Why ‘AI-Powered’ Products Are Backfiring With Consumers

In a world inundated with products claiming to incorporate AI, presumably in the hope of appearing cutting edge, what’s surprising isn’t that this label is often misleading. What’s really interesting is that, according to recent studies, doing so can directly damage sales.

A Washington State University and Temple University study, published in the Journal of Hospitality Marketing & Management and also cited in The Wall Street Journal, titled “Adverse impacts of revealing the presence of ‘Artificial Intelligence (AI)’ technology in product and service descriptions on purchase intentions: the mediating role of emotional trust and the moderating role of perceived risk”, concludes what seems like common sense to many of us: when a company announces that a product is AI-powered, consumers tend to distrust it more and as a result are less inclined to buy it.

The underlying reason is emotional: explicit mention of AI diminishes customers’ feeling of trust, especially in products with certain perceived risks such as expensive appliances, medical diagnostics or financial services. In other words, the idea that a machine decides something conveys greater risk. In other words, consumers will choose the product that doesn’t use AI over one that claims to.

Worse than the negative impact on trust is the fact that in most cases, the product has nothing to with AI, and instead relies on a set of basic conditional rules, a motion sensor, simple pattern detection, or programmed routines that decades ago no company would have dared classify as “intelligence” for fear of being exposed as a fraud.

Examples abound — just turn on the TV or open a magazine. There are refrigerators “with AI” that, in reality, only detect when the door opens and emit an alert if it’s open for more than a certain time: that, let me be clear, is not AI, it’s a time sensor. There are “smart” lamps that really only adjust brightness according to the time of day, something called “conditional.” There are toothbrushes that claim to use AI to “improve your smile,” when all they do is register their position with a gyroscope and warn you if you brush for more than two minutes. In one case reported by the WSJ, an “AI-enhanced” toaster did absolutely nothing different from what one without AI did.

This is all blatant “AI-washing,” using AI as a marketing hook. We’ve been here before with blockchain and big data, whereby companies hoped to appear state-of-the-art by including those magic words in their corporate marketing pitch, even though they had no idea what they meant or how to apply them.

The difference is that, this time, the effect is tangible and quantifiable: announcing that your product incorporates AI reduces, on average, purchase intention. Not only does it not generate additional interest, it can also activate alarms in the consumer’s mind: what is this technology doing? Is it spying on me? Can it fail? Should I trust something I don’t understand?

The lesson is clear. If a product truly incorporates AI, the reasonable thing is to explain precisely what it does and how it improves the user experience. But making empty claims just to sound sophisticated is not only a waste of time, it’s also counterproductive.

In short, not everything needs AI. And the sooner companies understand this, the better off we’ll all be.

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This post was previously published on Enrique Dans’ blog.

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