As AI steps out of the shadows, agencies recalibrate under new labelling rules

New Delhi: The government’s new AI labelling and rapid takedown rules may be directed at social media platforms, but their ripple effects are already visible across advertising and marketing agencies. From February 20, synthetic or AI-altered content must be clearly labelled, and platforms will have a three-hour window to act on flagged content. For creative teams, AI shifts from a background enhancer to a visible production layer: documented, disclosed and defensible! Industry leaders see the move less as a clampdown and more as a structural evolution.

Transparency is the new brand currency

For Amitesh Rao, CEO, South Asia – Leo, Publicis Health & Publicis Business, the framework formalises what responsible innovation should look like.

“As this powerful new technology evolves at an incredible pace, frameworks for responsible deployment of AI are not only welcome, they are essential. Far from limiting creativity, clear and transparent frameworks help build credibility for consumers and influence for brands,” he said.

“For marketers, agencies and creators, this is more than a legal and ethical obligation; it is an opportunity to build authenticity and trust through accountable innovation,” Rao added.
In his view, a trust-first approach does not curb AI’s potential, it strengthens it, allowing creativity, technology and ethics to work together in ways that are sustainable and scalable.

AI no more hack, its hygiene

Rahul Vengalil, chief executive officer and co-founder, TGTHR, described the move as overdue hygiene for the ecosystem. “This is a welcome change. It will set some benchmarks and rules for everyone to start using AI properly. It will be aimed at curbing fraud, it will be aimed at curbing deep fake videos, so on and so forth.”

Downplaying fears of disruption, he added, “Everything else remains the same, you can add a watermark of AI labelling.” Drawing a comparison with platform disclosures, he said: “Initially Google and Meta did not have ad labels, now if you look at Meta as a platform, every ad has to be called as an ad, there is a label which comes out these days.”

In his assessment, “AI has now become a tool and not an advantage, it is just an efficiency tool now not an effective tool, unless you have great people who are managing it.” He believes the government is “trying to put the decision making in the consumer's hand, saying this is AI content, tread with caution and that is it.”

The three-hour test for AI campaigns

Ishaan Balvani, Creative Lead, Digital, Wondrlab Network, underscored labelling as a structural shift in how teams deploy AI. “AI labelling won’t really reduce the use of AI rather; it will give it structure and make creative teams use it in a more deliberate fashion. In a digital world that’s becoming increasingly unpredictable, relatability and responsibility will start taking priority.”

“How are we using AI even when people know that it’s AI?” and “Does it still creatively connect to consumers if they know?” become the questions to ask, she added. 

On liability in the event of a three-hour takedown, he noted: “Often, the onus will eventually lie with the brand. The final go-ahead comes from them and, as far as the optics go, it’s the brand the people see. But the answer is a subjective one and depends on a lot of factors. One thing is for sure, this will increase the importance of AI agreements, clauses and responsibilities between agency, client, and creators.”

Caution in High-Trust Categories

Ambika Sharma, Founder and Chief Strategist, Pulp Strategy, is expecting high-sensitivity industries to tread more carefully. Beauty, finance, health and child-focused brands may avoid fully synthetic representation in favour of hybrid models that are AI-assisted production paired with human-led storytelling.

In categories where credibility directly influences consumer decisions, AI may increasingly operate behind the scenes rather than at the centre of the narrative.

The categories that stand to benefit most from responsible AI advertising are BFSI, fintech, healthcare, edtech, and public sector campaigns. Anywhere trust, compliance, and transparency directly influence economic outcomes, responsible AI will not be a burden. It will be a competitive moat.

Visible AI is the new baseline

The new rules do not remove AI from marketing, they make it visible. From creator briefs to legal approvals, the industry appears to be moving from invisible experimentation to declared deployment. In a market where trust is currency, visible AI may prove more sustainable than invisible AI - and agencies are recalibrating accordingly.