Coca-Cola's AI Holiday Ad Illustrates a Core Tension in AI Advertising

Coca‑Cola is facing an avalanche of industry criticism for its latest AI-generated holiday campaign, but the ad industry isn't the audience Coke should be concerned with. It's consumers.

This year, there have been multiple examples of marketers embracing AI at the creative core. They're not just augmenting workflow but redesigning how ideas get made. Brands like Kalshi and Puma are pushing the envelope with fully AI-generated ads, and they're getting a lot of publicity for them. So it's not surprising that Coca-Cola has returned in 2025 with a new AI-generated holiday ad, despite the backlash it received for its 2024 AI holiday ad.

The Coca-Cola holiday ad illustrates a core tension in AI advertising

The Coca-Cola campaign illustrates a core tension I flagged in research I conducted with Interactive Advertising Bureau (IAB): There's a meaningful gap between how ad executives believe consumers feel about AI ads and how consumers — especially Gen Z and Millennials — actually feel about them.

In our study, four in five ad industry respondents (80%) believed consumers felt very or somewhat positive about AI-generated ads, but less than half of Gen Z and Millennial consumers actually did feel that way.

One peek at Reddit tells me a lot of people aren't too positive about the Coca-Cola AI holiday ad right now:

What can brands learn from the reaction to the Coca-Cola AI holiday ad?

1. AI is changing the playbook, but it doesn’t replace emotional resonance.

Coca-Cola’s ad uses AI animals, rather than humans. Animals are much easier to generate with AI, and by not trying to duplicate humans, Coke avoided the common criticism that AI is putting human actors out of work.

But even with animals as the stars, the bar for whether an ad “feels real” remains human. When viewers sensed something was off—with lighting, movement or compositing—they didn’t say “cool tech,” they said “looks fake.” And that matters when your job is building brand trust.

2. The consumer audience is caught in transition.

The IAB-Sonata Insights study found that Gen Z consumers are more likely than Millennials to label companies that create AI ads as “inauthentic” or “fake.” More companies have used AI to create ads since then, and that means consumers have been more exposed to them. But attitudes may not have kept up with the increased awareness.

3. Disclosure matters, but it needs to be done the right way.

The decision to disclose AI usage isn't an easy one. Generally, I recommend that brands should be upfront when an ad is created with AI. The Coke ad carries no disclosures that I can find.

When J. Crew published social media posts that were AI-generated, consumer criticism forced it to edit the posts to identify them as "digital art." A simple disclosure like that could have saved it from backlash.

It's true that the industry doesn't require disclosure statements (it's not like influencer marketing where FTC rules require disclosure), but the Coca-Cola campaign’s visibility tells me that handling disclosure another way — perhaps by incorporating it into the storyline — might have helped consumer perception.

(Case in point: This Andrew Cuomo AI ad was lauded as AdAge's "AI Ad of the Week." It carries prominent disclosure; it also made the AI part of the storyline. Another AI ad was promptly deleted after being "inadvertently posted." It did not carry an AI disclosure, but that probably wasn’t the reason it was deleted.)

The bottom line about gen AI advertising

Ads created with AI are here to stay, but the path toward earning trust, impact and emotional connection is still being paved.

For brands and agencies contemplating using gen AI for advertising, don’t treat this moment as “AI means cheaper and faster advertising." Treat it as “AI advertising demands more creative rigor and a commitment to audience education through appropriate disclosure.” If those pieces are missing, the efficiency payoff may be overshadowed by the risk to brand perception.