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ad:tech Survey: Best and Worst Online Tactics, Budget Plans for 2008

Behavioral targeting, search engine optimization (SEO), and direct email using house lists are the best-performing tactics in online marketing, according to MarketingSherpa’s annual survey of ad:tech attendees.

Marketers also report strong ROI from paid search and direct email from rented lists, albeit less so than last year.

Top (and Bottom) Online Performers

• SEO is gaining in popularity among marketers: 57% of those surveyed in 2007 said it outperforms other tactics (”great ROI - outperforms other tactics”), compared with 45% in 2006.
• Email marketing from house lists, a top tactic of 47% of marketers in 2006, was cited by 42% in 2007.
• Behavioral targeting offers a stronger ROI than contextual targeting, marketers again said - but in greater proportions: 44% said so (up 10 percentage points from 2006), while 21% cited contextual advertising (down 8 points).
• Paid search remains a strong money maker for 34% of those surveyed, but that’s down from 49% in 2006, likely due to increased competition that raised keyword prices and lowered ROI.

Among the ad types rated by marketers as having the lowest ROI in 2007 were rich media ads (only 7% said it delivered a strong ROI), banner ads (cited by 10%), and pop-ups and pop-unders - awarded the “worst Web ad of 2007″: No marketer said it provided a significant ROI.

Budget Plans

Pay-per-click (PPC) and behavioral ads are set to earn a larger percent of marketers’ budgets, according to the survey:

• Some 32% of marketers cited PPC (i.e., agreed that they plan to increase their budgets for the tactic more than 5%).
• Strong ROI from behaviorally targeted ads is likely to attract more investment - 27% of marketers said they’ll increase their spend, compared with 18% in 2006.

What’s Next - New Tactics

Viral marketing and advertising on mobile phones, online video sites and virtual worlds are gaining the attention of marketers, many of whom are being encouraged by agencies to increase budgets, or allocate budgets for the first time, to those tactics:

• 93% said agencies recommended an increase in spending or begin spending on viral video.
• 87% were asked to start or increase viral marketing spend on social networking sites.
• 60% were urged to try, for the first time, wireless ads on mobile networks.
• 62% said agencies advised advertising, for the first time, in games and virtual worlds.

About the survey: MarketingSherpa asked internet marketers (ad:tech attendees) what tactics worked (and didn’t work) in 2007 and where they plan to spend their budget in 2008. The data is based on 421 responses.