical AI applications

Despite concerns about authenticity, retailers are finding ways to use AI that enhance rather than detract from customer connections.

Personalization is one area where AI excels.

"Ulta uses AI for marketing so that they can really personalize that lipstick color to whatever it is that you typically buy," Davidkhanian noted, highlighting how AI can solve practical consumer problems.

Shopping assistance represents another valuable application.

"Amazon's Rufus or Walmart's integration with OpenAI gives consumers more ways to sift through the massive amount of products that are out there, help them make better decisions, help them find the best price," said Feger. "Those are things consumers are already doing, they're just streamlining it."

Brands keeping it real with AI

Some of the most successful AI implementations embrace both the technology's capabilities and its current limitations.

Heinz Ketchup created a campaign showcasing what happened when they asked DALL-E to generate images of ketchup.

• The AI consistently produced bottles resembling Heinz, but with wonky text and strange distortions.
• "It was this way of saying, 'Yes, we're embracing this, but we're also showcasing the weird little inconsistencies,'" Feger explained. "It was funny and it just worked."

Duolingo successfully tapped into AI-fueled viral trends by dressing its mascot as one of the "Italian brainrot characters" popular with Gen Alpha.

"It became a kind of joke, but it also drove app downloads and a lot of engagement around that core audience of young Gen Z and Gen Alpha that's really paying attention to AI," said Canaves.

As AI continues to evolve, brands that find the right balance between technological efficiency and human connection will likely see the greatest success.

"Be clear about what you're doing and understand that it's not going to be perfect," advised Feger. "You can play with it and be self-aware."

Listen to the full episode

This article was prepared with the assistance of generative AI tools to support content organization, summarization, and drafting. All AI-generated contributions have been reviewed, fact-checked, and verified for accuracy and originality by EMARKETER editors. Any recommendations reflect EMARKETER’s research and human judgment.

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