This is largely due to the potential regulatory risks of the technology not behaving as it is supposed to and, let’s face it: AI tools tend to be initially launched with their fair share of wrinkles.
“The FTC (Federal Trade Commission) is looking at the performance claims of these tools,” Bourne said. “The consequences of AI not living up to expectations can be severe, including fines, lawsuits, and reputational damage to companies, which could lead to more regulatory challenges.”
Fully integrating AI into key functions such as media buying and creative development, which requires technology infrastructure and analytical skills, is expected to take several years, Snyder added.
A much-needed market correction
Investments in AI fell from 1,052 deals in the first quarter to about 900 in the second quarter, and there was a decline of nearly 30% year over year, according to Crunchbase Data.
“This is a slowdown from the higher spending we saw last year,” Bourne said. “It’s not necessarily a sign of a serious problem.”
Rather than rushing to market with test-and-learn strategies, brands are ensuring their AI implementations comply with regulatory frameworks and meet strict brand safety requirements, Snyder said.
Unileverfor example, has established a cross-functional risk assessment team to evaluate potential AI projects. This team reviews AI systems to identify and mitigate risks related to data privacy, bias, and overall effectiveness in order to comply with Unilever’s ethical standards and applicable regulations, such as the European AI Act.
“The focus on compensation and privacy is critical and will make marketers more cautious about adopting AI, but also more confident in its potential,” Snyder said. “This kind of market correction is exactly what we need right now.”
