Can an 'AI generated' label really build trust, or will it slow the industry down?

As Malaysia prepares to introduce the Online Safety Act 2024, which may include a mandate for labelling all AI-generated content, the advertising and creative community is bracing for impact. While the government’s move is part of broader efforts to tackle scams, impersonation and digital misinformation, many in the industry say it might just have wide-ranging effects on how agencies create, deliver and discuss work.

In sharing the news, communications minister Fahmi Fadzil emphasised the need for greater transparency in digital content creation. He said, as quoted by Bernama, that the ministry believes platforms must be proactive in labelling AI-generated content. Fahmi also added that the requirement is expected to come into force by the end of this year.

Don't miss: MY govt mulls mandatory labelling of AI-generated content

According to the minister, several global platforms have already taken voluntary steps to flag AI-generated content. He suggested that such practices could be formalised and expanded across Southeast Asia through ASEAN-level cooperation. Considering this news, questions still remain as to whether the requirement will affect AI-generated advertising and marketing materials in the country. And at the heart of the debate, lies a critical question: Can a label really build trust, or will it simply slow the industry down?

Demands for clarity

For many creative leaders, transparency isn't the issue, it’s vagueness. Stanley Clement, CEO of Mediabrands Content Studio (MBCS), likened the proposed labelling to “slapping a 'hot surface' warning on a stove”. While useful in principle, he warned that without precise rules and frameworks, it risks becoming a bureaucratic distraction.

“The last thing creatives need is another unclear regulation that nobody knows how to apply in real-time and ends up causing a lot of roadblocks to creativity," said Clement. He added:

We need clarity, not chaos disguised as compliance.

Joyce Gan, partner at Fishermen Integrated, echoed a similar sentiment, welcoming transparency but questioning enforcement. “If the goal is to combat scams and misinformation, then labelling makes sense. But will bad actors actually comply?”

Explaining her concerns, Gan shared that delinquents will by nature, operate outside regulation, and although labelling could help in legitimate spaces, enforcement will be key. "In contrast, the advertising and creative industry uses AI not to deceive, but to enhance storytelling, increase efficiency, and solve problems more creatively," she said.

In practical terms, much of today’s content is a hybrid of human and machine. From script assistance to visual reference generation, AI touches many layers of creative production. However, it’s rarely responsible for the final creative alone. This murky middle is where the biggest concerns lie.

Christopher Greenough, GM at GrowthOps Asia, flagged the same issue. “Definitions, tiers, and platform alignment will be key, as AI touches every layer of marketing now.”

According to Greenough, it would be helpful to apply a tiered system to the intended labelling rule, so as to not lump all AI use cases under the same label, as nuance matters. "It would also help to work closely with the digital platforms to align on the necessary standards," he added. 

Slower timelines, stronger discipline?

Most agencies agree the labelling requirement will introduce friction into existing workflows. But some see it as a necessary friction.

“It will slow us down,” admitted MBCS’ Clement. “But great ideas adapt.” He stressed that the creative industry has weathered countless disruptions, and this one just adds more approvals, documentation, and probably some client handholding.

Zero Asia’s founder, Farez Khan, argued the slowdown could even serve a creative purpose. In his view, AI has at times become a shortcut rather than an enabler, and labelling could push agencies toward more intentional use.

It may affect timelines, but that’s a price worth paying if it brings back the human touch.

"This regulation could actually encourage better creative discipline. It forces teams to be more intentional with how and when they use AI, making sure it enhances rather than overrides human creativity," said Farez. "Ultimately, creativity thrives not just on speed, but on depth. And if this requirement brings us closer to that, then it’s a shift worth embracing."

Gan, however, sees the impact as minimal for now. As long as labelling is applied at the final output level (akin to a disclaimer) it may not disrupt day-to-day workflows as much as feared.

How will the public perceive AI-labelled content?

Opinions are mixed on how the public will perceive AI-labelled ads. Some, such as Clement, believe most audiences still associate “AI-generated” with corner-cutting. Unless the work hits emotionally, the label will feel like a warning, he explained.

Greenough agreed that audience reactions will depend largely on execution: “Some may see it as innovation, others as inauthentic.”

However, others see the label as a step toward demystification, not devaluation. “Trust is built on intent and execution, not just the tools used,” said Gan. “If anything, this opens the door for more honest conversations about how ideas are made today.”

Farez believes audiences are already savvy enough to spot AI, and that labelling won’t change much, as long as it's framed as support for human creativity, not a replacement.

Perhaps the most pressing concern is where the government, or the industry, will draw the line. “If AI generates the final creative, label it,” said Clement. “But if it’s just reference-building or cleanup, let it go. We don’t label Adobe or Google Slides.”

The MBCS CEO added that safeguards are needed for fair implementation. “Influencer content needs clear lines, as audience trust is fragile there. For agency work, keep it transparent, but don’t punish smart tool use. Draw the line where AI replaces originality, not where it supports it.”

Meanwhile, Farez proposed a similar standard: disclose when AI drives the core output, not when it plays a background role. "Fully AI-engineered visuals have a direct impact on how a message is visually perceived, and transparency here helps maintain creative integrity and consumer trust," he added. 

Opportunity amid uncertainty

While the mandate raises logistical and philosophical concerns, many agency leaders see a silver lining: the chance to educate clients and lead the conversation on ethical, responsible AI.

“This is a golden opportunity,” said Farez. “Agencies can reset the conversation and advocate for time and space to do meaningful, strategic work.” Greenough agreed: “Agencies already building trust and capability here will be the ones clients turn to in uncertain times.”

Ultimately, the proposed AI labelling requirement may signal more than just a regulatory shift, it could be a cultural inflection point for the Malaysian advertising industry. As Clement put it, “This isn’t a tech arms race, it’s a mindset shift. Embrace or be left behind.”

And according to Gan, there is also an opportunity for agencies to learn from clients. "From creative to strategy to production, we can shape smarter conversations whether around ethical use, integration, and impact," she said. 

It’s not about replacing the old ways but perhaps, it’s about evolving them, thoughtfully.

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