Artificial intelligence is expanding its role in advertising, from generating campaign visuals to analysing consumer behaviour and optimising media spending. But research published in Harvard Business Review suggests that AI-generated advertisements can underperform human-made creative work, even when consumers struggle to identify which is which.
The findings come as Indian FMCG major ITC deploys AI across consumer insights, content creation and media optimisation. The two developments highlight a central question for the advertising industry: can AI help brands work faster without compromising the effectiveness of their campaigns?
Research Finds AI Ads Can Underperform
In a September 2026 article for Harvard Business Review, Adam Peruta examined research comparing AI-generated video advertisements with human-made creative work. The study involved 3,000 US consumers and found that audiences often struggled to distinguish between the two.
Despite this, the AI-generated advertisements performed less effectively on measures of short-term sales potential and long-term brand equity. The findings suggest that an advertisement’s ability to look convincing does not necessarily translate into stronger commercial results.
A separate academic study on consumer perceptions of AI-generated advertising found that participants correctly identified whether ads were AI-generated or human-made 64% of the time on average, only moderately above the 50% expected from random guessing. Across the study’s product categories, accuracy ranged from 57% to 68%.
The research also found that human-made ads received higher average ratings for creativity and memorability, while advertisements perceived to be human-created scored more highly across all the measured dimensions, regardless of their actual origin.
Together, the studies point to two distinct issues: consumers may not reliably recognise AI-generated content, but their perceptions of an advertisement’s creator can still influence how they evaluate it.
ITC Reports Faster Marketing Decisions Through AI
At DigiPlus Fest 2026, ITC Chief Marketing and Digital Officer Shuvadip Banerjee discussed how the company is using AI to reduce the time between gathering consumer insights and acting on them. In its October 5 report, ETBrandEquity said ITC had been exploring enterprise-level AI transformation since around October-November 2025.
The company is using a wider range of data for consumer research, including e-commerce behaviour, social conversations and video analytics. These inputs help identify emerging preferences and inform product and communication opportunities.
AI is also being applied to media optimisation. Banerjee cited the complexity of managing campaigns across multiple products, explaining that even three stock-keeping units can generate around 7,000 campaign line items when different combinations are considered. With hundreds of products, the number of variables rises considerably.
ITC is using AI to optimise these variables multiple times a day, with the aim of improving return on advertising spend. The company is also exploring how AI agents could connect consumer insights, research and development, product development and marketing.
From Generating Content to Producing It at Scale
ITC is expanding its use of generative AI in content production through Studio Alchemy, its internal content studio. The operation produces material for social media and product detail pages, addressing the growing need for tailored content across digital platforms.
The approach builds on the company’s earlier experiments with generative AI. In a 2024 interview with ETBrandEquity, Banerjee discussed ITC’s “Har Dil Ki Fantasy” campaign for Sunfeast Dark Fantasy, which used generative AI to let consumers recreate an advertisement featuring Shah Rukh Khan using their own selfies.
The campaign demonstrated how AI could be used not only to produce marketing assets, but also to create an interactive experience for consumers.
However, ITC has also acknowledged limitations in current generative AI tools. Banerjee said human emotions, body language and dialogue delivery remained challenging, and that the company was not yet satisfied with the results in these areas.
Efficiency Does Not Guarantee Effectiveness
The growing use of AI in marketing reflects the pressure on brands to produce more content, respond quickly to consumer behaviour and manage increasingly fragmented media channels. AI can help with these demands, particularly where large datasets and repeated optimisation are involved.
But the research on advertising performance suggests that efficiency and effectiveness need to be measured separately. Producing more advertisements in less time does not necessarily mean those advertisements will be more memorable, persuasive or valuable to a brand.
ITC’s experience illustrates the operational advantages of AI, while the HBR research raises questions about the quality and impact of AI-generated creative work. The two are not necessarily contradictory: AI may be useful for analysing data and scaling production, even when human creative input remains important to the final result.
For the advertising industry, the next phase of AI adoption may depend less on how much content brands can generate and more on whether they can demonstrate that the technology improves campaign outcomes.
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