Backlash to boom: Why brands are betting big on generative AI ads

McDonald’s Netherlands released a fully artificial intelligence (AI)-made advertisement titled “It’s the Most Terrible Time of the Year," a play on the classic Christmas carol. The commercial uses quick cuts to show people struggling with holiday chores—putting up a Christmas tree, baking festive goodies and rushing to finish their shopping.

With the help of AI, the McDonald’s ad shows darkly comic mishaps, from a furious Santa stuck in traffic to a woman carrying gifts trapped in tram doors, and burnt Christmas cookies that grimace and sing.

In the end, McDonald’s urges viewers to skip the stress of a traditional Christmas and find comfort at the nearest outlet.

However, the ad was severely panned, not only for apparently mocking the spirit of Christmas, but also for its use of AI, which many felt made it tacky, joyless and steeped in an “uncanny valley" feel.

Other brands including Coca-Cola and Toys“R"Us have also taken down their made-with-AI ads recently following similar backlash.

Yet, experiments with making ads and even full-length entertainment content using generative AI (GenAI) are here to stay. In India, homegrown brands are already experimenting with GenAI ads while GenAI startups attract early stage funding, Mint had previously reported. Now, even mainstream brands and agencies are embracing generative AI, not just for small social-media tasks, but for full-scale marketing campaigns as well.

But what can GenAI really do to elevate advertising? And will big brands embracing it really help advertisers, and more importantly, their target customers?

Future-proof

“A year ago, I saw the opportunity and said to myself, ‘Boss, this business is going to boom.’ Unions, employees, anybody likes it or doesn’t like it, this is the future," veteran adman Sandeep Goyal told Mint in an interview. Earlier this year, his ad agency Rediffusion launched Artificial Intelligence Labs, pitched to be a creative studio dedicated to creative services using GenAI.

In the last 12 months, this lab has produced more than 250 video advertisements, 30-40 of which have also run on television. For now, the lab is at a ₹10-12 crore run rate, and Goyal expects to scale this up to a whopping ₹100 crore in annual turnover in one year as he expands his GenAI client list and raises money to create a software-as-a-service (SaaS) platform.

“Right now we have used 40-45 different [AI] softwares," Goyal said. “Every part of the film has work done by a different piece of software. But our creative operating systems—which are LLMs (large language models) from different softwares—are all coming together to learn on my creative worlds. This becomes a community of knowledge. On top of this ‘creative OS,’ one year from now, I will launch a SaaS platform. I will license it out to clients who can use it for basic tasks such as creatives for ‘Happy Diwali.’ These will be 10 times better than what any agency will make."

Other homegrown organizations are also working on creating similar service platforms. For instance, talent management and content firm Collective Artists Network is working on a ‘repository’ of GenAI visuals that are tailored to Indian sensibilities and visuals, founder and group chief exectuive officer Vijay Subramaniam told Mint in an earlier interview. Singapore-based Clairva AI, founded by former Balaji executive Sunil Nair, has also been working on refining how ‘Indianized’ photos and videos look when generated with AI, Nair had told Mint in an earlier interview. Clairva’s clients include e-commerce platform Tata Cliq.

Besides, large ad agency networks have also invested in rolling out AI tools, although those tend to deal with back-end marketing work rather than generative AI for creative services; UK-based Big Four network WPP’s Open is one such example.

“It takes a long time to explain the machine to understand what is brown skin, black eyes and black hair," Goyal said, recounting the challenges of working with AI tools trained on western models. “It is easy for the machine to understand what pasta is. But what is poha? Or a mekhela sari? That is difficult for a machine to understand."

Brands experiment

Challenges notwithstanding, brands are floating generative AI creatives even in mainstream campaigns. In fact, some are instituting in-house creative roles dedicated to experimenting with AI. One such brand is the Bengaluru-based insurance-tech firm Acko. Nine months ago, the company posted a vacancy for an AI Creative Lead.

“AI today is not just a production tool for us—it’s becoming a thinking partner," Acko’s chief marketing officer Ashish Mishra told Mint. “Across the team, AI helps generate video and visual concepts, but more importantly, it sharpens our creative decision-making. For many briefs, we use AI to generate multiple creative routes early in the process. This allows us to explore a wider solution space, identify stronger directions faster, and get internal alignment without going through multiple rounds of subjective debate."

Acko has been experimenting with short GenAI ads to explain and showcase the company’s various insurance offerings using tools such as Nano Banana, Veo and Eleven Labs.

But bigger brands are testing the waters, too. Goyal’s AI creative services venture, for instance, created ads for Nerolac Paints featuring long lines of (GenAI) penguins and polar bears. Not only are such ads made in a fraction of the time otherwise taken to shoot a film, they also cost 8-10x less than using computer-generated imagery (CGI) or other older technologies for special effects. Besides, even CGI will find it hard to produce a good-looking polar bear relaxing inside the home of a Nerolac Paints’ customer. Other brands in his generative AI roster include Dabur and Tata Consumer.

While generative AI’s biggest attraction is lower cost and turnaround times, the bigger creative advantage may be a brand’s (or agency’s) ability to generate visuals that are otherwise impossible to do in real life, or too expensive with other, older technologies. Does this mean an ad is more likely to grab customers’ fleeting attention if they know it is made with AI?

“I don’t think it makes a difference, and in fact telling a viewer that an ad is generated with AI creates a bias," Goyal said. “The viewer will start looking for faults in the ad or detract him from watching it. We don’t make a fuss about our clients’ ads being made with AI."

For now, brands say the best use case of AI is not novelty, but how efficiently it can become a “thinking partner" for marketing teams.

“The biggest advantage is speed and autonomy," Acko’s Mishra said. “When AI capability sits within the team, experimentation becomes frictionless. The team can test, learn and refine ideas in real time. It also dramatically reduces the cost of exploration. We can prototype ten ideas for the cost of one traditional agency output, which fundamentally changes how bold we can be."