Ninety-five per cent of advertising spend in 2009 had no impact on the consumer, says a report from Alterian. 

A poll by the customer engagement technology and solutions provider shows that an average of just five per cent of consumers surveyed say they trusted advertising  – and only eight per cent (nine per cent UK and six per cent US) believed what the company says about itself.

This equates globally to nearly $426 billion spent on ineffectual advertising activity in 2009 alone. 

In stark contrast, the research found that consumers actively engaging in the use of social media feel more in control of relationships and more positive about their connection with brands in general. A third (31 per cent UK and 35 per cent US) of respondents using social media believe companies are genuinely interested them.

David Eldridge, CEO, Alterian, said: "The majority of marketers are simply not hitting the right note with their target audience. Consumer trust is at an all-time low. What we are witnessing is an era of individualisation. It is no longer adequate to adopt a strategy of mass broadcast and one-way conversations. Brands should be trying to understand communities rather than focusing on siloed communication channels."

The report highlights that many organisations still do not recognise the need to change, with 58 per cent of respondents believing that the lack of a social media strategy was due to the absence of board support. As global advertising levels are predicted to increase by 0.8 per cent in 2010, the report calls for businesses to redirect their marketing spend into better understanding their audiences, investing in appropriate skills to make the most of new media.

Eldridge said: "Traditional marketing is dead. To know and communicate to individuals, to a specific individual, should be the strategic and tactical goal of all brands and organisations. This will present the number one marketing and wider business challenge over the coming decade.  

"The question is how quickly can brands evolve their marketing strategy? If brands are ready to increase marketing budgets let’s ensure that we focus that resource in the right places." 

Author of the report – Your Brand: At Risk or Ready for Growth? – Professor Michael Hulme, said: "Meeting the challenge of individualisation will require new thinking in the collection of customer information/data for an organisation to be able to interact at a personal level.   

"This will call for a commitment from the business to both structural and skill changes, arising from the need to break down silos, both departmentally and functionally to address the ’single view’ of information but to also understand how the information is being used at any one time across the organisation."

The report is available for download here.