This study examines how Generative Artificial Intelligence (GenAI) transforms marketing by enabling immersive, adaptive, and interactive experiences —particularly within the metaverse. These environments merge physical and digital realities in real time, allowing brands to deliver multisensory, personalized, and co-created experiences. GenAI lowers technical barriers to 3D modelling, avatar creation, and real-time content generation while integrating with extended reality (XR), virtual reality (VR), and augmented reality (AR) technologies. This study explores how GenAI enables immersive marketing through qualitative methods based on semi-structured interviews with nine professionals working in marketing and immersive technology. Data were analyzed using the Gioia methodology, which enabled systematic theory development linking empirical insights to higher-order concepts. The findings reveal three interrelated mechanisms through which GenAI transforms immersive marketing: (1) Scalability and Efficiency, (2) Personalization, Interactivity and Storytelling, and (3) Authenticity and Ethical Responsibility. Together, these mechanisms explain how GenAI enhances creativity, engagement, and emotional resonance while redefining ethical boundaries in AI-driven marketing. The study advances theory by developing a conceptual model that explains how technological enablers, mediating mechanisms, and boundary conditions interact to produce key marketing outcomes such as immersion, engagement, and loyalty. For practitioners, the results highlight the need for strategic integration of GenAI into marketing design, transparent governance of AI-generated content, and the cultivation of ethical innovation to ensure consumer trust in immersive digital environments.