Physical AI in Marketing: Beyond the Uncanny Valley

Artificial intelligence is increasingly moving beyond digital interfaces and becoming embedded in physical artefacts capable of sensing, deciding, and acting within real-world environments. This emerging form of Physical AI, including service robots, autonomous agents, and intelligent devices, is expected to transform customer experiences and marketing interactions across retail, hospitality, healthcare, and service settings. Existing research has largely interpreted consumer responses to embodied intelligent agents through the lens of the uncanny valley, emphasizing the discomfort generated by human-like appearance and behavior. While valuable, this perspective provides only a partial explanation of how consumers evaluate Physical AI in marketing contexts. This chapter argues that consumer acceptance of Physical AI depends on a multidimensional evaluation process that extends beyond anthropomorphism and perceived eeriness. Building on insights from marketing, consumer behavior, and human–robot interaction research, it proposes a conceptual framework centered on perceived competence, role congruence, social legitimacy, and consumer vulnerability. Rather than focusing exclusively on how intelligent agents look, the chapter explains how consumers evaluate whether Physical AI is appropriate for specific marketing and service roles. The chapter first distinguishes Physical AI from Digital AI by highlighting their different modes of interaction and action. It then revisits the foundations and limitations of the uncanny valley theory before introducing a conceptual framework explaining Physical AI adoption in marketing through perceived competence, role congruence, social legitimacy, and consumer vulnerability. Finally, the chapter outlines future research directions and managerial implications for organizations seeking to integrate Physical AI into customer-facing activities. Overall, the chapter offers a marketing-oriented perspective on Physical AI adoption by integrating technological, social, and contextual determinants of consumer acceptance.