Companies that spend millions of pounds advertising their brands online could be wasting their money.

The effectiveness of internet banner advertising has fallen during the last year as web users have become increasingly ambivalent to poorly targeted ads.

These findings are published this week by Continental Research in its sixth annual internet report exploring internet usage in the UK.

More than 2000 respondents interviewed claimed to read or glance at only 12% of all banner ads they were exposed to, compared with 25% last year.

The research also showed that internet users may be learning to ignore banner ads altogether.

In 1998, 59% of internet users said they had clicked onto a banner ad that provided a link to the advertiser's own website.

That figure has dropped over the past two years to 40%.

The research also suggests that growth in internet take-up and usage has peaked, with expansion in both home and work internet growth showing signs of slowing down.

Only a 5% increase has been recorded since January this year in UK home access, a considerable slowdown in comparison to other years.

Continental research director Colin Shaddick said: "Clearly an innovation is needed in the marketplace to introduce the internet to other sections of society."