Made with Artificial Intelligence: The Effect of Artificial Intelligence Disclosures in Instagram Advertisements on Consumer Attitudes

Artificial intelligence (AI) has the potential to disrupt the advertising industry as marketers and brands can leverage its power to create highly engaging personalized content. However, the usage of AI is prone to bias and misinformation and can be used to manipulate. Therefore, various lawmakers such as the European Union aim to enforce AI disclosure messages to protect consumers. But the implications of such disclosures have not yet been studied. This paper draws on existing theories in persuasion knowledge, disclosure theory, inferences of manipulative intent, and AI aversion to develop a model to understand consumer attitudes toward AI disclosures in Instagram advertisements. A three-condition between-subjects online experiment (Nfinal = 161) was conducted to test the model. The data were analyzed using a moderated mediation model. AI disclosures lead to a direct decrease in advertising attitude. In addition, AI disclosures lead to a decrease in brand attitude only when consumers have high AI aversion. There were no effects of AI disclosures on source credibility. These effects were mediated by inferences of manipulative intent. However, participants who viewed the AI disclosure had lower inferences of manipulative intent and then participants who did not view the AI disclosure. Furthermore, no differences were found between AI disclosures pertaining to the use of AI in the creation of the image or the text. Implications are discussed from both theoretical and managerial viewpoints and highlight why the use of AI on social media for advertising purposes should be limited as it will become more transparent in the future.