AI adoption surges in marketing, but consumer trust crumbles over data privacy

Artificial intelligence has moved from industry hype to essential marketing infrastructure: 92 percent of marketing professionals now integrate AI into their everyday work. However, a study by SAP Emarsys examining responses from more than 10,000 consumers and 1,250 marketers reveals a troubling disconnect. While companies are reaping tangible benefits from AI deployment, consumer confidence in the technology—particularly regarding data privacy—is deteriorating rapidly. This growing mistrust threatens to undermine the customized shopping journeys that retailers are investing heavily to create.

The transition from experimental to operational AI in marketing has accelerated dramatically. According to Sara Richter, CMO at SAP Emarsys, "AI marketing is now fully in motion: it has transitioned from the theoretical to the practical as marketers welcome AI into their strategies and test possibilities."

Business gains are substantial

For enterprises, the business case is compelling. Marketing teams report that AI enables them to deploy campaigns in significantly less time—71 percent cite faster campaign launches, with an average time savings of over two hours per campaign. Beyond efficiency, the technology is liberating teams from monotonous tasks: 72 percent of marketers say they can now dedicate effort to higher-level creative and strategic work.

Financial outcomes are following suit. Three-fifths of marketers have witnessed improvements in customer engagement, while 58 percent report strengthened customer loyalty since implementing AI systems.

Consumer sentiment tells a different story

The research uncovers what SAP Emarsys identifies as a "personalisation gap"—a fundamental mismatch between what marketers believe they are delivering and what consumers actually experience. Despite substantial AI investments aimed at customization, 40 percent of consumers feel brands fail to understand them as individuals, a dramatic increase from 25 percent in the previous year. Adding to this disconnect, 60 percent of consumers report that marketing emails they receive lack relevance.

Data privacy concerns are driving a crisis of confidence in AI-powered marketing. Globally, 63 percent of consumers express distrust in AI handling their personal information, up sharply from 44 percent in 2024. The situation is even more pronounced in the UK, where 76 percent of shoppers report discomfort with how their data is being managed.

Regulation reshaping the landscape

The erosion of trust coincides with the introduction of stricter regulatory frameworks. Following the EU's AI Act rollout one year ago, more than one-third of UK marketing professionals have fundamentally restructured their AI strategies, with 44 percent indicating their approach has become more ethically grounded.

The industry faces a fundamental tension: balancing responsible practices against the need for continued innovation. While the AI Act establishes clearer governance standards, over a quarter of marketing professionals worry that overly prescriptive regulations could constrain creative possibilities.

Dr Stefan Wenzell, Chief Product Officer at SAP Emarsys, articulates the challenge: "regulation must strike a balance – protecting consumers without slowing innovation. At SAP Emarsys, we believe responsible AI is about building trust through clarity, relevance, and smart data use."

When AI delivers genuine value

Consumer receptiveness to AI exists—but only when the technology solves real problems. More than half of shoppers recognize that AI improves their shopping experience, with 55 percent finding it makes shopping easier and 53 percent noting it accelerates their purchasing process. Consumers use AI to locate products, evaluate pricing options, and generate gift suggestions. The appetite for beneficial AI is present, provided it comes with guarantees of openness and data protection.

Leading retailers are succeeding by prioritizing human needs over technological capability. Sterling Doak, Head of Marketing at guitar manufacturer Gibson, explains the philosophy differently. "If I can find a utility [AI] that can help my staff think more strategically and creatively, that's needed because we're a very creative business at the core," Doak states. At Gibson, AI functions as a tool to amplify human creativity rather than as an automation replacement.

Australian retailer City Beach demonstrates similar success through targeted AI deployment. The company leveraged AI marketing to identify and re-engage customers at risk of leaving. Mike Cheng, Head of Digital at City Beach, explains: "AI was able to predict where people were churning or defecting at a 1:1 level, and this allowed us to send campaigns based on customers' individual lifecycle." The strategy recovered 48 percent of at-risk customers within a three-month window.

The path forward

These winning implementations share a common thread: they address genuine customer needs. As the industry enters what SAP Emarsys terms the "Engagement Era," the direction becomes increasingly evident. Marketing budgets continue expanding, with 64 percent of professionals planning to increase AI spending in the coming year.

The technology itself is not the obstacle; the challenge lies in its application. Retailers must narrow the gap between their AI initiatives and customer perceptions. Success requires moving beyond surface-level personalization to deliver authentic value, demonstrating transparency in data practices, and establishing that data sharing produces tangible benefits for consumers.

The AI transformation is underway, yet its ultimate success hinges on a fundamental principle: marketing professionals must keep the individual consumer at the center of their strategy.