New report claims social cure to ineffectual advertising


By The Drum Team | Staff Writer

May 18, 2010 | 5 min read

A report launched today claims that nearly $426 billion was spent on ineffectual advertising activity in the last year alone.

Only five per cent (four percent UK and six percent US) of consumers surveyed in the report trusted advertising and eight percent (nine percent UK and six percent US) believed ‘what the company says about itself’.

Alterian claims that this equates globally to nearly $426 billion spent on ineffectual advertising activity in 2009 alone.

In 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 percent UK and 35 percent US) of respondents using social media believe that ‘companies are genuinely interested them’.

“The report highlights that the majority of marketers are simply not hitting the right note with their target audience,” commented David Eldridge, CEO, Alterian. “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.”

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The report highlights that many organisations still do not recognise the need to change, with 58 percent 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, which means investment in appropriate skills across every department to make the most of the opportunity that new media affords them.

Eldridge concludes: “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 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.”

Key Stats: Consumer Attitudes

The report explores some current attitudes towards brands and companies. The report surveyed a representative sample of 2,000 adults from the UK and US in early 2010.

• Today’s newly empowered consumers hold a deep rooted cynicism towards companies: 58% (62%UK and 54% US) of respondents felts that ‘companies are only interested in selling products and services to me, not necessarily the product or service that is right for me’.

• Only 5% (4% UK, 6% US) trusted advertising from organisations and 8% (9% UK, 6% US) trusted ‘what the company said about itself’

• Only 9% (7%UK and 10%US) of consumers surveyed in the report trust companies to act with their best interests in mind

• 33% (31% UK and 35% US) of respondents using social media believe that ‘companies are genuinely interested them’

•82% (78% UK, 86% US) expressed a positive interest in being involved by companies in developing products and services

• Furthermore, 82% thought that being involved in the development of a product or service would make them more likely to tell others about the company

• 81% of the sample saw the internet as the ‘first port of call’ to compare products or services

• 75% (69% UK, 80% US) said it would have a positive impact on their experience as a customer if companies took the time to found out more about their needs. However only 17% (10% UK, 23% US) thought companies currently took note of what they said.


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