The Role of Artificial Intelligence in Shaping Personalized Advertising Campaigns and Consumer Engagement

ABSTRACT This study investigates the impact of AI‐powered personalization on customer engagement and examines the moderating roles of personalization and consumer trust in advertising effectiveness. A mixed‐methods approach was employed, comprising a quantitative survey of 100 participants and qualitative interviews with 20 participants. Data were analyzed using SPSS through regression analysis and Structural Equation Modeling (SEM) to assess the direct and indirect relationships among AI personalization, consumer trust, and customer engagement. AI‐based personalized advertising significantly enhanced customer engagement ( β = 0.48, p < 0.01). Personalization ( β = 0.42, p < 0.01) and consumer trust ( β = 0.56, p < 0.001) emerged as significant predictors of engagement, demonstrating that transparent and ethical AI practices strengthen consumer confidence and advertising effectiveness. AI‐driven personalization improves customer engagement when supported by trust and ethical data practices. The findings highlight the importance of transparency and responsible AI implementation to maximize the benefits of personalized advertising while addressing consumer privacy concerns.