AI-Generated Advertisements on Consumer Acceptance with the Mediating effect of Perceived Intelligence in AI Endorsement

Digital marketing strategies have evolved globally due to the rapid growth of AI-generated advertisements. However, little is known about how consumers perceive and respond to AI-generated ads, particularly in diverse economies like Sri Lanka. Unlike traditional human endorsements, AI-generated endorsements lack human agency, raising questions about their reliability and persuasiveness. Additionally, research has looked at the legitimacy of AI-generated advertisements, but less has looked at how AI-generated endorsers might act as intermediaries to affect consumers' acceptance of these advertisements. Thus, the purpose of this study is to analyze the impact of AI generated advertising on consumer acceptance of technology with a particular focus on Perceived Intelligence in AI generated endorsement as the mediator. A sample of 200 respondents who lived in Sri Lanka and had experience with AI technology provided the primary data. The findings showed that two of the four elements of AI-generated advertisements, synthesis and verisimilitude, have a significant impact on the perceived intelligence of AI-generated endorsements. However, neither vitality nor imagination much affects consumers' acceptance of technology. Additionally, it was shown that the relationship between AI-generated advertisements and consumer acceptance is partially mediated by Perceived Intelligence in AI endorsement. The results of this study have important practical ramifications for policy makers and marketers in numerous ways. Marketers need to first develop methods that emphasize increasing perceived intelligence. Furthermore, as highlighted by the increased significant impact of synthesis, the ability to blend and create something new from preexisting pieces is essential in AI-generated advertisements because it allows the creation of dynamic, personalized, and economically viable material that is appropriate for specific audiences and campaigns.