In Europe, artificial intelligence is not allowed to stay invisible anymore. With the AI Act having come into force from August 2, 2026, companies now must disclose when AI is shaping consumer interactions and label certain forms of AI-generated content. The regulation applies across formats, from chatbots or synthetic video to AI-generated images and text, particularly where the output may be mistaken for something human-made.
Well, the intent is straightforward. Artificial intelligence has become more sophisticated and harder to detect– consumers should know when they are engaging with machine-generated experiences.
But when it's for advertising, the implications run a little deeper. AI has already become central to how campaigns are built all over the world. It began as a tool for optimisation but has moved into the heart of creative production. That has allowed brands to move faster, personalise at scale and of course, significantly reduce production costs. For the most part, however, this transformation has remained behind the scenes.
Now, with the AI Act coming into force, a new set of questions comes to the surface. As AI starts to shape the final output, not just the process, the focus shifts from adoption to visibility. When consumers are told what they are watching, reading or interacting with has been created using AI, how will that change the way they respond to it?
For markets like India, where the use of AI in advertising has accelerated rapidly, the EU’s move signals more than just a regulatory shift in one region. It points to a broader transition in how AI will be treated globally. In India, AI has already begun to shape consumer-facing campaigns in visible and grand ways.
For example, do you recall Cadbury’s ‘Shah Rukh Khan – My Ad’ campaign? It was among the earliest demonstrations of what AI could unlock at scale. It brought personalisation and reach together in a way traditional production simply could not. The campaign reportedly generated over 130,000 customised ads, drove significant engagement and delivered a reported 35% uplift in sales. It went on to win some of the industry’s highest honours, including the Creative Effectiveness Grand Prix at Cannes Lions and a Titanium Lion, cementing its place as a landmark use of AI in advertising.
But the campaign also sparked early questions that are now harder to ignore. It raised concerns around authenticity, consent and the boundaries of synthetic content. At the time, these questions remained secondary to the innovation itself. Today, with regulations like the EU’s AI Act pushing for disclosure, they are moving closer to the centre of the conversation.
Retail brands soon followed suit. For instance, Reliance Smart Bazaar used AI-led workflows to create dozens of ad films across multiple regions and languages within days, a process that would typically take weeks with traditional production. In categories like automotive, Volkswagen India experimented with AI-generated festive campaigns built entirely on synthetic visuals, eliminating the need for physical shoots.
What is striking is not just the adoption of AI, but the extent to which it is beginning to influence how stories are told. Brands are not just using AI to optimise. They are using it to create.
The approach, as Vincent Noronha, AVP Marketing at HyFun Foods explains, is to use AI to enhance storytelling without compromising what the product stands for. “Being open about using AI-generated content is going to be crucial if brands want to build and hold onto consumer trust. People connect with brands that feel real and authentic,” explains Noronha.
At HyFun Foods, generative AI has become part of how the brand responds to culture and speed. Its recent campaign built around a fictional ‘audition’ between burger ingredients relied on AI tools across scripting and visual design, allowing the team to produce content quickly and align with digital-first consumption patterns. Noronha adds that the responsibility lies in ensuring that AI does not misrepresent the physical product, particularly in categories where trust is closely tied to what consumers expect in reality.
For some brands, the relationship with AI runs deeper than campaign execution. At Hudle, AI is embedded into the product itself, shaping how users interact with the platform. That integration naturally extends into marketing. “Our Hudle Vision launch film was created entirely using generative AI, including the music. Given the product itself is AI-powered, we felt it was only natural to build the campaign the same way, and we were transparent about it,” said Nikhil Gulati, VP - Marketing & Growth, Hudle. His larger point is that AI is not a separate layer but part of how decisions are made across the business, from identifying user cohorts and predicting behaviour to improving attribution and content creation.
This growing integration is precisely what makes the question of disclosure more relevant. When AI is involved at every stage, drawing a clear line between human and machine becomes increasingly difficult. It also raises the question of whether every instance of AI needs to be disclosed, or only those where it directly shapes what the consumer experiences.
“AI is the biggest shift the advertising industry has seen in decades.But as AI becomes a core part of the ecosystem, transparency has to become part of the process too,” says Amit Relan, Founder & CEO, mFilterIt.
That is where regulations like the EU’s AI Act come in. Rather than restricting innovation, they are pushing the industry towards greater accountability. “The EU's AI transparency framework shouldn't be viewed as a barrier to innovation. It's a step towards building greater trust in how AI is used,” he adds. For Indian brands, especially those working on global mandates, this shift may soon move beyond regulation. As Relan puts it, “adopting AI disclosure will soon become a business expectation rather than just a regulatory requirement… Innovation builds growth, but transparency builds lasting trust.”
At the same time, the industry is aware that disclosure is not without its challenges. Advertising has always relied on emotional connection, and the introduction of labels could alter how content is perceived.
“The transparency guidelines being implemented in the EU are an extremely positive development. This will make marketers and creative agencies a little more conscious about the deployment of AI,” said Arijit Ray, CEO & Founder of The Unlock Company. He points out that while AI will continue to power a large portion of functional content, marketers may need to be more deliberate about where it is used, especially in work that demands deeper engagement. There is also a perceptual risk. Once disclosed, AI-generated content could be immediately identified as automated, potentially affecting brand affinity and emotional resonance.
That tension between transparency and immersion is central to how brands think about AI. Gulati sees transparency as an opportunity to build trust rather than a regulatory burden, noting that consumers are becoming increasingly aware of how content is created. Brands that are upfront about their use of AI are likely to build stronger relationships over time.
However, not every instance of AI assistance needs to be disclosed. The focus, instead, should be on moments where AI materially influences the consumer experience, notes Gulati, whether through recommendations, decision-making systems or synthetic content presented as real.
The industry may need to move beyond its current fixation on performance metrics and reintroduce qualitative measures such as brand empathy and affinity. As AI accelerates content production, the risk is not just overuse but uniformity. The challenge will be to ensure that content does not begin to feel like it is coming off an assembly line, losing the distinctiveness that drives engagement.
Noronha echoes a similar concern from a category perspective. In sectors like food, where trust is closely linked to the physical product, the use of AI needs to be carefully managed. Creative storytelling can benefit from AI, but it should not blur the line between representation and reality. Maintaining that distinction is key to ensuring that consumer trust is not compromised.
What emerges from these perspectives is a nuanced picture. AI is not just transforming how advertising is made, but also how it is perceived. The introduction of disclosure requirements, whether through regulation or evolving consumer expectations, forces the industry to rethink its approach.
India does not currently have a regulatory framework mandating AI disclosures in advertising. But the direction of travel is clear. A mix of government advisories, particularly from the Ministry of Electronics and IT, and evolving self-regulatory norms from bodies like the Advertising Standards Council of India are beginning to push the industry towards greater transparency. While these frameworks stop short of enforcing explicit disclosure requirements, they emphasise accountability, especially in cases where AI-generated content could mislead consumers.
Yet, as global standards begin to change, the pressure to align may not come solely from policymakers. It may come from consumers, from global clients and from the industry’s own need to maintain credibility in an environment where technology is becoming increasingly visible.
For brands, the decision may ultimately come down to balance. Using AI to drive efficiency and scale while ensuring that creativity retains a human core. Being transparent where it matters, without reducing the impact of the work. And most importantly, recognising that as AI becomes part of the final output, it also becomes part of the brand’s relationship with its audience. The next phase of advertising will not just be about how effectively AI is used, but about how comfortably it is acknowledged.
