AI in advertising is facing growing pressure to become more transparent as new regulations are prompting the industry to rethink how and when AI use should be disclosed to consumers.

The Interactive Advertising Bureau (IAB) has released its AI Transparency and Disclosure Framework Version 2, providing updated guidance for agencies, platforms, advertisers and technology partners on when and how to disclose AI involvement in marketing content, including AI-generated imagery, video, audio and synthetic experiences.

IAB’s framework takes a risk-based approach rather than recommending brands level every piece of content associated with AI. It argues that disclosure should prioritise uses that may affect authenticity or potentially mislead consumers. This includes AI-generated content, including some synthetic videos, aviators, digital twins, and AI-powered chatbots that could be mistaken for humans. 

As for audio enhancements, standard copy generation, and routine post-production, disclosure is not currently required. 

Caroline Giegerich, Vice President of AI at IAB commented, saying not all uses of AI need a label. “Labeling everything teaches consumers to ignore labels and could negatively impact advertisers.”

The message is clear. Transparency doesn’t always mean disclosing everything. Therefore, marketers need to address this challenging balance between being open about AI use and avoiding disclosure fatigue that may result in consumers overlooking labels when they matter most. 

AI use deemed inauthentic by some

According to IAB’s initial AI Transparency and Disclosure Framework, released in January 2026, some consumers viewed AI use in creative contexts negatively. More than half of respondents said they would want brands to disclose if an ad uses AI or is fully AI-generated. That being said, 73% of Gen Z and Millennials believed clear disclosure would have little to no impact on whether they would purchase a product. Only 27% said they would be less likely to make a purchase based on AI use.

In the updated report, 34% of Gen Z and Millennials described brands using AI in advertising as “creative,” while 30% considered it to be “inauthentic.” The framework says this disconnect “highlights why transparent and consistent disclosure is crucial, not to discourage AI use, but to foster the trust necessary for responsible adoption.”

Why blanket AI labelling may not be the answer

A measured approach to AI disclosure is largely supported by advertisers. IAB found that 72% believe there should be industry standards for disclosing AI use in creative development, but just 17% think AI should be disclosed each time it is used.  

Marketers are seeking greater consistency around AI transparency, but without blanket labelling requirements being implemented. IAB’s report suggests “a materiality-based approach rather than blanket requirements.”

IAB’s framework argues that over-labeling can lead to disclosure fatigue, reinforcing why “disclosure should be targeted at the uses that matter most to consumers: those where AI involvement creates a material risk of misleading audiences about authenticity, identity, or representation.”

Greater transparency could come with a commercial trade-off. An NYU Stern study discovered click-through rates fell by 31.5% when consumers were told an ad had been created using generative AI. A drop in engagement may be justified if AI has been used to mislead consumers, but applying labels to low-risk uses could create growing costs for advertisers, without providing any clear benefit to audiences. 

The level of AI involvement isn’t necessarily the deciding factor. Giegerich spoke on the challenge of avoiding two failure points. “Under-disclosure leaves consumers at risk of being misled. Over-disclosure could risk negatively impacting advertisers.” Ultimately, the potential impact on consumers is a crucial consideration for marketers as they try to balance disclosure. 

Regulatory momentum worldwide

On the back of IAB’s original framework, regulators in the US, EU, and Asia are moving AI disclosure from voluntary industry guidance towards formal requirements, but approaches remain fragmented.

In June 2026, New York’s synthetic performer law took effect, while the EU’s Article 50 of the AI Act was enforced in August 2026, and South Korea introduced its revised AI Basic Act in January 2026, requiring certain AI-generated content to be clearly identified as AI.

Different jurisdictions are adopting varied disclosure formats and thresholds, with IAB’s framework acting as an industry-wide baseline rather than replacing regulations. Marketing leaders will still need to comply with tailored AI disclosure requirements in each market, using IAB’s guidance to give a more consistent approach to transparency. One global AI workflow and multiple disclosure regimes could create a new headache going forward.

AI labeling rules vary between markets

Globally, there is an open approach to AI disclosure. In the US, marketers can choose between a standard sparkle icon or a clear text label with both meeting disclosure requirements. Advertisers can simply choose what format works best for their content. 

The EU has adopted a different, evolving approach under the AI Act. According to Article 50, AI-generated content and deepfakes must be disclosed, but no icon is currently mandated. The Code of Practice, a compliance framework that accompanies the AI Act, remains voluntary, setting design and placement requirements for AI labels.

David Cohen, CEO of IAB believes trust is critical to the growth of AI. “Putting the right transparency and disclosure standards in place benefits everybody: consumers, advertisers, agencies, publishers and platforms. This is how collective growth happens.”

AI adoption is speeding up across industries, meaning the gap between AI use and consumer trust is becoming increasingly important. A more considered AI governance stance seems to be taking place as brands strive to balance transparency, consumer expectations, and the impact of AI labeling. 

The challenge for marketers is establishing when AI use materially affects consumer experiences, and ensuring there is transparency when it matters most. This is just one of the many topics that will be discussed at upcoming DMWF events, starting with expert insight at the Digital Marketing World Forum North America 2026 in New York. 

See also: IAB prepares framework for measuring AI’s role in conversions

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