The news: McDonald’s has pulled an AI-generated Christmas ad after a wave of online backlash. Upon removal, McDonald’s said to BBC News that the ad was “an important learning” for the company’s understanding of “the effective use of AI.”
Zooming out: The ad, released on McDonald’s Netherlands YouTube channel, isn’t the first time a major company has used genAI for its holiday advertising. Coca-Cola recently released its second AI-generated holiday ad despite mixed reactions to its first iteration.
The trend: Brands are increasingly turning to AI for ad creation for several key reasons as the tool fundamentally reshapes the ad industry.
- AI unlocks an unprecedented level of scale and efficiency in an area that has historically required weeks or months of planning for single campaigns. Using AI to develop ads means teams can now speed up workflows and produce more campaigns at a faster rate.
- The tool is also proving valuable for cost savings, as it dramatically reduces production costs on big-budget campaigns—something smaller brands in particular haven’t had access to. Brands can now stretch their budgets further and do more with what they have by turning to AI.
- Even brands who once shied away from using AI are now facing a landscape where it is essential for remaining competitive. Companies across the board are implementing the tool in some fashion—and those who resist get left behind.
Consumer sentiment: AI is becoming the norm for advertisers, but audiences are still warming up to the idea.
- Over 30% of consumers across age groups state that knowing an ad is AI-generated makes them less likely to choose a brand. This is especially true for older demographics: 42% of consumers over 65 hold this preference.
- Nearly two-thirds (65%) of US consumers feel somewhat or very uncomfortable with AI-generated ads.