AI Powered Advertising: Navigating Legal Risks

Abstract

Artificial intelligence or “AI” is fast becoming a commonly used tool for business. What was once novelty is now established in many industries as vital technology to stay ahead or keep up with competition. AI’s ability to process vast amounts of information, while producing output in mere seconds, attracts many businesses to adopt AI technology as a means to advertise their product or services. From creative development, to serving internet advertisements, AI can be applied at each advertising campaign touchpoint to increase efficiency and ROI. Campaigns that once took an advertiser two weeks or more to ideate, strategize, and execute without AI may now be accomplished at each stage in mere seconds using AI technology. While efficiency in this context is appealing, advertisers desiring to adopt AI technology must apply diligence to navigate its inherent legal risks. This article examines ways in which advertisers leverage AI technology, and the legal risks that may arise. One way advertisers use AI technology is by collecting or processing sensitive data and inputting such data into large language models to make AI powered decisions on what ads to serve online users. Non-compliance with U.S. or GDPR laws and regulations is a legal risk with this process. Advertisers also use AI technology for algorithmic and dynamic ad serving to buy digital ad placements and personalize ad creative. Such AI powered ad serving has legal risk, because of AI’s propensity to hallucinate and produce false or misleading ads which calls for establishing legally compliant oversight processes. Another way advertisers leverage AI technology is to develop advertising creative. However, applying AI technology to this process has legal risk of bringing U.S. copyright infringement claims related to ownership of artwork or images used by AI to generate ad creative.