Why industry insiders, from influencers to marketers, are cautiously optimistic about AI-powered ads

Influencers, brands and agencie told Modern Retail they’re cautiously optimistic when it comes to AI-powered ads. Although AI creators offer numerous benefits, including cost and time savings, it’s too soon to tell what the ramifications of such technology will be. For brands, AI-powered ads run the risk of falling flat or engendering mistrust with consumers. For influencers, a lack of transparency and negotiating power could stand to upend their livelihoods.

In the announcement post, TikTok said the new tools are “designed to enhance and amplify human imagination, not replace it.” All videos created using TikTok’s new tool will be labeled as AI-generated, the company said when it announced the news. 

Rebecca Traverzo, head of marketing at DTC aggregator OpenStore, which owns dozens of brands, said the company plans to wait on the sidelines when it comes to TikTok’s new AI influencer tool, as it raises questions about authenticity and customer engagement. 

“When you start to bring in AI, and you have someone reading from a script, I think that consumers are a little bit smarter than you think, and I think it may come across as disingenuine, to be honest,” said Traverzo.

Indeed, in an April survey of 1,000 consumers in the U.S. from The Influencer Marketing Factory found that 32% of respondents were skeptical about the authenticity of AI-powered content creators when asked why they didn’t follow virtual influencers on social media. Nevertheless, such AI influencers have entered the mainstream, with 53% of participants saying they followed at least one virtual content creator. 

OpenStore’s Traverzo said she’s “bullish” on the potential of AI-powered marketing for brands, saying it can help companies work faster and at a greater volume. OpenStore has been using AI to develop ads, particularly still imagery and photography for Jack Archer, its men’s focused athleisure brand. Such ads have performed 300% better in terms of user engagement, compared to regular ads, said Traverzo. 

That’s because generative AI lets OpenStore take Jack Archer’s “Jetsetter Pants,” for example, and render an ad that shows the product on various models in real-life settings – like the airport or a golf course – so shoppers get a better sense of how the pants look in everyday life. A full creative production that would typically take six to eight weeks can be done in as little as a week or two with AI, said Traverzo. Plus, brands have more options in terms of models and set locations. 

Traverzo isn’t alone. 

Krishna Subramanian, co-founder and CEO of Captiv8, an end-to-end influencer marketing platform, said AI-generated ads stand to benefit small brands the most since they typically can’t afford influencers with massive social media followings. 

“When you think about small businesses that have limited budgets, using AI-generated content instead of hiring expensive creators is a benefit,” said Subramanian.

As for TikTok’s AI-powered influencers, OpenStore’s Traverzo is waiting to see how other brands leverage the technology first, including competitors, and how consumers react to it before testing it out. 

“Normally, we would want to be first to market, but on this one, we’re kind of like we’re playing wait and see,” said Traverzo. “We won’t wait and see for too long, but there’s a lot of unknowns in this space right now.”

There’s plenty of reasons to be skittish. For creators, AI-generated influencers could lead to unfair wages and content misuse, according to Thya Sanders, an attorney who runs Bloomie for Creators, a firm that provides advice for social media personalities. She said she’s seen some brands ask creators to license their likeness in perpetuity for a flat fee. As a result, creators have little to no control over how their likeness will be used in future advertising. 

“In the end, they don’t have the control factor of, ‘What are you going to be using my image to promote?’” said Sanders. 

Those risks are compounded for some influencers more than others. “If they’re a new creator or they have a small following, they don’t really have that much negotiating power,” said Sanders.

To Sienna Santer, an influencer with 20,000 followers on TikTok, and creator strategist at influencer marketing firm Buttermilk, the possibility of AI creators is promising for amplifying the voices of historically marginalized groups. Santer cited digital influencer Kami as an example. In 2022, more than one hundred real-life women with Down syndrome submitted videos and photos of themselves that were compiled into a single image using AI, which ultimately became Kami, the first virtual creator with Down syndrome. 

“In that way, some AI influencers can really spotlight and represent people who may not always feel represented by some traditional creators,” said Santer. 

As an agency, Buttermilk hasn’t expanded into working with AI influencers yet, said Santer. “But we’re excited to explore that opportunity in the future,” she said. 

Although the idea of AI influencers has gained popularity, Alessandro Bogliari, CEO and co-founder of marketing firm The Influencer Marketing Factory, said human creators are still top of mind when it comes to paid social advertising. 

“We haven’t had a single brand asking specifically for virtual influencers because I think it’s so new to them, and it’s very complicated,” he said. 

To Buttermilk’s Santer, the industry still needs human creators, and she doesn’t see AI leading to their displacement.

“Human creators will always win out, and that intimate connection that creators build with their audience is what determines their success,” said Santer. “Whether they’re human or not, that connection can still be forged.”